Published on 4/12/2017 12:24:16 PM | Source: Dion Global Solutions Ltd

Regulatory regime for airports still evolving: Moody`s

Posted in Expert Views| #Expert Views #Industry #Moody's #Airport

Rating agency Moody's has said that the regulatory regime in India for airports is still quite new and evolving, posing credit challenges for the aerodromes. Moody's Investors Service further said it expected large airports in India to bring forward plans to expand capacity to meet the growing demand.

With high double-digit growth in domestic air traffic for the past couple of years, India is one of the fastest growing aviation markets in the world. According to Moody's, terms and conditions stated in concession agreements for airports have been different from those stipulated under the regulatory act on certain key issues, leading to frequent misunderstandings.

"For example, there have been different interpretations of what constitutes aeronautical and non-aeronautical revenues and whether non-aeronautical revenues can be used to subsidies airport charges. Similarly, there are disputes over components of the rate base for arriving at aeronautical revenues. This has led to the Ministry of Civil Aviation playing a more active role and giving policy directives," the report said.