New Delhi: Since 2006 when the aviation sector was liberalised, tariff fixation has been fraught with delays and disputes, with airport operators and airlines even slugging it out in legal battles to ensure fair tariffs from the regulator. To pre-empt such disputes and push private investment, the ministry of civil aviation (MoCA) has proposed under the NABH (NextGen Airports for BHarat) Nirman initiative, a new transaction system for greenfield airports built under the public private partnership (PPP) model.
This offers predictability of tariffs to concessionaires and other stakeholders, with a pre-determined structure setting rates for services like parking and landing airlines and passenger service fee. Thus, airport tariffs would be set before the rollout of the bid document for construction of airports, a significant shift from the present practice of choosing the bidder which offers the highest revenue share to the government. At present, five PPP airports – Delhi, Mumbai, Bengaluru, Hyderabad and Kochi – operate under the revenue-sharing system, with tariffs being set by the Airports Economic Regulatory Authority (AERA) for five years.
In the existing system, AERA considers both aeronautical and non-aeronautical revenues to arrive at charges for airport use. The new model offers developers freedom to earn returns from non-aeronautical sources. The government thinks a longer concession period of 40 years and liberalised norms for real-estate development could help attract foreign investment.
17/09/18 Arun Nayal/Financial Express
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This offers predictability of tariffs to concessionaires and other stakeholders, with a pre-determined structure setting rates for services like parking and landing airlines and passenger service fee. Thus, airport tariffs would be set before the rollout of the bid document for construction of airports, a significant shift from the present practice of choosing the bidder which offers the highest revenue share to the government. At present, five PPP airports – Delhi, Mumbai, Bengaluru, Hyderabad and Kochi – operate under the revenue-sharing system, with tariffs being set by the Airports Economic Regulatory Authority (AERA) for five years.
In the existing system, AERA considers both aeronautical and non-aeronautical revenues to arrive at charges for airport use. The new model offers developers freedom to earn returns from non-aeronautical sources. The government thinks a longer concession period of 40 years and liberalised norms for real-estate development could help attract foreign investment.
17/09/18 Arun Nayal/Financial Express
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