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Govt may allow Delhi airport to raise fees 10% despite delays

Govt may allow Delhi airport to raise fees 10% despite delays
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First Published: Fri, Jan 09 2009. 05 33 AM IST
Updated: Tue, Feb 17 2009. 06 41 PM IST
New Delhi: The civil aviation ministry plans to allow the Delhi International Airport Ltd, or DIAL, which runs the country’s second largest airport by passengers handled, to increase airport charges by 10% after having initially rejected the operator’s request on grounds that it did not comply with a 2006 privatization agreement.
DIAL, a consortium led by GMR Infrastructure Ltd that is modernizing the Capital’s airport, had sought to increase aeronautical charges such as aircraft landing, parking and route navigation charges by 10% last year as had the Mumbai International Airport Pvt. Ltd (Mial), a consortium led by GVK Power and Infrastructure Ltd.
Aircraft landing, parking and route navigation charges are calculated on the basis of complicated formulas set by regulator Airports Authority of India, or AAI. For instance, an Airbus SAS-made A-320 plane with a rated empty operating weight of 42.24 tonnes will have to pay at least Rs7,240 per landing in any international airport in India, according to Mint calculations based on data from AAI’s website.
Under an April 2006 so-called operations management development agreement, or Omda, and the state support agreement (SSA), the two airports had been allowed to increase aeronautical charges after two years of airport modernization if they complete and commission mandatory capital projects in that period. If not, the “incentive shall not be available to the JVC (joint venture company) for purposes of calculating aeronautical charges for the third year after the effective date”, the SSA said.
As reported by Mint last year, the aviation ministry had rejected a DIAL proposal to increase airport charges on the grounds that the operator had not completed its share of work as per the Omda, while a similar proposal by Mial was under consideration given that it had met the requirements.
Last month, Mial’s proposal was approved, allowing the airport operator to increase charges as also a so-called passenger service fee from Rs225 to Rs233 per passenger, effective 1 January.
But now, DIAL has said that the delay in execution of certain projects was on the account of time taken by other government agencies in giving approvals and, therefore, the delay was not under the operator’s control, said a senior government official requesting anonymity.
Details of DIAL’s argument were not immediately available.
A spokesman for the airport operator denied any delays at the New Delhi airport projects. “All projects required to be completed under Omda have been completed on schedule,” he said, adding that the operator was waiting for the government’s response to its proposed 10% increase in charges.
The ministry now plans to approve DIAL’s proposal, the official said, by invoking clauses in the agreement that allow overlooking delays in completion of projects. Under the Omda, AAI has to be satisfied of the reasons for the delay for such a relaxation.
An analyst said AAI’s assent will be critical for any increase in airport and other charges. “Both parties will need to assess the reasons for the delay in the overall airport modernization timeline and agree on the way forward,” said Kapil Arora, an analyst with audit and consultancy firm Ernst and Young.
Shares of GMR Infrastructure closed at Rs72.45 each on the Bombay Stock Exchange on Wednesday, a day when the exchange’s benchmark index, the Sensex, lost 7.25%. Trading on equity markets was closed on Thursday on account of a holiday.
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First Published: Fri, Jan 09 2009. 05 33 AM IST