DIAL retail plan may skirt pledge to govt

New Delhi: In a departure from the practice of leasing out duty-free shopping space to a third party, Delhi International Airport Ltd, or DIAL, plans to award retail concessions based on a revenue-sharing model, with the winning bidder required to form a joint venture with the airport operator, three people close to the development said.
The plan by DIAL, which runs the airport in the national capital, would dilute the revenue it has pledged to the exchequer as part of a May 2006 privatization agreement, an aviation equity analyst insisted, although it is not clear that the proposal violates the 2006 pact.
A senior official of the Airports Authority of India, or AAI, India’s airports regulator, said the government will investigate the plan if it is seen as a way of skirting DIAL’s obligations under the agreement.
The analyst and the AAI official, as also four other people interviewed for this story, didn’t want to be identified.
A senior DIAL executive said the duty-free operator will be chosen on the basis of the highest revenue-share percentage it is willing to offer, and will hold a 51% stake in the joint venture. DIAL will own the rest. The partnership will be formed for 10 years and may be extended for five more years after that.
This executive did not want to be identified because he is not authorized to speak officially for DIAL. A spokesman for the airport operator declined to comment on the proposal.
Two senior executives of a global duty-free operator, one of whom attended a meeting on 2 April to discuss the proposal, confirmed the plan.
12/04/09 Rasul Bailay and Tarun Shukla/Livemint

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Categories: Airports Apr 2009