Annexure II - AERA

NERA
Economic Consultinq
airport), Between these two extremes, also an intermediate approach (i.e, an hybrid till) may
be followed. Appendix A provides a description of these three different regulatory till
approaches.
The fact that ICAO explicitly mentions different approaches to be adopted by regulators in tariff
determinations, and that these approaches range from a single till to a dual till, confirms that
AERA's interpretation ofICAO policies - according to which the single till is the only
regulatory till which comply with ICAO guidelines - is not correct.
We also believe that , in few cases, AERA's conclusions may represent a twist ofICAO
principles. For example, in order to demonstrate that "it is clear from harmonium construction
that ICAO guidelines indicate that non aeronautical revenues should be either used for funding
investment need (capex) of aeronautical activities or to defray aeronautical charges", AERA
mentions the following extracts from ICAO's documentsr'
" When determining contributions from non aeronautical revenues, high priority should
be given to the investment needs ofairports [...]. It may be appropriate for airports to
retain non aeronautical revenues rather than lise such revenues to defray charges.
However, there is no requirement for airport to do so and, in appropriate circumstances,
there may be solid grounds for charges to be lower, consistent with Doc 9082,9
It is interesting noting that AERA adds emphasis to the last sentence ("However, there is no
requirement for airport to do so and, in appropriate circumstances, there may be solid grounds
for charges to be lower, consistent with Doc 9082'). Complete reading of the entire paragraph
(and not of the single sentence) would indicate that, in general (i.e, in most cases), ICAO
policies specifically state that it may be appropriate for airports to retain non-aeronautical
revenues, rather than to use such revenues to defray charges. However, in some specific
circumstances (i.e. in some cases), ICAO recognises that it may be appropriate for airports to
deem a full or partial use of non-aeronautical revenues to defray aeronautical charges as
appropriate or necessary to increase their competitiveness. Therefore, emphasis added by AERA
on the second sentence instead of the first one unavoidably leads reader to misinterpretations of
ICAO principles.
In the past, the issue on which regulatory till approach should be regarded as consistent with
international practice and, in particular, with ICAO policies and guidelines, has been discussed
for a long time .
AERA (20 II), Order No, 13120I0-11, In the Matter ofRegutntory Philosophy and Approach In Economic Reguletton of
Airports Operators, par. 5.23.
ICAO (2006), Airport Economics Manual (Doc. 9562/2) , page 4-15.
Annexure II-B
CP No. 9/2013-14/T-12023(14)/1/2012- Tariff- Vol - III Annexure II-B Page 21 of 51
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