NEW DELHI: In a move that will reduce airfares and airlines' cost of operations, the civil aviation ministry has asked the airport regulator to follow a normative approach to decide airport charges and do away with the current costplus method, an official said.
"It was decided that the cost-plus model approach is a wrong method to decide on airport charges, as all sectors prefer normative approach over cost plus and the airport regulator has been asked to work it out within the limitations of the existing agreements of private airports like Delhi and Mumbai," said the official who was present in a meeting between officials of the ministry, Airports Economic Regulatory Authority (AERA) and airlines last week.
Under cost-plus approach, the airport charges — comprising of landing and parking charges and user development fee — is determined by providing a certain return on investment to the cost of building the airport. In a normative approach the charges are fixed and does not depend on the cost of the project. Any move towards normative model will bring down airfares, too, as airlines pass on airport charges to passengers.
25/07/15 ET Bureau/The Economic Times
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"It was decided that the cost-plus model approach is a wrong method to decide on airport charges, as all sectors prefer normative approach over cost plus and the airport regulator has been asked to work it out within the limitations of the existing agreements of private airports like Delhi and Mumbai," said the official who was present in a meeting between officials of the ministry, Airports Economic Regulatory Authority (AERA) and airlines last week.
Under cost-plus approach, the airport charges — comprising of landing and parking charges and user development fee — is determined by providing a certain return on investment to the cost of building the airport. In a normative approach the charges are fixed and does not depend on the cost of the project. Any move towards normative model will bring down airfares, too, as airlines pass on airport charges to passengers.
25/07/15 ET Bureau/The Economic Times
