• Those fancy airport stores may help lower airfares

    The next time you confuse an airport with a mall, don’t fret and fume. Because higher “non-aeronautical“ earnings will help the airport operator levy lower charges on airlines. This will in turn mean lower fares for flyers.

    The passenger-friendly move comes as the Airports Economic Regulatory Authority (AERA) has decided to determine the future tariffs of major airports under the `hybrid till’ model. Under this, 30% of non-aeronautical revenue will be used to subsidise aviation charges. It will also provide a boost to investment in airport sector by ensuring funding to projects without burdening airlines -and in turn passengers -with skyhigh charges.

    However, the tariffs of Delhi and Mumbai airports will not be impacted by this and continue to be determined as per the agreements with the airport operators at these metros. “`Single till’ may not be appropriate at this juncture when there is high growth and capacity expansion is the need of the hour. The Authority’s methodology for tariff determination should be consistent with the government policy ,“ AERA order says.

    Several airport operators were in favour of the ‘single till’ model -where non-aeronautical earnings are not used to cross-subsidise aero charges, leading to higher charges for airlines. This, in turn, leads to higher fares and airport user charges. Amber Dubey, head of av iation at KPMG, said in a Facebook post that AERA’s move was in line with the civil aviation policy . “This is likely to boost investor sentiment in the Indian airport sector which has so far seen tepid response from leading global players, despite huge growth opportunities here. End of a six-year struggle. Good move (by) AERA,“ his post said.

    “The `single till’ mechanism does not provide adequate funds to airport operators for taking up various expansion and modernisation programmes. `Hybrid till’ is more suitable for fund capital additions. One of the major functions of the Authority is to ensure that the airport operator has adequate funds to make capital additions at the appropriate time. `Single till’ mechanism cannot provide adequate funds to the airport operators in a timely manner and it cannot be adopted uniformly at all times and at all airports,“ AERA order says.  Dalvin Tomlinson Jersey

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