Raise airport charges: GMR, GVK

NEWDELHI: Facing significant revenue erosion because of the slowdown in airtraffic, the private players involved in developing Delhi and Mumbai airportssought the government's clearance to raise 10% aeronautical charges along withsome other relief. Otherwise, they warned, the development work at both placesand the meeting of the all important 2010 deadline in Delhi maysuffer.GMR and GVK airport chiefs Kiran Kumar Grandhi and SanjayReddy are learnt to have told aviation secretary M Madhavan Nambiar on Wednesdaythat the two busiest airports have witnessed a 16% to 18% drop in domestictraffic because of which the revenue from aircraft movement and passengers hasdeclined. The crash in real estate markets has given a blow to the body as theRs 9,000 apiece projects were to raise Rs 2,700 crore from realty in Delhi andRs 2,400 crore from realty and income accruals in Mumbai."The twoplayers asked the government to allow them to raise aero charges by 10% as thisis allowed under the agreement. But since this would put additional pressure onairlines, the move has not been allowed so far. They also asked that theshortfall in expected revenue real estate be made good through some othermeasure. The airport developers cited lower earnings had resulted in banksgetting unenthuastic about lending more to them," said sources. Thanks to theoverall liquidity crunch, the two have now dues to the tune of Rs 400 crore fromairlines, concessionaires and oil companies. The developers alsoraised some other issues with the government. The GMR-backed Delhi airportdeveloper now expects a significant shortfall in the Rs 2,700 crore it expectedto raise from its upcoming hotel district. It has sought permission to make goodthis shortfall through some other way like a levy on passengers.TheGVK-backed Mumbai airport developer had mostly land-related issues. But it hadanother interesting problem. Some months back, its power connection category waschanged from industrial to the more expensive commercial one. As a result ofthis, its earlier monthly power bill of Rs 5 crore has shot up to Rs 7 crore.They sought the aviation ministry's help on this issue.A seniorministry official admitted that the developers were in a difficult situation."The entire aviation industry is in a bind. Passenger numbers have fallen andairlines are under financial stress. Despite reducing fleets, they are incurringhuge losses and not paying their charges to airports on time. So the combinedimpact of a lower revenue and not getting even that on time is hurting thedevelopers," said a senior official.