According to a report by Parul Chhaparia in Financial Chronicle, it may not be easy for airport developers — private or state-owned — to increase User Development Fee (UDF) collected from air travellers on the pretext of not being able to make enough money to repay their loans or get decent returns on investments. Instead, airport developers may be asked to partly cross subsidise air services operations from earnings through real estate in and around airport, hospitality, retail and other services. The Civil Aviation Ministry is understood to have favoured a hybrid till, as a revenue model that allows for apportioning revenue from aeronautical operations and non-aeronautical services. This is against single till model that was proposed by the Airports Economic Regulatory Authority (AERA) of India.
Sustainable revenue models are being worked out by AERA to enable companies like GMR group that developed Delhi airport and GVK group that are expanding the Mumbai international airport to make their operations commercially viable. Even state-owned airports developer, Airports Authority of India (AAI) has been pushing for a sustainable revenue model to run metro and non-metro airports. Three revenue models, single, hybrid and dual till are being considered by the AERA and Civil Aviation Ministry. In single till, the entire revenue generated from non-air business in airports is clubbed with that of air services.
In the case of hybrid till, only a certain percentage is clubbed, where as in dual till model there is no clubbing of revenues. Private airport developers, at least, in private admit that revenues from commercial and air services should not be clubbed. They have been pushing for flexibility to enhance development fees payable by air travellers. “We want to ensure that there is single revenue model for all airports, be it private or government. But, single till would not be very feasible as there is already a contract with Mumbai and Delhi airports on lines of a hybrid till. Our consultant has prepared the report. It should be out by next week,” a Civil Aviation Ministry official said.
“We are waiting for the Ministry’s response. We have proposed single till for all airports. Delhi and Mumbai airports under OMDA (Operation, Maintenance and Development Agreement) are supposed to cross subsidise 30 per cent of their aeronautical losses from non-air services revenue. That can be discussed with their boards,” stated Yashwant Bhave, Chairman, AERA. Private airport operators are not in favour of this. “Single till can be implemented only when airports are run by government departments where viability, performance and profit are not relevant issues to be considered. It is going to affect potential private investors. Privatisation has been successful. Now, there is no justification in changing this approach,” Satyan Nayar, Secretary General, Association of Private Airports Operators said.
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