The Geneva-based global airline body International Air Transport Association (IATA) has objected in the “strongest possible terms” to the proposed increase in airports tariff in Delhi being considered by the Airports Economic Regulatory Authority (AERA).
“Despite the proposed increase being a significant moderation from the increase proposed by Delhi International Airport Ltd (DIAL) would still have a severe impact in the viability of airlines operating IGI airport. AERA must not allow such a quantum of increase in airport tariff to be loaded on the industry. It would make Delhi the most expensive airport in Asia if not the world,” the Communication from Mr Malvyn Tan, Assistant Director, Industry Charges, Fuel and Taxation states.
DIAL has called for an increase of more than 700 per cent in airport charges, while AERA is said to be in favour of allowing a close to 330 per cent increase in charges. With the Ministry of Civil Aviation writing to AERA that it believes a 18-20 per cent return on equity in airport sector is justified, a final decision on how much airport charges should be increased is expected by the end of the month. IATA points out that comparison on a purchasing power parity basis places Delhi airport in its own category and adds that the proposed increase in charges would not only put air travel out of the reach of Indian consumers, but also jeopardise the strong growth that the Indian aviation has been experiencing and be a set back to Delhi's aspiration to be a major aviation hub.
It has also called on the Indian Government to “seriously consider” reviewing the existing concession agreement existing between DIAL and Airports Authority of India to reduce the quantum of tariff increase.
The global airline body has also pointed out that DIAL's allocation of close to 90 per cent of asset to the aeronautical group is arbitrary and too high if comparison is made to the experience at European airports.
“In the absence of an objective formula, a 50:50 split to aeronautical and non-aeronautical groups would be fairest,” the communication adds.