Govt plans to tweak revenue model in private airports

The ministry feels that the hybrid model will incentivise the operator of private airports.

Written by Mihir Mishra | New Delhi | Published: January 3, 2014 1:46 am

Flying out of all six airports that are in the process of being privatised — Chennai,Kolkata,Jaipur,Lucknow,Guwahati and Ahmedabad — is likely to get expensive once the privatisation process is through as the civil aviation ministry has decided to follow the ‘hybrid till’ model and set aside a portion of non-aeronautical revenues for the airport operator.

Not all revenues — aeronautical and non-aeronautical — collected at these airports will be accounted for during the calculation of charges by the airport regulator under the ‘hybrid model’ than under the ‘single till’ model followed currently,where collection from both streams are taken into account. By apportioning a part of the revenue stream to the operator under the ‘hybrid till’ model,the user charges would consequently go up.

“We have decided to follow hybrid model at these airports by taking 60 per cent of the non-aeronautical revenues into account while calculating charges at these airports,and leaving the remaining 40 per cent for the airport operator,” said a senior ministry official.

However,compared to the Delhi and Mumbai airports,the new set of six airports are likely to be less expensive as in both the airports that were privatised earlier,only 30 per cent of non-aeronautical charges are taken into account.

The civil aviation ministry has finalised the model concession agreement (MCA),which is to be cleared by the new aviation secretary Ashok Lavasa. The ministry,in its MCA,has also decided that the charges at these airports will be calculated by the Airports Economic Regulatory Authority. The Planning Commission’s draft had earlier suggested that the charges be fixed prior to the bidding and should increase on the basis of the rise in the wholesale price index.

The ministry feels that the hybrid model will incentivise the operator of these airports.

“Leaving 40 per cent of the revenues to the airport operator will act as an incentive for the operator. The airport operator will now innovate to get maximum revenues from non-aeronautical side,hence,increasing the revenue share to the government,” said the ministry official.

Another ministry official said that providing 40 per cent to the prospective airport operators will ensure that there are enough bids.

“We need to have a policy in place to ensure that there are enough takers for these road projects and hybrid model will ensure that,” said the official. A decision has been taken that the private airport operators will pay lease rental to the Airports Authority of India (AAI) for using assets created by them.

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