Airports to soon face efficiency test — Know what triggered the move

By: |
Published: March 10, 2019 5:35:40 AM

The regulator wants to determine if tariffs imposed are just or not.

The regulator also hopes to fix a benchmark for ideal operating costs from tariff determining exercise at Delhi and Mumbai that can be applied at other airports.

Airport operators may soon have to face scrutiny over efficiency of costs incurred at their aerodromes as the regulator feels some reported expenses are high, which burden the passengers. Airports Economic Regulatory Authority (AERA) is planning to conduct efficiency studies, starting with Delhi and Mumbai airports, which are due for tariff revision from April 2019.

Under the efficiency study, the regulator wants to determine if costs like maintenance and labour are reasonable for fixing tariffs. Airport tariffs mainly comprise user development fee (UDF) paid by passengers, and parking and landing charges levied on airlines. At Delhi, for instance, a flat fee of Rs 77 is charged on each departing passenger while the carriers pay Rs 171-228/MT (metric tonne) for landing aircraft and Rs 7.40/MT as parking fee.

“So far (for tariff determination) we have been taking whatever costs that are reported by the airport operators. They could be too high and unnecessary. That is why it is important to know if those costs are fair and because ultimately passengers have to bear it,” a civil aviation ministry official said.

Currently, airport operators give an operating cost certificate to the AERA which is considered while deciding tariffs across the airports. The airport tariffs are set for a duration of five years called control period.

The regulator also hopes to fix a benchmark for ideal operating costs from tariff determining exercise at Delhi and Mumbai that can be applied at other airports.

“There is a global benchmark for costs like these. We want to have a standard model for our airports,” the official said. AERA is yet to appoint consultants to conduct efficiency study at these airports.

The official said airlines too have raised the issue of high operating costs at airports with the ministry.

Airport tariff exercise has witnessed a tug of war between airlines, airport operators and consumer groups in the past with the cases settled at the Supreme Court. While tariffs at Delhi’s IGI airport are set to go up due to proposed expansion work, the airport fees at Mumbai airport is likely to come down.

AERA chairman S Machendranathan had said in September last year that the regulator wanted to focus on monitoring quality of service at airports as the tariff fixing regime had settled. AERA handles 31 major airports handling more than 1.5 million passengers in a year. ”

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition
FinancialExpress_1x1_Imp_Desktop