Aviation ministry can’t fly PDF Print E-mail
Thursday, 28 April 2011 00:00
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The aviation ministry is yet to get over the scandal of pilots with fake licences being allowed to fly; it has now been hit by the Supreme Court on how it allowed the airports at Delhi and Mumbai (DIAL and MIAL, respectively) to charge an airport development fee. More trouble could lie ahead with the consultation paper put out by the Airports Economic Regulatory Authority of India (AERA) on the development fees DIAL should be allowed to levy—while the airport’s costs have skyrocketed from the original estimate of R5,900 crore to R12,857 crore thanks in part to larger capacity, two consultants have recommended R830-1,000 crore be disallowed; they’ve also said neither the ministry nor the Airports Authority of India (which owns 26% of DIAL) were regularly updated on the cost overruns; if 84,000 square metres extra were built by DIAL without taking prior Board approval, as the consultation paper says, it indicates the ministry was pretty much sleeping on the job.

The ministry has broadly defended its February 2, 2009, letter to allow DIAL to charge R200 per departing domestic passenger and R1,300 per departing international passenger (R100 and R600 respectively for MIAL on February 27, 2009) on the grounds that AAI was entitled to levy such a development fee under Section 22A of the AAI Act of 1994. Since DIAL and MIAL were running the airports under lease from AAI, the ministry was justified in extending this facility to them. This is what the Supreme Court has struck down. For one, it points out, the development fee was “really a cess or a tax for a special purpose”, and under Article 265 of the Constitution, no tax “can be levied or collected except by authority of law…” In other words, the Court has ruled, even if AAI were running the Delhi and Mumbai airports, it had no power to fix the rates without Parliament’s sanction—in the same way that the finance ministry can’t raise income tax rates unless Parliament approves this. Two, since this power to fix rates was given to AERA by virtue of the AERA Act which was notified on December 5, 2008 (for some reason, AERA was established only on May 12, 2009), the ministry was usurping AERA’s powers—it gave DIAL and MIAL permission to collect the development fees in February 2009 even though the AERA Act had been gazetted. How the ministry chooses to react to the Supreme Court judgment should be interesting, as also the final decision AERA takes on DIAL’s costs once the consultation process is over.


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