AAI staring at revenue loss as AERA mulls tariff cut for Delhi

The state-run Airports Authority of India (AAI) could suffer a revenue loss of Rs 900 crore due to the 78 per cent reduction in levies for Delhi Airport proposed by tariff regulator AERA, a move that sources said would impact its ongoing projects.
Airport Economic Regulatory Authority (AERA) had, in a consultation paper circulated to all stakeholders in late January, proposed slashing of charges for landing, parking and other support services at Delhi Airport by a massive 78 per cent for the second five-year tariff fixation period (April 2014-March 31, 2019).
AERA had asked the various stakeholders to submit their comments on the proposed reduction by April 10.

"The proposed 78 per cent reduction in tariff for the airport would mean a revenue loss of around Rs 900 crore for AAI," the sources said.
The proposal, if implemented, would adversely impact several ongoing airport projects of the AAI, they added.
DIAL (Delhi International Airport Ltd), the joint venture between AAI and a GMR Group-led consortium, runs the Delhi Airport. GMR holds 54 per cent stake while AAI owns a 26 per cent share.

The Malaysia Airports Holdings Berhad (MAHB) and Frapport of Germany each hold 10 per cent.
As per the Operations, Management and Development agreement (OMDA) for Delhi Airport, AAI gets 46 per cent of the revenue.

AAI's fees from the Delhi and Mumbai airports had more than doubled from Rs 1,035 crore in 2010-11 to Rs 2,673 crore in the 2013-14 fiscal. During 2013-14, AAI reported a profit of Rs 796 crore.
Alleging that the tariff regulator was not "consistently following" the policy to calculate the Aggregate Revenue Requirement (ARR) of the project for the second control period, AAI has already taken up the issue with the Civil Aviation Ministry and requested it to intervene and ensure that the PPP project remains viable, sources said.
Following the last revenue projections, AERA had allowed DIAL to hike charges by 346 per cent, effective May 15, 2012, as against a 775 per cent increase proposed by the joint venture at the time.