Mumbai: Airlines and passengers using the Rajiv Gandhi International Airport in Hyderabad may have to pay higher usage charges soon, with the government allowing the airport operator to fix tariffs on a model that promises higher revenue.
GMR Infrastructure Ltd, whose unit GMR Hyderabad International Airport Ltd (GHIAL) runs the airport, on Thursday said the aviation ministry has asked the airport tariff regulator to adopt the so-called hybrid till model to set tariffs.
In the single till model, all airport activities—aeronautical and non-aeronautical—are taken into account to determine airport charges. So airlines and passengers are charged less. This model, currently followed at the Hyderanad airport, is also followed in UK airports such as Heathrow and Gatwick. In contrast, only aeronautical activities are considered under the dual till model, which private airport operators prefer since it will fetch them higher revenue. Under the hybrid model, 70% of non-aeronautical revenues are also taken into account. This is the tariff model proposed for the upcoming Navi Mumbai airport. The privatized airports in Delhi and Mumbai also operate under the hybrid till model.
Airports earn non-aeronautical revenues such as rentals from retail outlets and airport parking charges, besides aeronautical revenues from flight operations.
In a statement to BSE on Thursday, GMR said the ministry “vide its order dated 11 June 2015 has directed the Airport Economic Regulatory Authority (AERA) under section 42(2) of the AERA Act, 2008 to adopt a hybrid till with 30% cross-subsidization for tariff determination”.
This means GMR needs to account for only 30% of its non-aeronautical revenues to determine tariff, instead of 100%.
After an AERA order on 24 February 2014 directed adoption of the single till tariff model for Hyderabad airport, GMR had moved the Andhra Pradesh high court, complaining that the decision was not in line with the original agreement with the government.
“After various hearings, the court had directed the Ministry of Civil Aviation to pass an order on the appropriate till methodology to be used for tariff determination of GHIAL,” the GMR statement said.
A senior executive with the GMR group, who did not want to be identifed, said the new model will change the fortunes of GHIAL and help the company log profits faster than expected.
“It is not sure whether AERA will take up the issue with the government. It is good news for GMR and bad news for airlines and passengers,” said a senior airport consultant, requesting anonymity.
Mint could not immediately contact AERA for a comment.
GHIAL’s aeronautical revenues in the March quarter fell 81.3% to Rs.20.3 crore, from Rs.108.6 crore in the year-ago period. In the same period, non-aeronautical revenue rose 11%, from Rs.75.8 crore to Rs.84.2 crore, and cargo revenue rose 6.6%, from Rs.3 crore to Rs.3.2 crore. The company had to take a negative impact of Rs.340 crore after user development fee was discontinued.
The airport company had registered a net loss of Rs.22.9 crore in the March quarter, against Rs.18 crore in the year-ago quarter.
