State-owned Airports Authority of India (AAI) has declined to ease the fiscal pressures of Delhi International Airport Pvt. Ltd (DIAL), which could potentially impact the firm’s profit.
The airport had proposed linking quarterly payouts to the government to actual receipts instead of having to make advance payments as it does now. That has been rejected, according to two government officials familiar with the matter. They didn’t want to be identified owing to the sensitivity of the issue.
DIAL wanted relief to partially offset the financial strain it has come under after the Supreme Court put a freeze on collection of the airport development fee from passengers to fund the airport’s $3 billion (Rs 13,320 crore today) modernization bill until an explicit order was passed by the Airports Economic Regulatory Authority, allowing the company to do so.
In addition, state-run Air India Ltd, announced as the hub carrier for the airport last year, is not paying DIAL its dues ontimebecause of the carrier’s huge debt burden, said one of the officials cited above.
“We have asked them to stop Air India flights if they want to, but we need our revenue,” he said, adding that Air India owed Rs 750 crore to AAI alone.
GMR Infrastructure Ltd-led DIAL, which runs Indira Gandhi International Airport (IGIA), the largest in the country by passengers and revenue, is required to pay 46% of that revenue to AAI.
DIAL currently pays AAI its share on the basis of projections at the start of each quarter.
“They were seeking revenue transfer on a realization basis instead of the accrual basis,” said one of the officials cited above. “We have said there cannot be a deviation from OMDA.”
OMDA is the operations management development agreement that governs the 30-year lease, extendable by another 30 years, of IGIA to DIAL. AAI ran the airport until 2006. One of the officials said that the DIAL proposal was turned down as no one in authority wants to take decisions that could come under any kind of scrutiny at a later date.
A DIAL official, who declined to be named, said the airport had asked for the relief because of delayed payments from Air India and other financial issues. The proposal has not been approved yet, the official said. Paying the revenue share after the quarter ended would have helped in terms of financing, he said.
DIAL earned revenue of Rs 1,255.22 crore in 2010-11, which translates into about Rs 313.80 crore every quarter.