New Delhi: India’s airport regulator may take another three months to decide on the charges that carriers pay at the country’s larger airports.
The Airports Economic Regulatory Authority, or Aera, which was expected to announce its decision around this month, has now sought the advice of the civil aviation ministry on the matter, said Yashwant Bhave, chairman of the regulator. Aera will await the government’s comments before drawing up tariffs.
“Each stakeholder has to be taken on board and government is certainly a very important stakeholder,” he said. Once the process is finalized, draft guidelines will be issued, he said.
Aera, which was set up late last year, is drafting fee policy at a dozen airports that get at least 1.5 million passengers every year. Airports and carriers are battling over the fee model to be followed.
Airlines and Aera prefer the so-called single-till model, which is followed at UK airports such as Heathrow and Gatwick, in which all principal activities, including aeronautical and commercial (or retail) functions, will be charged under a single window, keeping costs down. In contrast, the dual-till model has aeronautical or flying-related activities being charged under one head while the remaining activities are charged under a second till, resulting in a higher payout by carriers.
“We are looking to appoint a consultant with in-depth knowledge,” said a civil aviation ministry official, who did not want to be named.
The consultant will be asked to study the matter and give its views after which the ministry will revert with its opinion to Aera in three months, this official said.
The move by Aera, which had completed the consultation process earlier this month, came after stiff resistance from airports, the ministry official said.
Fraport AG, a partner of GMR Infrastructure Ltd in Delhi International Airport Pvt. Ltd, said the viability of investments would depend on the model adopted.
“Fraport went into the investment with an understanding that Delhi would offer an attractive entry point into India with many other opportunities waiting to be tapped. With a shift to the single-till principle, this assumption no longer holds true,” Fraport said in comments available on the regulator’s website. “Any future investment in India in a price-capped/single-till regulated market would be much more critically reviewed bearing a significant possibility of investments going elsewhere where the investment climate is more favourable.”
Air India chairman Arvind Jadhav drew a parallel with the power sector over monopoly issues in arguing for a single-till model. He cited a Supreme Court judgement that upheld “the Central Electricity Regulatory Commission’s authority to cap profit margin on trading of electricity. The apex court noted that the tariff policy which came into effect from 6 January 2006 intends to ensure availability of electricity to consumers at reasonable and competitive rate.”
The verdict also supported the stand that “the airport operator cannot add a mark-up on the rates of facilities/services being provided by the airport operators being a monopoly”.