Mumbai: The Civil Aviation Ministry will make its stand clear on the rate of return that airport operators can seek to generate on the equity brought in by them by early next month. The ministry has asked the Airports Authority of India (AAI) to hold talks with investment banks such as SBI Capital Markets Ltd to recommend a plausible return, according to two government officials who did not want to be named.
The aviation ministry is considering working on two different slabs for returns on equity invested in existing airports and those built from scratch depending on the risk level, said one government official. The risk, for example, could be more for an airport built from scratch compared with an existing facility like Delhi, which has an existing revenue stream. A higher risk would merit a higher return, according to a report by Tarun Shukla of Mint.
GMR Infrastructure Ltd-led Delhi International Airport Pvt. Ltd (DIAL) has sought a return on equity investment from the Airports Economic Regulatory Authority (AERA) of about 24 per cent besides an 800 per cent increase in airport tariffs. The move could potentially put the government in direct conflict with the airport regulator. AERA rejected that request and granted it a 16 per cent rate of return besides a 340 per cent increase in airport tariffs spread across two years. The final order on the move is expected only after all stakeholders, including airlines, send in their views. An AERA official said the ministry has said it too will give its final views on equity returns by the second week of February after which the regulator will finalize its position on DIAL tariffs. “It is always good to have a clear and transparent view,” this official said.
27/01/12 Travel Biz Monitor
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