Delhi, Mumbai airport charges: AAI eyes Rs 1,500 cr revenue loss on AERA order to cut fees by 90%

The Airports Authority of India (AAI) could lose revenues of Rs 1,000-1,500 crore if the orders of the Airport Economic Regulatory Authority (AERA) directing the Delhi and Mumbai international airports to reduce airport charges — landing, parking, cargo, user and development fees — by as much as 90% is implemented.

While the order directing the Delhi International Airport (DIAL) came in December 2015, the one relating to Mumbai International Airport (MIAL) came in September this year. The order relating to Delhi airport was challenged by DIAL in the Supreme Court, which has directed AERA’s appellate tribunal to look into the matter and in the interim put a stay on AERA’s direction. The one relating to MIAL is still uncontested.

According to the operation management and development agreement (OMDA) AAI has with DIAL and MIAL, it gets 45.99% and 38.7% share of the total revenues of DIAL and MIAL, respectively. Earnings from these two airports constituted almost 31% of the revenues for AAI in 2015-16. It is this revenue which will get hit if AERA’s order is implemented.

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On the back of increasing revenues from DIAL and MIAL, AAI had reported a 16.57% y-o-y rise in its revenue to Rs 10,824 crore in FY16. Net profit was up by almost 30% to Rs 2,537 crore. “We are likely to maintain our financial performance this year, but from FY18 our revenue share from Mumbai and Delhi airports may come down if the regulator’s order is implemented. Our revenues may come down by a third to Rs 1,000-1,500 crore in that case,” an AAI official said.

As a result, AAI is focusing on increasing revenues from cargo, non-aeronautical revenues from other airports and monetisation of assets like land to compensate any potential loss of revenues in future from DIAL and MIAL.

“We have appointed a couple of consultants to help us on how to fully exploit the commercial potential of terminal building. We are trying to monetise land and have floated expression of interest for airports in Bhubaneswar, Tirupati and some other places. So monetisation of land, increasing revenues inside and outside the airport will be our focus revenue streams areas along with cargo,” the official said.