India Ratings and Research (Ind-Ra) says Ministry of Civil Aviation's (MoCA) proposed policy measures aims to eliminate regulatory uncertainty and pave the way for fresh capital from foreign investors in the upcoming public-private partnership modelled airport bidding. Concurrently, the policy dwells on addressing issues related to all stakeholders including airports, airlines, maintenance repair and overhaul (MRO) services.
The draft policy suggests that all future airports under the public-private partnership framework will determine tariffs on a 30 per cent 'hybrid till' model (30 per cent non-aeronautical revenue will be cross-subsidised with aeronautical revenue) to arrive at the user development fee. This is a change from the earlier 'single-till' approach by the airport economic regulatory authority. Hence, the new tariff model is a win-win for both, the airport developers and passengers.
While addressing tariffs, the policy indicates that in the event of excessively high tariff for a particular year, the airport may be advised to spread out the collections over the ensuing years. Ind-Ra believes that the operator and regulator need to ensure that there are adequate reserves/cash flows to meet the debt service requirements, given the capex intensive nature of the business.