Mumbai: The Airports Economic Regulatory Authority of India (Aera) has rejected a proposal by the operators of New Delhi and Mumbai airports to raise aeronautical charges by 10%.
Aeronautical charges are paid by airline firms for parking and other services at an airport.
“The tariff for aeronautical services has to be determined taking into consideration several factors; one of these factors being the concessions offered by the Central government,” Aera secretary Sandeep Prakash wrote in the 20 May ruling.
Mumbai International Airport Ltd (Mial), run by GVK group, and Delhi International Airport Ltd, led by the GMR group, have been demanding a hike of these charges with effect from 3 May 2009.
Both companies said they are studying Aera’s order.
“We are examining Aera’s order,” said Sidharth Kapur, chief financial officer, airports, GMR group. “We will take a call after studying its implications.”
A spokesperson for Mial said the firm is reviewing the order and “will decide on the next steps in due course”.
Airlines, on the other hand, welcomed the decision as it would relieve them of additional costs in a fledgling recovery in passenger traffic.
“It is happy to note that Aera is stepping in and involving in such decisions,” said Sanjay Aggarwal, chief executive officer at Gurgaon-based low fare airline SpiceJet Ltd. “This will help in preventing any additional burden to airlines.”
Earlier, the International Air Transport Association, which represents around 230 carriers, had opposed an automatic increase in aeronautical charges. On 26 April, it wrote to Aera saying aeronautical charges should be set in relation to costs and that this would be in line with International Civil Aviation Organization’s (ICAO) principle of cost-related charging.
The Aera order points out that Indian is a member of ICAO, and therefore, any agreement entered into by the Indian government should be so interpreted to avoid a conflict with global civil aviation policies.
In March, Aera had also said a so-called single-till model was the best way to decide airport charges in India, where all principal airport activities, including aeronautical and commercial, are used to decide airport charges. In the dual-till model, only aeronautical activities are considered.
Airlines prefer the former model as charges are likely to be lower, while airport operators want the latter.