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फा. सं. ऐरा/20010/एमवाईटीपी/एएआई-वाराणसी/सीपी-II/2023-24
F. No. AERA/20010/MYTP/AAI-Varanasi/CP-II/2023-24
परामर्श पत्र संख् या
05/2024-25
Consultation Paper No. 05/2024-25
भारतीय ववमानपत् तन आवथशक वववनयामक प्राविकरण
Airports Economic Regulatory Authority of India
लाल बहादुर र्ास्त्री अंतरराष्ट्रीय हवाईअड्डा, वाराणसी (वीएनएस) के वलए वितीय वनयंत्रण
अववि के वलए वैमावनक टैररफ वनिाशररत करने के मामले में
(01.04.2024–31.03.2029)
IN THE MATTER OF
DETERMINATION OF AERONAUTICAL TARIFF FOR
LAL BAHADUR SHASTRI INTERNATIONAL AIRPORT, VARANASI (VNS)
FOR THE SECOND CONTROL PERIOD
(01.04.2024 - 31.03.2029)
जारी करने की तारीख : 26 अक्टूबर, 2024
Date of Issue: 26th October, 2024
ततृ ीय तल/ 3rd Floor,
उड़ान भवन/
Udaan Bhawan,
सफदरजंग एयरपोर्ट/
Safdarjung Airport
नई ददल् ली/New
Delhi – 110003
परामर्श पत्र संख् या
05/2024-25/ Consultation Paper No. 05/2024-25
पष्ृ ठ
119
क़ा
1/ Page 1 of 119STAKEHOLDERS’ COMMENTS
STAKEHOLDERS’ COMMENTS
Lal Bahadur Shastri International Airport is owned and operated by Airports Authority of India. It is located
at Babatpur, which is 26 km from northwest of Varanasi.
Varanasi Airport was shortlisted for leasing to private airport operator by AAI on PPP mode.
Considering that, the Ministry of Civil Aviation (MoCA) vide notification no AV-24011/141/2015-AD
(Vol. V) dated October 10, 2019 had notified Varanasi Airport as a “Major Airport.
As per the actual traffic of FY 2023-24, Varanasi Airport has achieved the passenger throughput of 3
MPPA.
For this Consultation Paper, the Authority has considered the audited financial results (being the audited
Trial Balance for Varanasi International Airport for the first four tariff years of the First Control Period i.e.,
FY 2020- FY 2023), actuals for FY 2023-24 (unaudited) and projections for the Second Control Period (FY
2025 to FY 2029).
The Authority has released this Consultation Paper putting forward its proposals in the background of the
Authority’s analysis and observations on the Multi Year Tariff Proposal (MYTP) submitted by the Airport
Operator.
The Authority shall consider written evidence-based feedback, comments and suggestions from all the
stakeholders on the proposals made in the Consultation Paper and pass a suitable Order determining the
Tariff for aeronautical services. The Authority would like to emphasize that the consultation process
timelines are sacrosanct and hereby requests the stakeholders to provide their comments/ inputs within the
timelines specified in this Consultation Paper, beyond which the same will not be considered by the
Authority.
As per the provisions of Section 13 (2) of the AERA Act, 2008, the tariff determination under the Tariff
Order can be reviewed and revised.
Thus, in accordance with the provisions of Section 13(4) of the AERA Act, the written comments on
Consultation Paper No. 05/2024-25 dated 26.10.2024 are invited from the stakeholders, preferably in
electronic form, at the following address:
Director (P&S, Tariff)
Airports Economic Regulatory Authority of India (AERA),
3rd Floor, Udaan Bhawan,
Safdarjung Airport, New Delhi – 110003, India
Email: director-ps@aera.gov.in, satish.kr@aera.gov.in, copy to: secretary@aera.gov.in
11.11.2024
Stakeholders’ Consultation Meeting:
25.11.2024
Last Date for Submission of comments:
05.12.2024
Last Date for Submission of counter comments:
Comments and Counter-comments will be posted on AERA’s website: www.aera.gov.in.
