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Private operators say that when they got the airports, the actual value of the land and assets was much higher. Therefore, they should be given Rs 50 thousand crores. If the Supreme Court’s decision is in favor of the operators, then the fees charged from passengers and airlines at Delhi and Mumbai airports will increase.
New Delhi. The Hypothetical Regulatory Asset Base (HRAB) dispute between the Airports Economic Regulatory Authority and the private companies operating Delhi and Mumbai airports has now reached the Supreme Court. This case will be heard on December 3. Private operators say that when these airports were given to them, their valuation was high but they were undervalued. That’s why they are now asking for Rs 50 thousand crores. Whereas the government is opposing it. If the operators win this case in the Supreme Court, then traveling from Delhi and Mumbai airports will become expensive.
This is because airport operators will recover this amount from passengers and airlines through increased charges. It is estimated that user development fees may increase by almost 10 times in Delhi alone. Where currently UDF is Rs 129, it can increase to Rs 1,261. Its impact may be even bigger in Mumbai, where UDF may increase from Rs 175 to Rs 3,856. This will make air tickets expensive.
what is the whole matter
According to a report in Times of India, this dispute is regarding ‘Hypothetical Regulatory Asset Base’. The value of airport properties is calculated to determine the fees charged to passengers and airlines at the airport. On the basis of this evaluation, it is decided how much user charge, landing charge or parking charge the airport can charge. But DIAL and MIAL, the private operators of Delhi and Mumbai airports, claim that the value of the airport properties they got in 2006 was much higher. That’s why they are demanding Rs 50,000 crore.
This controversy did not arise suddenly, rather it started in 2006. In the same year, Delhi and Mumbai airports were handed over to private companies under the public-private partnership (PPP) model. Earlier, both these airports were run by the Airports Authority of India (AAI) and the fees for all the airports were the same. In 2009, the Airports Economic Regulatory Authority (AERA) was formed, whose job is to decide the charges at major airports. The dispute is about the period in between, i.e. from the airport being handed over in 2006 till it became fully operational in 2009.
Argument of private operators
Private operators say that when they got the airports, the actual value of the land and assets was much higher. Private companies also want that non-aeronautical properties like hotels, malls, offices to be built in the airport premises should also be added to the asset base. While the government argues that in 2006, these airports were in very poor condition, the terminals were dilapidated, old buildings and basic facilities were not in good condition. Their price could not have been more than a few hundred crores.
The government says that if this demand of private companies is accepted, then airport development in the country will become very expensive. Besides, airlines will also be burdened with rising charges, which they will add to the tickets. Therefore, the government has made it clear that it will fully support AERA in the Supreme Court and will strongly oppose this demand.
