AAI share of Delhi airport revenue dropping: Audit

Civil aviation ministry examining DIAL contention

Revenue sharing between the Airports Authority of India (AAI) and Delhi International Airports (Pvt) Ltd (DIAL), according to the provisions of the operation, management and development agreement (OMDA), resulted in a substantial drop in AAI’s revenue.

A senior government official told Business Standard a report of independent auditors indicated AAI’s revenue from its cargo business alone fell by Rs 73.12 crore between November 2009 and September 2010. He said the issue was being looked into by top government officials.

AAI and DIAL had, in April 2006, signed an agreement for the operation and management of IGI Airport, Delhi, on a revenue-sharing basis of 45.99 per cent to AAI and 54.01 per cent to DIAL. The agreement permitted subcontracting of various aeronautical/non-aeronautical services to joint ventures which were specially created by DIAL on a revenue-sharing basis. DIAL had created 11 joint venture companies for subcontracting non-aeronautical services on a revenue-sharing basis of 10 per cent to 61 per cent.

“It has been pointed out in audit observations that taking into account the details available in the quarterly revenue report of the independent auditors appointed with the concurrence of AAI, the authority has incurred a reduction in share of revenue to the tune of Rs 73.13 crore due to the formation of the associated company for running the cargo business,” the official said.

He said DIAL’s contention that the share of revenue from cargo business would be more from the fourth year was not tenable, since international cargo tonnage was increasing. He added the fact remained that AAI’s share would be limited to 45.99 per cent of DIAL’s 36 per cent revenue-sharing arrangement with the associate company formed for the cargo business.

A senior civil aviation ministry official, however, said the audit had calculated the reduction in revenue share to be Rs 73.13 crore for cargo on the analogy that DIAL’s income had been proportionately hiked to arrive at 100 per cent turnover, with a consequent reduction in AAI’s revenue. “The contention of the audit is not tenable, since DIAL had entered into concession arrangements with concessionaires. The arrangement of sharing of revenue with the concessionaire is based on the bids received from non-related entities and concessions awarded to the bidder who quoted the highest MMG/revenue share,” he said.

The civil aviation ministry official said the equity participation with the successful bidder was subsequent to the award of concession and hence, DIAL was not an associate company during the award of the concession arrangement.

DIAL had also told the ministry that the revenue earned during the quarter ending June 2010, compared to the revenue earned in the quarter ending December 2010, showed an increase. The total revenue accounted by DIAL during these two quarters rose from Rs 88 crore to Rs 123 crore.

The OMDA between AAI and DIAL was signed on April 4, 2006, for the functions of operating, maintaining, developing, designing, construction, upgrading, modernising, financing and managing the Indira Gandhi International Airport, Delhi. The AAI has 26 per cent equity participation in DIAL, with the remaining 74 per cent held by a private consortium of GMR Group, Fraport AG, MAPL and IDF.