Delhi Airport Report
A Document on
MEASURES FOR IMPROVING CASH FLOWS AND PROFITABILITY OF DELHI INTERNATIONAL AIRPORT LTD
PREPARED BY ANEK AGRAWAL MAY 2012
Disclaimer: The contents of this document are entirely based on the opinions and ideas as suggested by me. This document in no way represents any views and opinions of Feedback Infrastructure Services Pvt Ltd.
Executive Summary This document discusses about the current state of Delhi and Mumbai International Airports and their recent decision to hike the Airport Development Fee to increase their revenues and meet their expenses including interest cost for capital incurred towards Airport Development and Modernization and the revenue share with the Airports Authority of India. Taking the case of Delhi airport, we believe that the step taken to increase passenger fees, which has been approved by Aviation regulator AERA (Airports Economic Regulatory Authority) will be levied from May 15th onwards is another retrograde step taken to distress the aviation sector further. It will make air travel in and out of Delhi Airport more expensive. Considering the present state of the Aviation sector, any further cost increases are only likely to make the Indian aviation sector more expensive. Our policy makers continue to suffer from the myopia of viewing Aviation as a luxury rather than a necessity. This is evident from the high taxation of various airport services including ATF. Mumbai and Delhi Airports too have been built at a substantially higher cost compared to the original planned modernization costs. This has been due to delays in awarding the OMDA (Operations, Management and Development Agreement) and higher construction costs than planned. While Airports need to recover their capital and operations costs, they need not raise their charges to an extent that it drives airlines and flyers, their primary users and customers away from the airport, which many international airlines are currently threatening. Instead of increasing
MEASURES FOR IMPROVING CASH FLOWS AND PROFITABILITY OF DELHI INTERNATIONAL AIRPORT LTD
PREPARED BY ANEK AGRAWAL MAY 2012
Disclaimer: The contents of this document are entirely based on the opinions and ideas as suggested by me. This document in no way represents any views and opinions of Feedback Infrastructure Services Pvt Ltd.
Executive Summary This document discusses about the current state of Delhi and Mumbai International Airports and their recent decision to hike the Airport Development Fee to increase their revenues and meet their expenses including interest cost for capital incurred towards Airport Development and Modernization and the revenue share with the Airports Authority of India. Taking the case of Delhi airport, we believe that the step taken to increase passenger fees, which has been approved by Aviation regulator AERA (Airports Economic Regulatory Authority) will be levied from May 15th onwards is another retrograde step taken to distress the aviation sector further. It will make air travel in and out of Delhi Airport more expensive. Considering the present state of the Aviation sector, any further cost increases are only likely to make the Indian aviation sector more expensive. Our policy makers continue to suffer from the myopia of viewing Aviation as a luxury rather than a necessity. This is evident from the high taxation of various airport services including ATF. Mumbai and Delhi Airports too have been built at a substantially higher cost compared to the original planned modernization costs. This has been due to delays in awarding the OMDA (Operations, Management and Development Agreement) and higher construction costs than planned. While Airports need to recover their capital and operations costs, they need not raise their charges to an extent that it drives airlines and flyers, their primary users and customers away from the airport, which many international airlines are currently threatening. Instead of increasing