AAI opposing cut in Delhi airport charges unfortunate: IATA

Lower airport fee would stimulate traffic growth at Delhi Airport as it would bring down airfares to an affordable limits

Terming as "unfortunate" and "disappointing" the AAI decision to oppose proposed reduction in charges at Delhi airport by 78%, International Air Transport Association (IATA) has said the move would prove detrimental to both passengers and airlines.

On the contrary, lower airport fee would stimulate the traffic growth at the Delhi Airport as it would bring down airfares to an affordable limits, it said.

"It is unfortunate and disappointing that AAI has taken a very short-term view on the Delhi Airport charges by contesting against the proposal of the independent regulator to reduce these inflated charges," IATA Regional Vice President for Asia Pacific Conrad Clifford told PTI.

His statement came following AAI's opposition to the proposal on the ground that it would adversely affect its bottomline.

Airport Economic Regulatory Authority (AERA) had in January proposed a 78% reduction in charges at Delhi Airport for the second five control period (April 2014-March 2019), as against a massive 346% hike allowed by it to DIAL in May 2012.

DIAL is a joint venture between Airports Authority of India (AAI) and GMR-led consortium, with each entity having 26% and 74% stake.

AAI ceded control of the Delhi airport to DIAL under a public-private partnership agreement in 2006 that mandated a 46% revenue share to the former.

Emphasising that a reduction in charges as against a huge increase of over 340% earlier would help stimulate traffic growth the airport, Clifford said this would in turn benefit both the airport operator as well as the Indian economy as a whole.

"To keep the tariff artificially high just to support the high revenue-share and high-tariff aspirations of AAI and DIAL respectively, would only come at the expense and the detriment of the interests of the Indian consumer and the airlines," he said.

The AAI could suffer a massive revenue loss of Rs 900 due to the proposed slashing of charges for landing, parking and other support services at Delhi Airport, a senior AAI official had said last week while opposing any such move.

DIAL and AAI had benefited from AERA's decision in 2012 in the tariff escalation for Delhi proposed in the first control period. The first control period ended on March 31, 2014.

IATA believes that as long as AERA has carried out its evaluation in a transparent and objective manner, this should be respected, Clifford said.