Airport bids to get attractive as government decides to fix fees first
NEW DELHI: Developers of new airports will have certainty on the aircraft landing and parking fees they can levy, as the government has decided to fix the rates before inviting bids.
The decision will help attract foreign investment as it will eliminate a major regulatory uncertainty that discouraged investors to vie for airport projects in India, aviation industry experts said. Airline executives also welcomed it, saying they will have more visibility on a key recurring cost.
“We have the approval from the Union Cabinet to amend the AERA Act, which will allow us to decide charges prior to the bidding of the airport project,” said a senior aviation ministry official.
The proposed rule will be prospective in nature, and AERA will continue to decide tariffs at airports that are currently in operation or where the projects have already been awarded, the official said.
The decision will make the airports sector attractive to foreign investors, said Satyan Nayar, secretary-general of the Association of Private Airport Operators.
Foreign investors see regulatory uncertainty as the biggest challenge in the Indian market, he said, adding: “Fixing tariff prior to bids would take care of regulatory uncertainty andhelp give a boost to foreign investments in the airports sector in India.”
About $45 billion is estimated to be required to develop airport infrastructure in the country, Nayar said. “A substantial percentage (of this) will come through foreign investments.”
Airlines said bidding for airports on tariffs would bring relief for passengers and airlines. “This would be a good move as it would bring respite from sudden increase in charges at private airports. However, the government should ensure that the charges keep falling every year,” said an airline representative.