Supreme Court Directs Re-evaluation of Airport Tariff Calculation Method, Emphasizes Need for ‘Single Till’ Mechanism

In a significant development, the Supreme Court of India has directed a fresh examination of the method used to calculate the Hypothetical Regulatory Asset Base (HRAB) for airport charges. This direction comes in the wake of applications by Delhi International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL), citing a newly discovered piece of evidence – a letter dated 24.05.2011.

In their judgment, Justices Sanjay Kishan Kaul and M. M. Sundresh emphasized the complexities involved in the calculation of HRAB. “The nature of jurisdiction exercised by this Court is predicated on two specialist authorities/tribunals having applied their mind to it,” Justice Kaul observed, highlighting the nuanced nature of the issue.

The central contention of the applicants was the adoption of a ‘single till’ mechanism, where both aeronautical and non-aeronautical revenues are considered as composite revenue for tariff fixation. The Court recognized the significance of this approach in the context of airport operations and revenue calculations. “It would be difficult to have a re-appreciation of evidence and facts, especially when the admitted position is that the TDSAT has not opined on it,” Justice Kaul remarked, acknowledging the need for expert opinion from the Telecom Disputes Settlement and Appellate Tribunal (TDSAT).

The Supreme Court’s decision to remit the matter to TDSAT for a fresh look at the HRAB computation using the ‘single till’ mechanism marks a crucial step in addressing the ongoing dispute over airport charges. The TDSAT is now expected to independently review the impact of the 2011 letter from the Ministry of Civil Aviation to the Airport Economic Regulatory Authority and determine the appropriate method for HRAB calculation.

Date of Decision: 04 December  2023  

DELHI INTERNATIONAL AIRPORT LTD. VS AIRPORTS ECONOMIC REGULATORY AUTHORITY & ORS.