Govt.: new formula for airport tariff will burden flyers

The Union government teamed up with airport tariff regulator Airport Economic Regulatory Authority of India (AERA) in the Supreme Court on Wednesday to appeal a Telecom Disputes Settlement and Appellate Tribunal (TDSAT) decision redefining the way tariffs are calculated for two of the busiest airports in the country on the ground that it would burden passengers and airlines with over ₹50,000 crore dues. 

The government and the AERA have argued in the Supreme Court that the TDSAT-approved formula would result in dues worth ₹50,000 crore in airport charges from the period 2009-2014 and may also impact future tariffs, raising passenger fares considerably in the two airports. 

“The stakes are very high, ₹50,000 crore,” Solicitor General Tushar Mehta, appearing for the Centre, submitted before a Bench of Justices Aravind Kumar and N.V. Anjaria on Wednesday.

Making preliminary submissions about the impact of the implementation of the TDSAT formula on the ground, Mr. Mehta said, “The impact of this would be on all airlines, and especially passengers. If the passenger fare is ₹10,000 today, for example in Mumbai airport, it would be ₹2.10 lakh then,” he submitted. At such astronomical rates, “nobody would fly”, he added.

The TDSAT, in a July 1 decision, held that both aeronautical and non-aeronautical revenues must be considered together for calculating aeronautical charges, commonly known as a ‘single-till’ mechanism.

The TDSAT order was on the basis of a reference made to it by the Supreme Court on December 4, 2023 to decide the limited issue of computation of the Hypothetical Regulatory Asset Base (HRAB) for the two airports, and whether the ‘single till’ mechanism ought to be the basis of the computation.

After due consideration, a Division Bench of Justice D.N. Patel and S.K. Gupta of the TDSAT, on July 1, concluded that HRAB should be calculated for Mumbai International Airport Limited and Delhi International Airport Limited taking into consideration both aeronautical as well as non-aeronautical revenues. The tribunal directed the AERA that the operation and maintenance costs would include “aeronautical as well as non-aeronautical services/assets”.

TDSAT decision had thus effectively set aside the basis on which the AERA had determined the tariffs for Mumbai and Delhi airports during the “first control period” between April 1, 2009 and March 31, 2014. This period between 2009 and 2014 were the initial five years of AERA-determined tariffs. 

The court has issued notice in separate petitions filed by the AERA, the Ministry of Civil Aviation, the Federation of Airlines and one filed by Lufthansa, as an independent airline.

The Bench scheduled the case for hearing on December 16.