DIAL justifies seeking hike in airport charges

Delhi International Airport Limited (DIAL) today justified seeking an eight-time hike in airport charges, saying it would not affect the airlines much and would help the Airports Authority of India (AAI) gain more revenue.

"If the proposed hike of 774% by DIAL is approved by Airports Economic Regulatory Authority, then the aeronautical charges would increase only by 100-150% for various airlines," DIAL CFO Siddarth Kapur said here.

"This would not be too high, as currently Delhi and Mumbai airports have the least charges among the top 50 airports of the world," he said.

At a meeting here last month, airline representatives including those from Air India and several major foreign carriers, had opposed the hike proposed by DIAL saying Delhi was a profitable airport but it was badly structured.

The representatives, who also belonged to Lufthansa, Air France, British Airways, Emirates, Singapore Airlines and Cathay Pacific, had said the increase would lead to a drastic fall in number of passengers.

Countering the arguments, Kapur said the demand for such a hike in aeronautical charges was "not to earn supernormal profits ... These are reasonable charges as these have not been increased in the last ten years, except once by 10% in 2009."

He said it was being sought as per the concessionaire agreement signed with the government and claimed that the User Development Fee (UDF) would rise by an average of only about Rs 400-500.

The DIAL official said the increase will not only help the airport operator which has registered a loss of Rs 1,300 crore since it took over the Delhi airport from the AAI in 2006, but also help the state-run airports body to earn more revenue.
   
As per the estimates, after the revision of current aeronautical tariff by 774%, the AAI -- which earned Rs 581 crore in the FY 2010-11, would earn about Rs 2,800 crore by FY 2013-14 from Delhi airport itself.
   
The AAI has emerged as a major beneficiary of the public-private-partnership deals of Mumbai and Delhi airports, Kapur said, adding, it has 45.99% and 38.7% revenue share in DIAL and Mumbai International Airport Limited (MIAL) respectively.
   
For FY 11, AAI has earned Rs 462 crore as navigational revenue from Delhi compared to Landing and Parking charges for DIAL which stood at Rs 337 crore, as per their annual report.
   
The revenue share from DIAL and MIAL was helping AAI to fund the growth of other metro and non-metro airports like Kolkata and Chennai. The project cost for modernisation of Kolkata airport is Rs 1,617 crore while for Chennai Rs 1,808 crore.
   
Of the total of Rs 3,425 crore, 65% of the total fund has been accrued from the revenue share from DIAL alone.
   
In the past five years, Delhi alone has contributed about Rs 2,200 crore to AAI which can be used to building a terminal of 22 million passengers capacity, the official said.
   
DIAL is also mandated to build a new Air Traffic Control (ATC) tower at the cost of Rs 350 crore.