“Except to the extent indicated, we find no good reason to interfere with the impugned tariff order. The appeals are disposed of accordingly,” said justices S K Singh, B B Srivastava and A K Bhargava in their order.
“We expect the authority to take up the exercise of truing-up (adjustments) wherever required in right earnest in all subsequent exercises,” the three-member bench remarked.
The Airport Economic Regulatory Authority (AERA) had allowed a 346 per cent increase in user charges for period 2009-14. The order was passed in 2012, nearly three years after the start of the control period, and the time-frame for recovery of charges was curtailed to 22 months.
Upset over the decision, airlines moved the tribunal. Their plea was for reduction in tariff as assets and services were wrongly classified and that the regulator had erred in allowing escalation in project cost.
The Delhi International Airport Limited (DIAL), too, challenged the 2012 order, seeking a higher return on equity than what was allowed for in the order. The airport operator also demanded returns on refundable security deposits.
“Prima facie, the tribunal has adopted a fair approach in the interest of the sector. There does not seem to be any immediate increase in tariff. The judgment will need to be given effect to by the regulator in its future exercise which may result in some increase in tariff,” said Poonam Verma, partner, J Sagar Associates.
“The TDSAT judgment has laid down principles to be followed by AERA in the third control period,” said advocate Milanka Chaudhary, who appeared for DIAL.
“On preliminary reading, we are glad to note the positive outcomes of the order, including that TDSAT has upheld the principles of Operation Management and Development Agreement and State Support Agreement, upheld the charging of user development fee, upheld determination of charges overlapping into the period prior to formation of AERA and has ordered a review of the cost of equity and referred the same back to AERA for reconsideration,” said a DIAL spokesperson.
“We are particularly pleased to note that TDSAT has allowed return to be charged on deposits of ~14.71 billion used for funding aeronautical assets, which were earlier given zero return while computing aeronautical charges. With less than a year left in the second control period, we expect that the uplift impact of the TDSAT order to reflect in the tariff determination by AERA for the next control period starting from April 1, 2019,” said the spokesperson.
The bench upheld the levy and determination of user development fee but said its use and appropriation must be transparent. It upheld DIAL’s plea and said refundable security deposit of ~14.71 billion can not be zero-cost debt. “Its cost needs to be ascertained and made available to DIAL through appropriate fiscal exercise at the time of next tariff redetermination,” it said.
However, the bench also held that merely appointing a third party to conduct a task would not change the classification of service from aeronautical to non-aeronautical ruling against the airport operator. “The colour of revenue from aeronautical service cannot get changed to that of revenue from non-aeronautical service, by an act of delegation or leasing out by the concessionaire,” it said.