A proposal by the capital's airport operator to raise user tariffs by 6.4 times has set alarm bells ringing among foreign airlines who say they will be forced to look for alternatives to the New Delhi airport if these hikes are implemented. The Airport Economic Regulatory Authority (AERA), the body that regulates private airports in the country, is expected to initiate stakeholder consultations on tariff proposals for Delhi and Mumbai airports soon. A senior official at the airport regulator said the GMR Group-owned Delhi International Airport (DIAL) has sought average hike of around 640%.
Mumbai International Airport (MIAL), led by GVK Power and Infrastructure, has also sought a tariff revision from the airport regulator though it is not as steep as DIAL's. However, the exact range of the hike sought by MIAL from the regulator could not be determined. "There is no simplistic number to the airport tariff hikes asked by MIAL. They have presented multiple scenarios for our consideration to boost their revenues, all of which entail a variable impact on airport costs," said the AERA official.
Airport tariffs are largely paid by airlines and include charges levied for aircraft landing and parking, ground safety and handling services for passengers and cargo, and fuel supply for aircraft.
DIAL officials say they have asked for a revision of charges but refused to disclose the specifics of their proposal. "The tariff structure is very lop-sided. We will incur a loss of about Rs 800 crore this year because tariffs have not been revised since 2001. So, we have asked for a revision in tariffs from the regulator," said Sidharath Kapur, GMR Infrastructure's chief financial officer (airports). The Delhi airport's tariffs had been raised by 10% in 2009 as per the operation, management and development agreement (OMDA) it signed with the government and the Airports Authority of India (AAI).
But foreign airlines are clearly alarmed by the prospects of a significant hike in charges. Finnair's director for the Indian subcontinent Kari Stolbow said the proposed hikes could force airlines to shift base out of Delhi. "Delhi is an important destination, but this kind of move may force airlines to look around for other possibilities," he said, pointing out that flight frequencies to and from India on the whole are growing faster than Delhi.
Economic Times
