AERA rejects operator's demand for 424% hike in user fees at Delhi airport

The operator had called for the hike in view of Rs 9,800 cr plan, including expansion of a terminal-1, construction of fourth runway

The Airport Economic Regulatory Authority (AERA)  has proposed the continuation of existing user charges at Delhi airport and has rejected the operator's demand for a 424 per cent hike in tariff.

Delhi International Airport Limited (DIAL) has sought an increase in tariff in view of Rs 9,800 crore expansion which includes expansion of a terminal 1, construction of fourth runway among other things.

The airport sector regulator, however, has turned down the request for tariff increase in a consultation paper released on Tuesday.  The authority has invited stakeholder comments by July 8 and will subsequently pass an order.

The authority proposes to continue with the existing base airport charges plus 10 per cent formula, AERA said in its consultation paper. It has also proposed to adjust the tariff collection for the third control period between 2019-2024  with over recovery of charges done in the previous years.

From December 2018 onwards domestic and international departing passengers are charged Rs 77 as a service fee.  Previously domestic and international passengers were charged a user fee of Rs 10 and Rs 45 respectively as per the second control period order. The fee was hiked after the operator argued that the approved tariff was below approved base airport charges.

The authority's proposal, if implemented, could pose a challenge to Delhi airport expansion plans. Traffic and revenue is expected to fall sharply because of Covid-19.  " The authority has not proposed a revision in charges and proposed a recovery. It is a loss both ways," an industry source remarked.

DIAL did not respond to an email query on the topic.

However other aviation experts pointed out that AERA in the consultation paper has said that will consider revised submissions from DIAL in view of Covid-19 impact on aviation and form a final view on various aspects of tariff determination.

"Traffic projections and operating expenses of the airport would need to be reassessed due to Covid 19 impact and the aggregate revenue requirement (ARR) of airport recalculated too. Non aeronautical revenue too will decline sharply thus impacting the ARR. The per passenger revenue requirement of the airport will have to be calculated afresh," an expert pointed out.