New Delhi: Operators of large airports—those with an annual handling capacity of at least 1.5 million passengers—will need to convince the regulator, airlines and consumer forums of the merits of expansion plans and get their project costs greenlighted by the stakeholders before they are allowed to scale up the facilities.
The move by the Airports Economic Regulatory Authority, or Aera, is an attempt to curb soaring costs associated with open-ended projects such as the modernization of the Mumbai and New Delhi airports that have entailed airlines and passengers paying more.
“Consultation for any investment is a major precondition in our guidelines,” Aera chairman Yashwant Bhave said in an interview.
Swanky look: A file photo of the integrated terminal, called T3, under construction at the Indira Gandhi International Airport in New Delhi. Sanjeev Verma / HT
“They have to consult (with stakeholders) if the capex (capital expenditure) is all right, what process has been followed for traffic forecast etc.,” if airport user charges are to be decided on the basis of their investment in expansion, he said.
The move comes on the heels of Delhi International Airport (Pvt.) Ltd, or DIAL, last week setting the final cost of modernizing the Indira Gandhi International Airport at Rs12,700 crore, a 42% increase over the Rs8,975 crore estimated earlier, clearing the way for raising existing charges and possibly levying new ones on passengers.
The cost estimated for modernizing the Mumbai airport has risen to Rs9,802 crore from Rs5,826 crore.
Airlines and consumer forums have in the past protested airport charges levied to allow the operators to recover investments. The charges are based partly on the project cost.
“The positive side is (that) what will happen from now is that decisions will be circulated for views and the views will be considered before a final decision, compared to the earlier scenario where the aviation ministry took a call, so the process is more transparent,” said a senior domestic airline official who asked not to be named.
Operators of airports that are already running and want to expand their capacity—such as Bangalore International Airport Ltd that wants to spend $1 billion (Rs4,490 crore) to scale up—will be required to follow the consultation route. Expansion would include even works such as the construction of a new runway.
“It is a very onerous process of consultation, which should be made more flexible,” said a senior official at a private airport operator who didn’t want to be named. Aera should instead hold the consultations with stakeholders such as airlines rather than put the onus on airport operators, the official said.
“Consultation cannot be an excuse for delay,” Bhave said. The airport regulator will lay out detailed consultation procedures, including a timeline, by the end of next month, he added.
The guideline wouldn’t be binding on airports such as the one coming up in Navi Mumbai, with a capacity to handle fewer than 1.5 million passengers annually.
Aera, which came into existence late last year after most big-ticket airport projects had already been cleared by the civil aviation ministry, will have no influence over those investments, totalling Rs30,000 crore.
The airports include the ones in New Delhi, Mumbai, Bangalore and Hyderabad.
In a separate but related development, Aera said in a statement posted on its website this week that it planned to exempt domestic passengers from paying any user development fee (UDF) for use of the Thiruvananthapuram airport.
State-owned Airports Authority of India, or AAI, which has spent around Rs289.60 crore on its expansion, had proposed a levy of Rs550 per departing domestic passenger and Rs1,020 per international passenger, for a period of 10 years effective April 2010, and Rs280 per arriving domestic passenger and Rs715 per international passenger for a 15-year period.
Aera has instead proposed a Rs755 UDF per departing international passenger (exclusive of statutory levies) with effect from the date of commissioning of the new international terminal building for a period of 10 years. If the move goes through, Thiruvananthapuram will be the first Indian airport to levy a UDF only on international passengers.
Bhave said the decision was taken based on the project merits. Besides being a relatively small airport, the new facility will be used primarily by international passengers, he added.