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Mumbai airport may penalise airlines

October 16, 2012 11:15 IST
Mumbai airport wants to penalise airlines that do not use approved slots and cancel flights for commercial reasons.

The proposal (called slot charge), the first of its kind in India, is under Airport Economic Regulatory Authority's (AERA's) consideration.

The slot charge has been included in Mumbai International Airport Limited's (MIAL's) rate revision proposal.

While MIAL had sought 881 per cent increase in aeronautical charges including landing and parking charges and use of aerobridge fees, among others, the regulator has recommended a 151 per cent rise, and sought comments from airlines and trade bodies on it.

The final order is expected in December and the new rate structure is expected to be in force from next January.

Earlier this year, AERA approved a 345 per cent rise in rates at Delhi airport, against the 770 per cent sought by the GMR Group that runs the airport.

In its filing, MIAL has said the airport needs to operate at peak capacity to meet the demand, and, hence, non-utilisation of slots needs to be checked.

"The value of slots, if not used, is lost forever, and can not be recovered in any manner. To increase operational efficiency, leading to lower charges for users, MIAL is making a proposal to deter misuse of scheduled and unscheduled slots allocated to air carriers,'' said the AERA's consultation paper on rate revision.

MIAL has said despite its monitoring, airlines obtain slots and do not use them, resulting in sub-optimal utilisation of infrastructure.

Mumbai airport wants airlines to pay a sum equivalent to the landing charges in case the airline does not operate a flight for commercial reasons on more than two occasions.

Currently, the Mumbai airport charges Rs 15,000 as landing charge for Boeing 737 and Airbus A320. Aviation experts say Kingfisher's cancellation of flights could have triggered MIAL's decision.

"The runway is an expensive resource. It remaining idle is wasteful. However, the charge has to be nominal,'' said an expert. He said the airline can lose a slot if it does not operate 80 per cent of flights in a schedule, but that decision can be taken by the Director General of Civil Aviation.

International Air Transport Association (IATA) has opposed MIAL's proposal. "IATA is opposed to MIAL's proposal to introduce a slot charge for flight cancellations. Nowhere else in the world is there a slot-use charge. Neither is it the right way to solve the slots problem at the Mumbai airport. The way to resolve this is through coordination committees, slot-performance committees and the appointment of an independent slot coordinator," IATA said.

GVK Group-run MIAL is carrying out the modernisation of Mumbai airport. This includes upgradation of runways, taxiways and new integrated terminal.

The project cost was revised from Rs 9,800 crore to Rs 12,380 crore, but the regulator has disallowed certain projects, and excluded some others, fixing the project cost at Rs 11,647 crore for purpose of rate revision.

AERA's rejection of MIAL's demand of 881 per cent rise will impact the operator's plans to fund the project. MIAL filed with AERA that promoters had ruled out further equity infusion, and banks too had said no to additional funding till clarity on rate approval.

MIAL has a total debt of Rs 4,231 crore and equity of Rs 1,200 crore. AERA has also written to the Airports Authority of India to consider additional equity participation in the project.

On Monday, Sanjay Reddy, vice-chairman of GVK Power & Infra, told a news channel the company was in discussion with private equity companies for investment in the group's airport holding company.

Aneesh Phadnis in Mumbai
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