'No hike in Delhi, Mumbai airport user fee'

The country's airports regulator, Airports Economic Regulatory Authority (AERA), has rejected demands of the Delhi and Mumbai airport to hike airport user charges by 10 per cent from the 2006 levels with a retrospective effect from May 2009. Airlines have to shell out airport charges for usage of services like landing, parking and air navigation fees. In its order issued recently, the regulator has said that both the airports have failed to justify the demand for hike in charges and the airport operators were allowed a lO per cent hike in 2009. The authority has said that there is no case for hiking aeronautical charges automatically by 10 per cent during the third year following the completion of mandatory projects, at the start of the fourth year and every year thereafter. According to the regulator, the revision of charges cannot be determined in isolation and several other factors have to be taken into consideration. "One of these factors being the concessions offered by the Central government," AERA said in its order. 
AERAs stand has been backed by the civil aviation ministry in its views on the matter. The Delhi and Mumbai airports, privatized in 2006, are operated by GMR-led Delhi International Airport Limited (DIAL) and GVK-led consortium Mumbai International Airport Limited (MIAL) respectively. As per the state support agreement, the airport charges could be hiked by 10 per cent in case the concessionaire completes and commissions all the mandated facilities in the first two years of operation. The ministry had earlier allowed both DIAL and MIAL to hike charges by 10 per cent upon completion of two years, even though they had failed to complete the mandated projects within the stipulated time limit In their proposal for hiking charges, DIAL and MIAL had argued that the privatization agreement allowed them to hike charges by ten per cent, with authority's approval, on commencement of fourth year, ie 2009-10, and for every year thereafter. 
Aeronautical charges form 80 per cent of the total revenue stream for an airport. Domestic airlines are dead opposed to any upward revision in the charges as they say recovery process is still underway. It will also mar traffic growth as well place additional burden on airlines, airlines have said. National carrier Air India has in fact said that the charges should not be hiked for another two years.

---

The above article was extracted from Skyline updates of Skyline College. Skyline College is amongst the top MBA and BBA institutes in Delhi, Gurgaon (NCR).