1. Hybrid till revenue model will make air travel expensive: IATA

Hybrid till revenue model will make air travel expensive: IATA

Global airlines body IATA today expressed "concern" over the hybrid model for fixing charges at airports built under PPP model, saying it would make Indian airports more expensive and render tariff regulator "toothless"

By: | New Delhi | Published: June 21, 2016 10:33 PM
cabinet, airports authority of India, memorandum of understanding, narendra modi There are three models to calculate charges at airports – single till, double till and hybrid till.(PTI)

Global airlines body IATA today expressed “concern” over the hybrid model for fixing charges at airports built under PPP model, saying it would make Indian airports more expensive and render tariff regulator “toothless”.

There are three models to calculate charges at airports – single till, double till and hybrid till.

International Air Transport Association’s regional vice president for Asia Pacific Conrad Clifford said the draft civil aviation policy stated that tariff at “all future airports” will be calculated on a hybrid till basis.

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However, the final policy states that “future tariffs at all airports” will be calculated on a hybrid till basis.

“It contradicts one of the stated intentions of the NCAP – to make flying affordable,” he said.

“We will be approaching the civil aviation ministry to clarify the seemingly minor change in the wording, which has a major impact on the airport charges landscape in India,” Clifford said.

Even as he termed the final aviation policy a step in the “right direction”, Clifford said, “We are concerned with the way the policy on hybrid till was written.”

In the single-till model, both aeronautical and non- aeronautical charges are taken into account for fixing landing and parking charges.

In the double-till model aeronautical charges are calculated taking into account revenues from aeronautical and non-aeronautical charges on the basis of collections from non-aeronautical.

In the hybrid model, the charges are calculated by taking all the aeronautical and 30 per cent of the non-aeronautical revenue into account.

According to IATA, this change will impact the basis for tariff determination for private airports in India, and also signal national airports operator AAI to switch from the single-till approach used currently, to the hybrid-till.

“This makes AERA (Airports Economic Regulatory Authority) a toothless entity. Passenger charges in India will increase, making air travel more expensive,” Clifford said.

The government had proposed in the Draft Aviation Policy that for the airports developed by state governments, private sector or in PPP mode “tariff at all future airports will be calculated on a hybrid till basis.

30 per cent of non- aeronautical revenue will be used to cross-subsidise aeronautical charges. In case the tariff in one particular year comes out to be excessive, the airport operator and regulator will explore ways to keep the tariff reasonable, and spread the excess amount over the future”.

However, as against this, the NCAP announced last week states that “to ensure uniformity and level playing field across various operators, future tariffs at all airports will be calculated on a hybrid till basis, unless otherwise specified for any project being bid out in future.”

As per the policy, 30 per cent of non-aeronautical revenue would be used to cross-subsidise aeronautical charges.

“In case the tariff in one particular year or contractual period turns out to be excessive, the airport operator and regulator will explore ways to keep the tariff reasonable, and spread the excess amount over the future,” the final policy stated.

The NCAP has reduced economic regulation in India to a single bullet point by mandating hybrid till as the basis for tariff determination, while being silent on other critical aspects of economic regulation, IATA said.

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