Operators DIAL and MIAL have challenged a TDSAT verdict striking down their hypothetical regulatory asset base (HRAB) claim, which refers to the capital value of the assets used to calculate the costs of the regulated services, for the first two years of these airports during PPP era, which started about 20 years ago
NEW DELHI: As a Rs 50,000-crore sword hangs over air travellers at Delhi and Mumbai airports, the Centre has decided to back passengers in an old legal battle between airport operators and the Airports Economic Regulatory Authority of India (AERA), which has now reachedSupreme Court, where the matter will be heard on Dec 3.The case relates to “hypothetical regulatory asset base (HRAB)”, the capital value of the assets used to calculate the costs of the regulated services, for the first two years of these airports during the PPP era, which started about 20 years ago.After a protracted legal battle followed by the recent Telecom Disputes Settlement and Appellate Tribunal (TDSAT) judgment, the case has now reached SC, where the two operators of the Delhi and Mumbai airports, DIAL and MIAL, have challenged the tribunal’s order striking down theirRs 50,000-crore HRAB claim.”Aviation ministry is going to back AERA in this case as the implications of fares on air travellers are immense. If the private operators of Delhi and Mumbai airports win the case, we are looking at about Rs 50,000 crore getting due to these two operators, which could mean a manifold hike in both user development fees (UDF) paid directly by passengers, and airline landing and parking charges that air carriers factor in while calculating airfares. Overall, the burden for passengers could increase majorly. So, govt has decided to back AERA completely,” officials said, adding UDF alone could rise by about nine times in Delhi and 21 times in Mumbai.Civil aviation ministry estimates domestic UDF at Delhi could rise from Rs 129 by almost 10 times to Rs 1,261, and at Mumbai from Rs 175 by 22 times to Rs 3,856.In early 2006, Delhi and Mumbai airports were handed over to private players for being developed in PPP (public private partnership) mode. Until then, the state-run Airports Authority of India used to have common charges for all its airports.AERA, which determines tariffs for major airports, came into being in mid-2009. “The dispute essentially is for the period between the airports being handed over to GMR Group in Delhi and the then GVK Group in Mumbai, and the time when AERA started deciding aeronautical tariffs. If this amount of Rs 50,000 crore becomes due to the developers, the same will be recovered through passengers paying more, and this has to be fought tooth and nail legally. Aviation ministry will do just that,” said sources.”DIAL and MIAL want a much higher value of assets they got in 2006. What were the assets that time at the two ariports? Run-down terminals barely worth a few hundred crores. They want value of non-aero assets to be added in the regulatory asset base. If that happens and value of non-aero development like hotels, malls and other commercial development is added, the entire model of brownfield airport development will go for a toss as it will come too expensive for users,” officials said.
