Government to Back Passengers Against Airport Fee Hike in Supreme Court
The Indian government is set to support air passengers in a Supreme Court case against the operators of Delhi (DIAL) and Mumbai (MIAL) airports. This legal battle revolves around a Rs 50,000 crore claim related to a "hypothetical regulatory asset base" (HRAB). If the airport operators win, passengers could face significantly higher charges.
What is the HRAB Claim?
The "hypothetical regulatory asset base" (HRAB) refers to the capital value of assets used to calculate the costs of regulated services at the airports. DIAL and MIAL are challenging a Telecom Disputes Settlement and Appellate Tribunal (TDSAT) verdict that struck down their HRAB claim for the initial years of the Public-Private Partnership (PPP) era, which began approximately 20 years ago.
Implications for Air Travelers
The aviation ministry fears that if DIAL and MIAL succeed in their claim, the resulting Rs 50,000 crore burden could lead to:
- A substantial increase in the User Development Fee (UDF) paid directly by passengers.
- Higher landing and parking charges for airlines, which would be factored into airfares.
Officials estimate that the domestic UDF could rise dramatically:
- Delhi: From Rs 129 to Rs 1,261 (approximately a nine-fold increase)
- Mumbai: From Rs 175 to Rs 3,856 (approximately a 21-fold increase)
Background of the Dispute
In early 2006, the Delhi and Mumbai airports were transferred to private operators under a PPP model. Before this, the Airports Authority of India (AAI) maintained uniform charges across all its airports. The Airports Economic Regulatory Authority of India (AERA), which regulates tariffs for major airports, was established in mid-2009.
The current dispute concerns the period between the airport transfers to GMR Group (Delhi) and the then GVK Group (Mumbai), and the establishment of AERA. The government aims to prevent the developers from recovering the disputed amount from passengers through increased fees.
Concerns Regarding Asset Valuation
The government argues that DIAL and MIAL are seeking an inflated valuation of the assets they acquired in 2006. They are concerned that the operators want the value of non-aeronautical assets, such as hotels, malls, and other commercial developments, to be included in the regulatory asset base. Officials warn that including these assets would make brownfield airport development too expensive for users.
