He agreed that ADF was not integral to the bidding document when these airports came up for bids. But to make up for the financing gap, airports started charging Rs 200 per domestic and Rs 1,300 per international passenger at Delhi airport. Mumbai airport too charged Rs 100 per domestic and Rs. 600 per international passenger.
On the ongoing crisis at Kingfisher Airlines ,the minister said that there is a possibility of KFA's licence being suspended or cancelled before renewal due to the airline's inability to resume operations and even employee salaries and other dues need to be addressed.
Here is the edited transcript of the interview on CNBC-TV18.
Q: I am a little curious about this decision by the government to actually do away with the ADF starting January 2013 because in a sense this is more than an acknowledgement of what the CAG had said. The CAG had very clearly said that this was not part of the Operation, Management and Development Agreement (OMDA) and that this was actually illegal and DIAL actually benefited on account of the ADF levy. For once this government is very clearly saying that the CAG was right?
A: It was not part of OMDA that's correct, but it is not illegal because Supreme Court has said it is legal. It was imposed because more capital was needed and there were delays, construction costs had gone up, some design changes were there and Airport Authority of India said they had no money. They had 26 percent stake and to maintain that stake they had to invest some money. At that time, they said they have no money and that's why ADF was imposed to fill that gap in funding.
Q: As far as the Delhi airport and the Mumbai airport is concerned, the gap still remains, yet you have decided to do away with the ADF and if you are talking about the Supreme Court order, it very clearly refuses to stay the levy collection and that happened on the October 13, which is why I am finding it very curious that the government has decided to actually do away with ADF and you do have the Supreme Court not willing to stay the ADF levy?
A: Yes, so I am saying it is not illegal, but we are doing it because it will be good for the aviation sector and the second thing is that Airports Authority of India (AAI) has a lot of money now. In fact, on August 30 the regulator wrote to AAI for Mumbai and they are determining the tariffs now. He wrote that there are many methods of funding, one of them is infusion of capital and tell us how much money you can infuse. Over the last five years, AAI has made about Rs 5,000 crore from just these two airports i.e. Mumbai and Delhi.
Q: How do you say that the ADF is not illegal when you have acknowledged the fact that it was not part of the bid or the OMDA (operation management and development agreement) document that was signed? The CAG has clearly said that the decision to levy the ADF after the effective due date has vitiated the sanctity of the biding process as the draft OMDA which was part of the bid document does not mention about funding of the project costs of the airport through levy of development fees. That's exactly what you are saying as well. So, then how can you turn around and say it was not illegal?
A: We are not going to discuss CAG report here. The PAC is looking into that. Why I am saying it is illegal is because a case filed in Supreme Court which did not state, but only asked, if the revenue collected was used for development. So since the Supreme Court did not state the levy was illegal, the collection went on till recently the Delhi High Court directed the plaintiff to go to the appellate authority.
Q: What happens then to the Rs 3,415 crore that was collected by GMR as part of DIAL through the ADF, does that remain? Is there going to be any plan to actually see that money being refunded in any fashion, no changes to that?
A: That's exactly what Supreme Court said. If Airport Authority of India certifies that ADF already collected has been used for airport development there is no refund.
Q: Let me now ask you about one of the concerns that is being raised and the obvious implication to most people seems to be that because you decided to do away with ADF, automatically ticket prices will fall but the question that aviation industry experts are raising here is that what prevents the operator from hiking the UDF which is applicable and eligible at both the Delhi and Mumbai airports and the operator will actually find a way of hiking UDF. I know it has to go to the AERA but how legitimate a concern is that?
A: As you said AERA is going to decide that and they have already uploaded what they are going to do about Bombay. I think its about 150% increase but, the fact remains that it is the AERA which wanted to know the method that can be used for filling that funding gap.
They asked AAI if they can infuse capital and ofcourse, AAI has the capital that's why we have asked the AAI to reply not only to Mumbai, Delhi also to AERA. We have asked AAI to write to them specifying that they can now infuse capital. Now it's for AERA to decide.
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