Association of Private Airport Operators(APAO - AERA
Association of Private Airport Operators(APAO - AERA
Association of Private Airport Operators(APAO - AERA
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12 CPI-X<br />
<strong>Association</strong> <strong>of</strong><strong>Private</strong> <strong>Airport</strong> <strong>Operators</strong><br />
Response to A E/lA's Consultation Paper No. 321201/-/ 2 tlt, 03 Jail 20/2 Oil<br />
determinution <strong>of</strong>Aeronautical Tarittin resoect <strong>of</strong>IGI Alroort. New Delhi<br />
12.1 The actual approach and methodology used by the Authority for determination <strong>of</strong>X<br />
(Escalation Factor) is not clearfrom the consultation paper.<br />
29tll February 20/2<br />
12.2 The tariff at 101 <strong>Airport</strong> is determined using the shared till inflation - X price cap<br />
model. In the approach, the Authority determines the X Factor that equates the present<br />
value <strong>of</strong> the target revenue over the regulatory period with the present value that results<br />
from applying the forecast traffic volume with a price path based on the initial average<br />
aeronautical charge, increased by Cl'I - X for each year.<br />
12.3 The maximum average aeronautical charge in a particular year i is calculated as, AC j =<br />
AC-I X (1 + CPI - X)<br />
12.4 The X Factor is then calculated, as mentioned in point 2, using the following<br />
equation,<br />
II 11 III<br />
RBj,l{WAc q '" OMj + J[)j+T 1" S. = 1: 1: ACjJxTij<br />
I<br />
(1+ WACq)i 1"'1 j...1 (l ot- WACJ:W<br />
12.5 DIAL had submitted to the Authority that they did not consider any inflationary<br />
increase and had assumed that the regulator would adjust the charges annually based on<br />
the actual Cl'I data. DIAL provided a 5 year forecast <strong>of</strong> CPI-IW at 7% per annum based<br />
on Survey <strong>of</strong> Pr<strong>of</strong>essional Forecasters as published by RBI on its website.<br />
12.6 The actual approach and methodology used by the Authority is not clear from the<br />
consultation paper.<br />
12.7 While the details <strong>of</strong> the methodology used by the Authority are not available, it is<br />
expected that the Authority would provide adequate allowance for inflation in its<br />
determination <strong>of</strong> tariff. It is proposed that the Authority may estimate the initial tariff<br />
based on X Factor. The tariffs can then be adjusted for inflation annually based on the<br />
initial tariff estimated using the X Factor.<br />
12.8 Conclusion: <strong>APAO</strong> would request the Authority to provide details on its treatment<br />
<strong>of</strong> inflation for the components in the price cap model and the resultant estimation<br />
<strong>of</strong> X Factor. It is proposed that the Authority may estimate the initial tariff based<br />
on X Factor. The tariffs can then be adjusted for inflation annually based on the<br />
initial tariff estimated using the X Factor.<br />
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