For any clarification/ information, Director (P&S, Tariff) may be contacted at Telephone Number:
Tel: 011-24695043
Consultation Paper No. 05/2024-25 Page 2 of 119TABLE OF CONTENTS
TABLE OF CONTENTS
1 INTRODUCTION ......................................................................................................................... 11
1.1. Background ............................................................................................................................... 11
1.2. Profile of Varanasi International Airport (VIA) ....................................................................... 11
1.3. Cargo Facility, Ground Handling and supply of Fuel to Aircraft ............................................. 12
2 TARIFF DETERMINATION OF VARANASI INTERNATIONAL AIRPORT .................. 13
2.1 Introduction ............................................................................................................................... 13
2.2 Construct of the Consultation Paper ......................................................................................... 15
3 FRAMEWORK FOR DETERMINATION OF TARIFF FOR VIA ....................................... 17
3.1 Methodology ............................................................................................................................. 17
3.2 Control Period ........................................................................................................................... 17
3.3 Revenues from Air Navigation Services (ANS) and Cargo ..................................................... 18
4 TRUE UP OF THE FIRST CONTROL PERIOD ..................................................................... 19
4.1 AAI’s submission on True up of the First Control Period for VIA .......................................... 19
4.2 Authority’s examination of True up of the First Control Period .............................................. 19
4.3 True up of Traffic...................................................................................................................... 21
4.4 True up of Capital Expenditure (CAPEX), Depreciation and RAB ......................................... 22
4.5 True up of Fair Rate of Return .................................................................................................. 30
4.6 True up of Non-aeronautical revenues ...................................................................................... 30
4.7 True up of Operation and Maintenance (O&M) expenses ....................................................... 31
4.8 True up of Taxation .................................................................................................................. 38
4.9 True up of Aeronautical Revenue ............................................................................................. 39
4.10 True up of Aggregate Revenue Requirement (ARR) for the First Control Period ................... 40
4.11 Authority’s proposal regarding True up of the First Control Period ........................................ 41
5 TRAFFIC FOR THE SECOND CONTROL PERIOD ............................................................. 43
5.1 AAI’s Submission on Traffic for the Second Control Period for VIA ..................................... 43
5.2 Authority’s examination regarding Traffic for the Second Control Period of VIA ................... 43
5.3 Authority’s Proposal regarding Traffic for the Second Control Period ................................... 47
6 CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET
BASE (RAB) FOR THE SECOND CONTROL PERIOD ........................................................ 48
6.1 Allocation of Gross block of assets into Aeronautical and Non-aeronautical .......................... 48
6.2 Capital expenditure for the Second Control Period .................................................................. 50
6.3 Depreciation for the Second Control Period ............................................................................. 79
Consultation Paper No. 05/2024-25 Page 3 of 119TABLE OF CONTENTS
6.4 Regulatory Asset Base (RAB) for the Second Control Period ................................................. 81
6.5 Authority’s proposal regarding Capital Expenditure (CAPEX), Depreciation and Regulatory
Asset Base for the Second Control Period ................................................................................ 82
7 FAIR RATE OF RETURN (FROR) FOR THE SECOND CONTROL PERIOD ................. 83
7.1 AAI’s Submission on Fair Return of Return for the Second Control Period for VIA ............. 83
7.2 Authority’s examination of FRoR for the Second Control Period ............................................ 83
7.3 Authority’s proposal regarding Fair Rate of Return (FRoR) for the Second Control Period .. 84
8 INFLATION FOR THE SECOND CONTROL PERIOD ........................................................ 85
8.1 AAI’s Submission on Inflation for the Second Control Period for VIA .................................. 85
8.2 Authority’s examination on inflation for the Second Control Period....................................... 85
8.3 Authority’s proposal regarding inflation For the Second Control Period ................................ 85
9 OPERATION AND MAINTENANCE EXPENSES FOR THE SECOND CONTROL
PERIOD…………………………………………………………………………………………..86
9.1 AAI’s Submission on Operation and Maintenance expenses for the Second Control Period for
VIA ........................................................................................................................................... 86
9.2 Authority’s examination of Operation and Maintenance expenses for the Second Control Period
………………………………………………………………………………………………..87
9.3 Authority’s proposal regarding Operation and Maintenance expenses for the Second Control
Period ........................................................................................................................................ 92
10 NON-AERONAUTICAL REVENUE FOR THE SECOND CONTROL PERIOD .......................... 93
10.1 AAI’s Submission on Non-Aeronautical Revenue for the Second Control Period for VIA .... 93
10.2 Authority’s examination of Non-aeronautical revenue for the Second Control Period ............ 93
10.3 Authority’s proposal regarding Non-aeronautical revenues for the Second Control Period .... 95
11 TAXATION FOR THE SECOND CONTROL PERIOD ......................................................... 96
11.1 AAI’s Submission on Taxation for the Second Control Period for VIA .................................. 96
11.2 Authority’s examination of Taxation for the Second Control Period ........................................ 96
11.3 Authority’s proposal regarding Taxation for the Second Control Period................................. 97
12 QUALITY OF SERVICE FOR THE SECOND CONTROL PERIOD .................................. 98
12.1 AAI’s Submission on Quality of Service for the Second Control Period for VIA .................. 98
