Aviation ministry, AERA at loggerheads over method of defining revenues

New Delhi: The civil aviation ministry is working on new policy for the economic regulation of greenfield airports, overriding the airport regulator's existing guidelines and opening another chapter in their ongoing tug-of-war.
The Airports Economic Regulatory Authority (AERA) and the ministry are at odds over the method of calculating revenue for airport operators. While AERA says the 'single till' method favours flyers and airlines by keeping airport charges low, the ministry says it does not create an environment conducive to investments.
"The sector needs investors and, therefore, greenfield airports may need a different policy because the proposed 'till' by AERA may not be possible to implement as there are doubts if it can ensure the promised return on equity to operators and attract enough investors," a senior ministry official said.
The ministry held a meeting last month to outline the regulatory philosophy for greenfield airports.
Experts say the new policy may not only exempt GMR-owned Hyderabad and GVK-owned Bengaluru greenfield airports from the current method of determining returns, but also subvert a mechanism that AERA has decided on through transparent consultation.
13/02/12 Anindya Upadhyay/Economic Times

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Categories: airports Feb 2012