To determine airport tariffs, the dual-till norm has found takers in airport operators, while airlines have backed the single-till model (for the difference see table). At a hearing today, of a discussion paper on the regulatory process being framed by the Airports Economic Regulatory Authority of India (AERA), the airport operators claimed that single-till norm did not have any incentive for them to increase non-aeronautical revenue. The airlines emphasised single-till would benefit them as well as passengers.
“The UK system of single-till is not the best system. Most privatised airports have adopted dual-till,” said representatives of Delhi International Airport, Mumbai International Airport, Bengaluru International Airport and Greater Hyderabad International Airport. They added that the regulatory approach should incentivise investors in new airports. They argued that for greenfield airports, dual-till was the preferred route.
The single-till norm could reduce aeronautical charges (a component of the overall airport tariffs), as compared to dual-till in which the surplus from non-aeronautical revenues subsidise aeronautical activities.
International Air Transport Association (IATA), which leads and serves the airline industry, said the interest of users — airlines and passengers — would be best served by single-till.
“Today, the airlines are in a competitive environment. Any reduction in airport charges would help them keep afloat,” said IATA representatives.
Meanwhile, a representative of Cochin International Airport said it was in a unique situation where non-aeronautical activities included hospitals, amusement park and golf course, which were not strictly relevant to airport operations. Thus, the airport representative sought that these activities be kept out of the till system.
The association of private airports operators also sought a clarification on the application of the proposed regulatory framework to existing concession agreements. It wanted to know the manner in which some of the provisions in the agreement would be made consistent with the proposed guidelines.
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AERA Chairman Yashwant Bhave told Business Standard: “The existing concession agreements would have to be taken on board while determining the airport tariffs. This may necessitate modification of the overall framework.”
On investors’ confidence, Bhave said their expectations on weighted average cost of capital should be spelt out in the written submission. “This would enable the authority to come to informed decision in this matter.” According to him, AERA may issue guidelines on the regulatory framework by the end of April.
| What is Single-till? What is Dual-till? |