AAI plans to charge lease rental on six airport assets

Airports in Chennai,Kolkata,Jaipur,Lucknow,Guwahati and Ahmedabad are up for privatisation. The AAI’s Key Infrastructure Division (KID) is preparing the concession agreement for the award of these airports.

The agreement is being prepared afresh after the civil aviation ministry decided to do away with the Planning Commission’s draft of the MCA.

The Planning Commission’s draft did not have any such clause on lease rentals. It has argued that a fixed charge would mean lower revenue share for the exchequer,said officials in the civil aviation ministry.

“We need to recover our investments made in all these projects and the lease rentals will help us recover the same,” said the AAI official.

According to a timeline set by the Prime Minister’s Office,privatisation of these airports was to be completed by March-end. With the decision to redraft the agreement,the deadline is likely to be missed.

The civil aviation ministry has,meanwhile,decided on some guidelines to be followed at the airports to be privatised.

The ministry has been decided that revenues from both city side (mainly from hotels,aero city) and airports will form a part of the revenue that is to be shared with AAI by the party selected through bidding. The plan panel wanted only the revenue from airports to be shared.

It was also decided that airports will be awarded for 30 years and any extension will be given based on the review of the work by the selected party.

There has been no decision on the method to be followed for determining landing and parking charges. The Planning Commission had proposed a model of fixing landing and parking charges prior to the award and linking its increase to the wholesale price index (WPI). This model,it said,would have lead to lowering charges over a period of time.

The ministry opposed it on the grounds that linking it to WPI introduces an upward bias to the charges. The Plan panel’s mechanism had been termed as “flawed” by the International Air Transport Association.

Privatisation

* The lease rentals will be a fixed charge to be paid monthly and spread over the concession period to recover the cost of construction of the airports

* Airports Authority is working to add this clause in the model concession agreement (MCA)

* The Planning Commission’s draft of the MCA did not have any such clause on lease rentals.