Tariff hikes could lift profits of 4 private airports

NEW DELHI: A material increase in tariffs will help lift the aggregate operating profit of four private airports - Delhi, Mumbai, Hyderabad and Bengaluru - to 65 per cent of their pre-pandemic levels in next fiscal, Crisil Ratings said.

This fiscal, the operating profits of these airports are expected to plunge 90 per cent due to a vertical drop in passenger traffic.

The ratings agency, in a report, said these airports accounted for over 90 per cent of the air passenger traffic handled by private airports in India, and 55 per cent of all such traffic in calendar year 2020.

As per the report, three of these four airports are likely to see their aeronautical tariffs levied on the passenger traffic, cargo, airport landing and parking fee, more than double, on an aggregated average, from current levels.

Currently, the airport regulations allow the airports to get a fixed regulated return on the capacity addition being done in the control period, charged through tariffs.

Further, regulations also allow a true-up in the tariff to compensate for the loss in aeronautical revenue due to lower-than-expected traffic over the previous control period. About one-third of the anticipated hike in tariffs is to compensate for the loss in aeronautical revenue due to lower than-expected traffic over the last and current fiscals.

The remaining two-thirds is to provide a fixed return on the capacity addition done in the current tariff control period of 5 years.

"The tariff hikes will help aeronautical revenue bounce back next fiscal to 1.3 times of fiscal 2020. However, these form only half of the overall revenue of these airports," said Manish Gupta, Senior Director, Crisil Ratings. (IANS)

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