Hybrid revenue model across airports soon

The Airports Economic Regulatory Authority of India (AERA) may allow airports across the country to adopt a hybrid revenue model. The regulator would come out with a final report on the economic model, to be followed across the airports, by February next year. Currently, the hybrid model is followed at Delhi and Mumbai airports.

“The hybrid model is in-built and AERA may continue with this model for all the airports in the country,” said a senior government official in the know.

Under the hybrid model, the airport operator adds a part of the non-aeronautical (duty-free shops, hotel, restaurant, among others) revenue and the total revenue from the aeronautical (landing, parking and ground handling charges) side to compile total earnings. The aeronautical rates are decided on the basis of total earnings. In the case of the airports in Delhi and Mumbai, 30 per cent of the non-aeronautical revenue is added in the total revenue.

The other two revenue models are single till and double till. In the single till, all the earnings from both aeronautical and non-aeronautical sources are added and then the charges are decided. In double till, earnings from only aeronautical services are considered while deciding the rates.

Analysts also feel the hybrid model would be good for India as of now.

“The hybrid model will be best for India till we increase our earnings from commercial operations at the airports, which will take some time,” said Amrit Pandurangi, executive director, PricewaterhouseCoopers.

Meanwhile, it has been announced that a user development fee at airports would be revised keeping in view the financial requirements of the airport projects and traffic projections.

Delhi International Airport Ltd (DIAL) and Mumbai International Airport Ltd (MIAL) have the permission on an ad hoc basis to collect airport development fee. DIAL has recently sent a proposal to AERA to extend its period by six months. The authority will decide the same by the end of this month.

The Delhi airport levies Rs 200 and Rs 1,300 on every domestic and international passenger, respectively, as its development fee. Passengers at Mumbai airport pay Rs 100 and Rs 600, respectively, for the same purpose. The Hyderabad airport levies Rs 375 and Rs 1,000 on every outgoing domestic and international passenger, respectively, as user development fee, while the Bangalore airport charges Rs 260 and Rs 1,070 from domestic and international passengers, respectively.