Home >Industry >Tariff regulator proposes 96% reduction in Delhi airport charges
Airport charges, levied to finance capital expenditure and pay for maintenance, are set for a five-year duration called the control period. These charges are passed on by the airport to airlines and, in turn, to travellers. Photo: Pradeep Gaur/Mint
Airport charges, levied to finance capital expenditure and pay for maintenance, are set for a five-year duration called the control period. These charges are passed on by the airport to airlines and, in turn, to travellers.
Photo: Pradeep Gaur/Mint

Tariff regulator proposes 96% reduction in Delhi airport charges

Airport operator DIAL had proposed 42.6% higher charges, but regulator Aera said the charges should, in fact, be 96.08% less starting 1 January

Mumbai: Flying out of New Delhi’s Indira Gandhi International Airport could get cheaper with the tariff regulator ordering a sharp 96% cut in airport charges for the 2014-19 period, upsetting its operator Delhi International Airport Ltd (Dial) which had sought a hike.

Dial, a unit of GMR Infrastructure Ltd, has invested more than 12,500 crore to develop the airport.

Airport charges, levied to finance capital expenditure and pay for maintenance, are set for a five-year duration called the control period. These charges are passed on by the airport to airlines and, in turn, to travellers.

The airport operator had proposed 42.6% higher charges, but the regulator Airport Economic Regulatory Authority (Aera) said the charges should, in fact, be 96.08% less starting 1 January.

To be sure, the reduction of charges are not certain.

In February, Aera had proposed a 78.4% reduction for the so-called second control period 2014-19. DIAL had challenged the decision in the Delhi high court.

So, a potential reduction of airport tariff would be possible only after the end of the legal battle between Aera and DIAL.

In its latest order, Aera had proposed a reduction based “on its decisions in respect of regulatory building blocks towards determination of aeronautical tariffs for the second control period (1 April 2014 to 31 March 2019) for the Indira Gandhi International Airport, Delhi."

However, Aera has allowed DIAL to implement only an 89.4% reduction instead of 96.08% as an interim measure to help the airport operator meet its cash deficit and get 691.50 crore.

In its order, Aera has also made a note of the legal challenge.

“With regards to implementation of this order, the authority notes that the High Court has permitted DIAL to charge the tariff applicable for the first control period till AERAAT (Airports Economic Regulatory Authority Appellate Tribunal) decides on the appeals filed by DIAL and the High Court has indicated a time-frame for AERAAT to dispose the appeals," it noted.

The first control period ran from 2009 to 2014.

Aera said it has appealed the high court order and depending upon the outcome of the legal process, the date of implementation of this tariff order will be decided.

In its 8 December order, Aera has also said there shall be no user development fee (UDF) charged on arriving passengers, both for domestic and international.

UDF is a fee levied to recoup investments on the completed infrastructure works at the airport.

Aera has also said in the case of departing passengers, UDF shall be 10 for domestic passengers and 45 for international passengers flying out of Delhi airport.

“The +348% increase in charges during the first control period was immediately implemented by the airport operator in 2012. Now that the independent regulator has made its tariff determination for the second control period which offers a reduction, the airport operator seems to want only the benefits from the upside of tariff determinations, and any reductions will be stalled through legal routines," said an airport consultant, requesting anonymity.

He said the issue relates to public interest and ensuring that passengers are not made to pay excess user charges.

“The ministry of civil aviation must robustly defend passenger interest by ensuring that the stay accorded by the Delhi high court to GMR Group which prevents the implementation of this charge reduction, is challenged and overturned quickly," he added.

Airport charges have gone up by 346% in Delhi, 269% in Chennai, 385% in Kolkata and 164% in Mumbai over the last three years.

In 2012, the Comptroller and Auditor General of India (CAG) said the ministry of aviation favoured private firms managing the New Delhi and Mumbai airports.

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