Another House panel to look into CAG report on DIAL

Committee on Public Undertakings seeks details of DIAL-AAI contract

New Delhi, Oct. 16:  

Fresh trouble is brewing for Delhi International Airport Ltd (DIAL).

Yet another Parliament panel, the Committee on Public Undertakings (CoPU), has decided to consider the Comptroller and Auditor General’s (CAG) report on implementation of public-private partnership project by Airports Authority of India (AAI) at Indira Gandhi International Airport, Delhi.

While the Public Accounts Committee has already started deliberations on the report, the committee on subordinate legislation of the Rajya Sabha is verifying the AAI (Major Airports) Development Fees Rules, 2011, which empowered DIAL to levy fee from passengers.

The CoPU, headed by senior Congress MP Jagadambika Pal, will be looking at the implementation of operation, management and development agreement (OMDA) signed by the AAI and DIAL. It will particularly look into paragraph 2.3 of the CAG report, which discussed the concession period provided to the developer, allegedly violating a Cabinet note in 2003. Sources in the panel said the CAG will make a presentation on the report at its meeting here on Thursday.

CoPU is likely to call key officials of Civil Aviation Ministry, AAI and Airports Economic Regulatory Authority on the issue for the details of the contract between DIAL and AAI.

“This is a serious report. All CAG reports that comment on public sector undertakings will be reviewed,” a panel member said.

The CAG report, tabled in Parliament during the winter session, had said that a Cabinet note in 2003 said the existing 30 years’ concession to the developer on traffic volumes, tariffs, concession period and capital costs could be extended by another 30 years only after a mutual agreement and negotiation of terms by the developer and AAI.

“However, as per the final bid documents, the ‘subject to mutual agreement and negotiation of terms’ was left out,” the report had said, adding that the OMDA, signed in April 2006, did not contain any provision of mutual agreement and fresh negotiations before extension of the concession period.

The report had pointed out that DIAL got the right to extend the term for another 30 years because of this lapse.

“This is not only a violation of the commitment in the initial Cabinet Note but also unilateral and unfair advantage given to DIAL which is detrimental to Government interest, as it does not provide the Government any scope for review of any of the conditions in OMDA and SSA,” the CAG had added.

http://www.thehindubusinessline.com/todays-paper/tp-economy/another-house-panel-to-look-into-cag-report-on-dial/article4003465.ece

Govt looks to ease rules for operating flights

New Delhi, Oct. 16:  

Scheduled airline operators such as Jet Airways and Air India as also operators of private aircraft will soon be able to take to the skies faster. This follows the Government looking to drastically cut the amount of time required to give clearance for both categories of operators to fly.

The revised proposal is to take just one day instead of three for giving clearance for a scheduled airline and three days instead of a week to give the nod for a private aircraft operator to take flight.

“The move will allow people to dynamically change their routes. Besides, it will allow airlines to change routes and deploy or remove capacity,” said Ankur Bhatia, Member, CII’s National Committee on Aviation and Managing Director, Amadeus India.

“Aviation is all about speed and anything which helps get the aircraft into the skies faster will be a welcome move,” said Capt. Karan Singh, Managing Director, Business Aircraft Operator’s Association.

http://www.thehindubusinessline.com/todays-paper/tp-logistics/govt-looks-to-ease-rules-for-operating-flights/article4003494.ece

Come Jan, flying out of Delhi, Mumbai will become cheaper

Airport development fee to go; however, user fee stays

New Delhi, Oct. 16:  

Flying from Delhi and Mumbai will become cheaper from January 1.

The Ministry of Civil Aviation has sought the abolition of the Airport Development Fee (ADF) that is being charged at these airports. At the moment, a passenger taking a domestic flight from Delhi pays Rs 200 while one boarding an international flight pays Rs 1,300. In Mumbai, currently the levy for a domestic passenger is Rs 100 and Rs 600 for an international traveller.

The Airports Authority of India (AAI) has instead been asked to pump in more equity — Rs 102 crore in Delhi and Rs 288 crore in Mumbai. Even after AAI brings in additional funds into the two joint venture projects, its equity will remain at the current 26 per cent, sources said. It means that additional investment could be in the form of instruments such as preferential equity. If this were to happen, it will give additional revenue to AAI. The state-owned airport operator is a joint venture partner in the new companies that are managing the modernisation of the two airports.

Passengers will, however, continue to pay the User Development Fee for flying through the two airports. This fee is levied on both departing and arriving passengers. In the case of Delhi, the UDF varies from Rs 200 to Rs 1,100. While ADF is a facility to meet the funding gap in the project, UDF is a charge that the airport operator collects from airlines, passengers and others for using the airport.

Interestingly, the directive on doing away with ADF comes from the Ministry of Civil Aviation although there is an ‘independent’ Airports Economic Regulatory Authority (AERA) which had approved the levy after consultations with various stakeholders.

“If the ADF is abolished from January 1, the expected financing gap in Mumbai will be about Rs 4,200 crore while in Delhi, it will be Rs 1,175 crore,” a statement issued by the Ministry of Civil Aviation said.

The statement adds that when ADF was levied at the two airports, the AAI had taken the plea that it is not in a position to contribute more equity in view of its critical financial conditions.

Between 2006-07 and 2011-12, AAI has received Rs 2,873 crore as revenue share from Delhi airport. Delhi airport was transferred to the new joint venture company in 2006-07.

Meanwhile, the Delhi International Airport in a statement said that it will, in consultation with its partners, based on further communication by AERA, if any, take the views of its lenders and equity partners and analyse its financial structure, including ability to raise further debt and equity, and also the consequential increased impact on the aeronautical tariffs and respond appropriately to AERA.

http://www.thehindubusinessline.com/todays-paper/come-jan-flying-out-of-delhi-mumbai-will-become-cheaper/article4003481.ece