Association of Private Airport Operators(APAO - AERA

8 Hypothetical Regulated Asset Base (HRAB)
Association ofPrivate A lrport Operators
Response to A EllA 's Consultation Paper No. 32/201 1-12 dt. 03 Jail 2012011
determination ofAeronautical Tariffill resoect ofIGI Alroort. New I)elhi
8.1 The Authoritv has considered the entire manpower cost, including the duplicated
manpower cost. while determining hypothetical regulated asset base.
8.2 In the Consultation Paper, AERA has observed following points with regard to BRAB
29th February 2012
"With respect to the issue of considering sustainable operating and maintenance
costs ... no such guidance is provided in the SSA ... "
Further, the Authority has also quoted "Principle 5, Schedule 1 of the SSA - Economic
Efficiency" "...Further in respect ofregulation ofAeronautical Servic es the approach
to pricing regulation should encourage economic efJiciency and only allow efficient
costs to be recovered through pricing, subject to acceptance of imposed constraints
such as the arrangements in the first three years for operation support from AAI"
Based on the quote, the Authority has stated that " ... there appears to be no warrant in
the SSA to exclude the manpower cost ofDIAL staff... "
8.3 Logical reasoning: Apparent intent ofthe SSA and its implications
a. As per Chapter VI of OMDA, AAI had to provide operational support, through
General Employees, to DIAL during the three years immediately after the Effective
Date. In this period, DIAL had to bear the operational support cost (OSC) including
manpower cost of AAI staff related to IGI, Airport.
b. Therefore, it appears that the apparent intent behind including the extra cost
incurred due to such imposed constraints as part of Principle 5, Schedule 1 of the
SSA was to enable and safeguard the private developer, while determination of
tariff based on economic efficiency, against the uncertainties and duplication of cost
as a result of such constraints.
c. Graph 1 below presents the breakup of manpower in terms of manpower cost of AAI
and manpower cost of DIAL. It can be observed that during the operation support
period (OSP), DIAL has slowly ramped up its manpower. Manpower cost is the
highest in FY 2009 , which is the last full financial year of operation support period.
In FY 2009, in addition to AAI 's manpower, DIAL's manpower was in full force
because it had to take complete charge of the operations of the airport.
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