AAI pressured to change stand on tariffs

New Delhi: The Airports Authority of India (AAI) has changed its mind on a critical part of a proposed new tariff regime for India's airports.
AAI, which had earlier backed a method of tariff fixation known as dual till, has now changed its mind and wants an alternative approach called single till. "This change in stance came about because of informal pressure from AERA, the regulator," according to an official of the ministry of civil aviation, who requested anonymity.
The AERA (Airports Economic Regulatory Authority), the body that regulates India's airports, had sought feedback from stakeholders such as AAI and the owners of private airports on a set of new draft regulations. Airport owners make money in two ways. One, from airlines, their only user; and second, from facilities like shops and bars located inside the airport. This second source of cash is known as non-aeronautical revenue.
In case of the so-called single till tariff, the charges to airlines are kept low because they are subsidised by higher prices paid by the users of other facilities such as shops. In case of a dual till tariff there is no such cross-subsidisation.
Dual till is preferred by airports the world over as it encourages them to develop alternative sources of revenue from commercial sources and also makes them financially robust, enabling them to handle future capital expenditure. Aviation industry experts say that dual till airports show better performance standards in the long run without necessarily leading to higher charges than single till airports.
31/03/10 Times of India

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Categories: Airports Mar 2010