Adani proposes uniform charges for Mumbai, Navi Mumbai airports
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New Delhi: Adani Airport Holdings Ltd (AAHL) has asked the government to consider Mumbai and Navi Mumbai airports as a single entity for calculation of tariffs for passengers and airlines, show documents reviewed by ET.The proposal, if accepted by the government, will bring parity in charges for both the airports, likely resulting in more traffic at Navi Mumbai, the success of which is crucial for AAHL, having invested Rs 16,700 crore in building the facility.While both airports are owned by AAHL, passenger user fees, landing and parking charges will be significantly higher at Navi Mumbai, which could deter airlines from shifting to the new airport that's expected to start commercial operations in July.The company has cited a 2021 amendment of the Airports Economic Regulatory Authority ( AERA ) Act allowing grouping of airports and designating them as a single entity. This was done to privatise smaller, loss-making airports--clubbing them with a larger one in the same region to make them attractive to investors.'Since there has been a large capital invested in Navi Mumbai, which is a green field airport, naturally tariff at the airport will be significantly higher than Mumbai, which is an established airport where capex is low and there are depreciating assets,' said a person aware of the development.'If both the airports' tariffs are calculated as one unit, the charges at both airports will be average of the two, bringing parity.'Tariff regulator AERA fixes airport charges for five years based on capital expenditure by the operator. It takes into account the airport's revenue and expenditure based on capital expenditure, operating costs, depreciation and non-aero revenue, determining tariffs so that the operator makes a reasonable profit.AAHL has faced opposition from airlines on shifting to the new airport. The International Air Transport Association ( IATA ), an airline lobby group, said in March that the Adani group was using its ownership of both airports to forcibly move traffic to kickstart operations at Navi Mumbai.The Adani group and the Ministry of Civil Aviation didn't respond to queries.The company announced plans to start the revamp of Mumbai airport 's Terminal 1 in October, due to which around 15 million passengers will have to be shifted to Terminal 2 and Navi Mumbai.The difference in revenue share is another reason why AAHL wants more airlines operating from Navi Mumbai, said people involved in the process.According to the concession agreement, Mumbai International Airport Ltd (MIAL), the company that operates the airport, has to pay 38.7% of its gross revenue with the Airports Authority of India (AAI) whereas Navi Mumbai International Airport Ltd (NMIAL) has to pay only 12.6 % of its revenue to the City and Industrial Development Corporation of Maharashtra (CIDCO).'If there is high traffic at low revenue share at Navi Mumbai airport as compared to less traffic at higher revenue share at Mumbai airport, the company will have more revenue for operating the airports,' a senior airport official said. 'So, it makes financial sense to consider them as a single entity.'Government officials said deliberations are ongoing with AAI and CIDCO on the company's proposal that would set a precedent for future cases. With as many as 15 cities having dual airports, it's necessary to establish a tariff calculation process that promotes the development of newer facilities while not burdening passengers, they said.But a former AERA official warned that such a move may be seen as conferring an unwarranted advantage as they have different agreements and ownership structures. 'Currently, this is the only case where a single company owns both the airports in the same geography,' he said.
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