Airports may get to cross-subsidise

The traditional airport development model hinges almost entirely on revenue generation from aeronautical activities and does not take non-aeronautical revenues into account.
But things are set to change, with the Union Cabinet on Friday approving an amended Airports Economic Regulatory Authority (AERA) Bill, 2007, which, among other things, provides for revenue cross subsidisation. The Bill also seeks to create a regulator for better airport infrastructure development.
The Bill has incorporated many suggestions of a Parliamentary Standing Committee and will be tabled in the next session of Parliament. It will take three months after being passed by both Houses for the Bill to be notified.
Aeronautical charges include fees airport developers charge airlines for landing and parking of aircraft, navigation etc. Non-aeronautical revenue comes from activities such as shopping malls, food courts and parking within the airport.
The Cabinet decision would allow AERA to examine the quantum of non-aeronautical revenue and factor this into the overall revenue generation for any airport project. Simply put, this allows private developers of non-metro airports to offer some of the unused land for development of hotels, conference halls, shopping malls etc and use the revenue so generated to cross-subsidise aeronautical charges airlines pay at present. This process would ideally bring down both the charges airlines have to pay to park and land aircraft etc as well as additional levy passengers have to pay to use airport facilities.
30/08/08 Sindhu Bhattacharya/DNA MONEY/Sify

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Categories: Airports Aug 2008