Jan. 06--MUMBAI -- The civil aviation ministry wants the Delhi airport to reduce its charges by half for the next five years, which the airport operator has appealed against.
New Delhi's Indira Gandhi International Airport, run by the GMR Group, has sought a directive from the Airports Economic Regulatory Authority Appellate Tribunal asking its regulator to put on hold the determination of user charges for the five-year period starting 1 April.
Delhi airport's first term of tariff fixation for five years ends on 31 March.
In an appeal dated 29 November, Delhi International Airport Ltd, or DIAL, GMR's airport company, has requested the tribunal to order Airports Economic Regulatory Authority (Aera) to hold tariff determination, citing unresolved financial issues including rate of return on equity and calculation of asset base.
In the appeal, DIAL argued that the adjudication of the present appeal has a direct bearing on the tariff determination as there are common principles and issues that have to be settled by the appellate tribunal before the tariff is determined for the second control period.
Mint has reviewed the letter.
A GMR Group spokesperson did not offer any comment for this report.
In April, DIAL had said its airport charges would drop by 50% as it expected to complete major capital expenditure of around Rs.12,500 crore on the airport before submitting its next application to Aera for approval of airport charges.
Union civil aviation minister Ajit Singh, in April, had said that the aeronautical charges of Delhi and several other airports would drop in the next two years along with the ADF (airport development fee paid by passengers) and UDF (user development fee).
Aera allowed Delhi airport to increase aeronautical charges by 346% from 15 May 2012, lower than its demand for a 775% hike, but even this was opposed by many airlines and the International Air Transport Association (IATA) said the charges would make Delhi airport the world's most expensive.
"Technically, GMR is trying to delay tariff fixation by Aera and trying to skip from lowering the tariff," said a civil aviation ministry official, requesting anonymity.
A second aviation ministry official said while an airline has to pay Rs.2,97,543 for landing a widebody Boeing B777 aircraft at Delhi airport, the tariff at Hong Kong airport is Rs.1,86,769 and at Dubai, Rs.85,023.
Malaysian low-fare carrier AirAsia X Sdn Bhd stopped flights to New Delhi and Mumbai from its Kuala Lumpur hub in March citing the steep increases in costs at the two facilities.
"DIAL's decision to appeal against the tariff determination is a disappointing development, and works against public interest," Albert Tjoeng, assistant director, corporate communications, IATA Asia Pacific, Singapore, said in an emailed statement.
Tjoeng said DIAL and the civil aviation ministry had several times in the past year spoken about a near 50% reduction of Delhi airport charges expected in the second regulatory control period.
"If the passengers and airlines were made to bear the burden of a 346% increase in charges due to Aera's determination in the first tariff control period, it is only fair to pass on any reductions through application of the same formula in the second control period, back to the passengers and the airlines," he said.
Tjoeng pointed out that seeking to disallow Aera from carrying out its essential function of tariff determination will only allow a continued focus on profit-maximization by the airport at the expense of the airlines and passengers. "Delhi's high airport charges continue to put a strain on the airlines operating to Delhi," he said.
Last year, the government's auditor slammed the civil aviation ministry for giving out Delhi airport and its land with a potential earning capacity of Rs.1,63,557 crore to DIAL, which made a total equity contribution of only Rs.2,450 crore.
Copyright 2014 - Mint, New Delhi
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