The Delhi International Airport (DIAL) has alleged that Air India has misappropriated the airport and user development fees (ADF, UDF) levied at both Delhi and Hyderabad airports. In a letter to the aviation ministry, the private airport operator has said that the national carrier has not opened an escrow account to deposit various charges collected from the passengers and to be passed on to the airport operator.
According to an aviation ministry official, AI owes about R700 crore to both Hyderabad and Delhi international airports. Dues also include the fee that is charged to passengers for providing security forces. The letter comes in the wake of aviation ministry’s decision to abolish ADF at DIAL and Mumbai International Airports (MIAL) with effect from January 1. The move has left the promoters ? GMR in case of DIAL and GVK for MIAL ? jittery. They are planning to approach the Airports Economic Regulatory Authority of India (AERA) to increase other charges including landing and parking of the aircraft to meet the funding gap.
Under the operation, maintenance, development agreement (OMDA), private airport developers were allowed to bridge the funding gap incurred during the modernisation and expansion of the airports through levy of ADF for a certain period of time. However, the comptroller auditor general (CAG) of India had raised questions against such provisions in case of Delhi airport and alleged that undue favours were given to the private developers.
?If ADF is abolished, the funding gap would be of about R1,500 crore. I do not think our other shareholders ? Fraport and MAHB ? would like to put in additional money as they are nearing the end of the statutory seven-year association with the project. Besides, lenders may have serious concerns on increasing DIAL?s debt levels further,? Sidharth Kapur, chief financial officer (CFO), GMR Airports, told FE. He said, in such a case, the company would look at sending a proposal to AERA to increase other charges.
The board of directors of MIAL, too, are going to hold meetings with their lenders and other stakeholders to work out the equity infusion plans. ?We will study the current development, assess its impact and means of finance. After consulting with our board of directors, partners and lenders, we will respond to the relevant authorities, in due course of time,? the MIAL said.
The total project cost for Delhi airport is R12,857 crore and R12,380 crore for Mumbai airport. As of March, DIAL shareholders have put in R2,450 crore as share capital while it has a borrowing of over R5,000 crore. MIAL, on the other hand, had planned to raise R1,200 crore through equity, R4,231 crore through debt and remaining through other means, including real estate deposit and development fee, to finance the project.
The expected financing gap in case of MAIL will be around R4,200 crore if the ADF is abolished. ?Even if we go for further borrowings, the interest cost is going to go up. Which would again has to be recovered in some form or other,? a MIAL official said on condition of anonymity.
The aviation minister on Tuesday asked the Airports Authority of India (AAI) to infuse R288 crore in MIAL and R102 crore in DIAL, a move that AAI has been avoiding for sometime due to funds constraints. An AAI official said the government-owned airport developer was now in a position to infuse equity as most of its major projects were in the process of completion.