The civil aviation ministry has decided to overrule the objections of the Comptroller and Auditor General (CAG) on GMR’s Delhi Airport forming joint venture companies in areas like retail and cargo to enhance its revenues from non-aeronautical streams.
The CAG had asked the ministry to examine the entire issue of Delhi International Airport Ltd (DIAL) forming such JVs as it could lead to loss of revenue for the Airports Authority of India. The agreement between DIAL and AAI mandates the former to share 46% of its annual revenue with the latter.
The apprehension arose because as far as operation and maintenance of airport is concerned the revenue would be shared between GMR and AAI in proportion to their equity stake. But in case of other JVs of DIAL there would be a third party also so revenue of AAI could come down.
Sources said that the civil aviation ministry has brushed aside such apprehensions after seeking the opinion of the attorney general, which states that there’s no clause which refrains DIAL from setting up such JVs.
However, the ministry is proposing to specifically lay down the areas where such partnerships can be entered into.
The matter had come to surface when in November last the Airports Economic Regulatory Authority of India (Aera) chairman Yashwant Bhave wrote to the civil aviation secretary that formation of such JVs could have serious regulatory implications.
Following this the ministry had sought AAIs views on any revenue loss to which the latter said that it instead stood to gain. It then sought the opinion of the AG, which said that there nothing wrong in DIAL having such JVs.
When contacted a DIAL spokesperson said, “These 11 JVs are in respect of non-aeronautical services in the areas of duty free, fuel supply, advertisement, car parking, F&B, IT services & cargo. Outsourcing of non-aeronautical services was envisaged in the bidding itself and also is the basis for offering 46% revenue share to AAI. The operation, management and development agreement (OMDA) specifically permits outsourcing of non-aeronautical services. The agreement also permits DIAL to invest in the JVs. There has been no intent whatsoever to divert revenue and reduce AAI?s revenue share in any way”.