The Airports Authority of India (AAI) has said that it was not losing its share of revenue due to the financial model adopted by the GMR’s Delhi International Airport (DIAL), allaying fears of the airport economic regulator. The AAI has communicated this in a letter to the civil aviation ministry.
As per the concession agreement signed by DIAL and AAI, the latter is entitled to receive 46% of the revenue generated by the former. The airport regulator, Airports Economic Regulatory Authority of India (AERA) had in November 2010 written to the aviation ministry saying that AAI was losing revenue due to DIAL forming a number of JVs for several works without giving any role to AAI.
“By and large DIAL is following the same model for revenue generation which we follow. But after the airport regulator raised the issue of lower revenue share and a subsequent communication from the ministry we have got the whole thing assessed by our joint venture (JV) cell. We have not found any non-compliance of contractual obligation by DIAL,” a senior AAI official told FE.
AERA had earlier said that the ‘modus operandi’ adopted by DIAL to sub-contract works related to IT, parking and food and beverage could result into lower revenue share for public sector airport operator.
“If this (non-aero activities) revenue stream is now handled by a JV company on a revenue-share basis with DIAL (say 15% of the gross revenue) the private operator would receive Rs 15 only as against Rs 100 had it not sub-contracted the revenue stream,” AERA chairman Yashwant Bhave is understood to have written to the aviation ministry. “This would reduce the revenue share of AAI from earlier Rs 46 to Rs 6.90,” the regulator further wrote.
An aviation ministry official confirmed that AAI had written back to them saying that DIAL had not circumvented the provisions of the concession agreement.
Stressing that the financial model adopted by DIAL had serious implication, AERA had said that this would not only reduce the revenue share of AAI in real terms but also the same would be received by the airport operator after netting of cost.
