AAI's submission short-sighted; will affect traffic growth

 Within days of the state-owned Airports Authority of India (AAI) asking the government not to reduce tariff at Delhi airport, an international airline body has called the proposal a short-sighted approach which will affect traffic growth.

"It is unfortunate and disappointing that AAI has taken a very short-term view on the Delhi charges by contesting against the proposal of the independent regulator to reduce these inflated charges," said Conrad Clifford, regional vice president, Asia Pacific, International Air Transport Association (IATA).

According to Clifford, the aviation industry is an economic enabler and a reduction in Delhi's airport charges would help to stimulate traffic growth.

"DIAL (Delhi International Airport Limited) and AAI benefited from the decision in 2012 of the independent regulator in the tariff escalation for Delhi proposed in the first control period," Clifford said.

"To keep the tariff at Delhi artificially high just to support the high revenue-share and high-tariff aspirations of AAI and DIAL, respectively, would only come at the expense and the detriment of the interests of the Indian consumer and the airlines," Clifford added.

In a recent submission to the civil aviation ministry, AAI had said that the reduction in tariff at the Delhi airport will lower its revenue and impact its development projects.

AAI had requested the ministry to issue directive to AERA (Airports Economic Regulatory Authority (AERA) to ensure viability of the Delhi airport project.

The move by AAI to protect its revenue share from Delhi airport from falling, comes after AERA had proposed in a consultation paper to reduce 78.24 percent in the aggregate revenue requirement (ARR) for the second control period from 2014 to 2019.

In 2007-08, AAI had entered into an operation, management and development agreement (OMDA) with a consortium of private players which constitute DIAL.

AAI which holds 26 percent in the Delhi airport gets a 45.99 percent of DIAL's total revenues. In 2012-13 DIAL paid Rs.1,533.16 crore to AAI as its share of the total revenue earned.

AERA allows the DIAL to levy charges on passengers and airlines to cover the cost incurred on developing the airport infrastructure.

The charges are determined for a duration of five years known as the control period. The first such period ran from 2009 to 2014.

In 2012, airport development fee (ADF) at Delhi and Mumbai airports were abolished. ADF is a levy that is used to garner financial resources to meet the cash flow requirements during the development of airport projects.

Currently, a user development fee (UDF) is charged for passengers for using the developed facility

Airlines too are subject to landing and parking charges. The proposed reduction in tariff will reduce costs for both passengers and airlines using the IGIA.

Currently, domestic passengers have to pay anywhere between Rs.200 to Rs.500, while international passengers are levied charges ranging from Rs.500 to Rs.1,200.

In 2012, the AERA had allowed DIAL to raise aeronautical charges by 346 percent.

Meanwhile, in an unrelated development Civil Aviation Minister Ashok Gajapathi Raju Pusapati told the Lok Sabha on Monday that the government has received more than Rs.5,814 crore from AAI in the last four financial years. - IANS