Adani Group has proposed to the Indian government the unification of tariffs for Mumbai’s Chhatrapati Shivaji Maharaj International Airport (CSMIA) and the upcoming Navi Mumbai International Airport (NMIA).
The proposal aims to treat both airports as a single entity for the purpose of calculating passenger and airline charges. This approach could lead to standardized fees across both facilities, potentially making NMIA more attractive to airlines and passengers alike. Currently, NMIA, set to commence operations in July, faces higher passenger user fees, landing, and parking charges compared to the established CSMIA. This disparity could deter airlines from shifting operations to the new airport, despite its state-of-the-art infrastructure and capacity to handle increasing air traffic.
The Adani Group’s proposal is grounded in a 2021 amendment to the Airports Economic Regulatory Authority (AERA) Act, which allows for the grouping of airports and their designation as a single entity for tariff calculations. This legislative change was initially intended to facilitate the privatization of smaller, loss-making airports by clubbing them with larger ones in the same region. By applying this provision, the Adani Group seeks to average the tariffs between CSMIA and NMIA, thereby bringing parity to the charges levied at both airports. This strategy could encourage airlines to operate from NMIA, ensuring its commercial viability and relieving congestion at CSMIA.
The financial implications of this proposal are significant. Under the current concession agreements, Mumbai International Airport Ltd (MIAL), operating CSMIA, shares 38.7% of its gross revenue with the Airports Authority of India (AAI). In contrast, Navi Mumbai International Airport Ltd (NMIAL) is required to share only 12.6% of its revenue with the City and Industrial Development Corporation of Maharashtra (CIDCO). This difference in revenue sharing models means that higher traffic at NMIA could result in greater net revenue for the Adani Group, making the unified tariff proposal financially advantageous for the operator.
However, the proposal has met with some resistance. Airline operators have expressed concerns that the Adani Group might leverage its ownership of both airports to compel airlines to shift operations to NMIA. Government officials have indicated that discussions are ongoing with AAI and CIDCO regarding the proposal. They acknowledge the need to establish a tariff calculation process that supports the development of new airport facilities without imposing undue burdens on passengers.
As India continues to expand its aviation infrastructure to meet growing demand, the outcome of this proposal could set a precedent for future cases involving multiple airports in a single metropolitan area. The decision will likely balance the interests of airport operators, airlines, passengers, and regulatory authorities to ensure sustainable and equitable growth in the sector.
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