12.2 Authority’s examination regarding Quality of Service for the Second Control Period ............ 98
12.3 Authority’s proposal regarding Quality of Service for the Second Control Period ................. 98
13 AGGREGATE REVENUE REQUIREMENT (ARR) FOR THE SECOND CONTROL
PERIOD……………………………………………………………………………………….. 99
13.1 AAI’s Submission on Aggregate Revenue Requirement for the Second Control Period for VIA
Consultation Paper No. 05/2024-25 Page 4 of 119TABLE OF CONTENTS
……………………………………………………………………………………………...99
13.2 Authority’s examination of Aggregate Revenue Requirement (ARR) for the Second Control
Period ........................................................................................................................................ 99
13.3 Authority’s proposal regarding Aggregate Revenue Requirement (ARR) for the Second Control
Period ...................................................................................................................................... 100
14 AERONAUTICAL REVENUE FOR THE SECOND CONTROL PERIOD ....................... 101
14.1 AAI’s Submission on Aeronautical Revenue for the Second Control Period for VIA .......... 101
14.2 Authority’s examination of Aeronautical Revenue for the Second Control Period ................ 101
14.2 Authority’s proposal regarding Aeronautical Revenue for the Second Control Period ......... 103
15 SUMMARY OF AUTHORITY’S PROPOSALS ..................................................................... 104
Chapter 4: True Up of the First Control Period ................................................................................ 104
Chapter 5: Traffic for the Second Control Period............................................................................. 104
Chapter 6: Capital Expenditure (CAPEX), Depreciation and Regulatory Asset Base for the Second
Control Period ......................................................................................................................... 104
Chapter 7: Fair Rate of Return for the Second Control Period ......................................................... 105
Chapter 8: Inflation for the Second Control Period .......................................................................... 105
Chapter 9: Operation and Maintenance expenses for the Second Control Period ............................ 105
Chapter 10: Non-aeronautical revenue for the Second Control Period ............................................ 105
Chapter 11: Taxation for the Second Control Period ....................................................................... 105
Chapter 12: Quality of Service for the Second Control Period ........................................................ 105
Chapter 13: Aggregate Revenue Requirement (ARR) for the Second Control Period .................... 105
Chapter 14: Aeronautical revenue for the Second Control Period ................................................... 105
16 STAKEHOLDERS’ CONSULTATION TIMELINE ......................................................... 106
17 LIST OF ANNEXURES ............................................................................................................. 107
17.1 Annexure I: Annual Tariff proposal submitted by AAI for VIA for the Second Control Period
………………………………………………………………………………………………107
17.2 Annexure II: Annual Tariff proposed by the Authority for Consultation process ................. 114
Consultation Paper No. 05/2024-25 Page 5 of 119`
LIST OF TABLES
LIST OF TABLES
Table 1: Technical and Terminal Building details of VIA .................................................................. 11
Table 2 :Timelines for submission of MYTP and other information by AAI ..................................... 15
Table 3: True up for First Control Period submitted by AAI .............................................................. 19
Table 4: AAI’s submission for True up of traffic for the First Control Period for VIA ...................... 21
Table 5: Passenger traffic and ATM approved by the Authority in the Tariff Order for the First Control
Period ................................................................................................................................... 21
Table 6: True up of traffic proposed by the Authority for the First Control Period for VIA .............. 22
Table 7: Capital additions during the First Control Period submitted by AAI for VIA ...................... 22
Table 8: Capital expenditure approved in the Tariff Order for the First Control Period ..................... 23
Table 9: Depreciation for the First Control Period submitted by AAI for VIA .................................. 24
Table 10: Capital additions proposed by the Authority for True up of the First Control Period ......... 27
Table 11 : Depreciation proposed by the Authority for True up of the First Control Period .............. 29
Table 12: RAB proposed by the Authority for True up of the First Control Period ............................ 30
Table 13: Actual Non-aeronautical revenue for the First Control Period submitted by AAI for VIA 30
Table 14: Non-aeronautical revenue approved in the Tariff Order by the Authority for the First Control
Period ................................................................................................................................... 31
Table 15: Actual O&M expenses submitted by AAI for VIA for the First Control Period ................ 31
Table 16: O&M expenses as per the Tariff Order for the First Control Period ................................... 32
Table 17: Re-allocation of CHQ/ RHQ – Admin and Gen expenses proposed by the Authority for the
First Control Period ............................................................................................................. 35
Table 18: Details of power costs incurred and recoveries made from Concessionaires ...................... 36
Table 19: O&M expenses as proposed by the Authority for True up of the First Control Period ...... 37
Table 20: Taxation submitted by AAI for VIA ................................................................................... 38
Table 21 : Taxation proposed to be considered by the Authority ........................................................ 38
Table 22: Aeronautical revenue submitted by AAI for VIA ............................................................... 39
Table 23: Comparison of Aeronautical Revenue as submitted by AAI with Tariff Order of the First
Control Period ...................................................................................................................... 39
Table 24: ARR proposed by the Authority for True up of the First Control Period ............................ 40
Table 25: Historical passenger and ATM traffic at VIA (in numbers) ................................................ 43
Table 26: Traffic growth rates and traffic proposed by AAI .............................................................. 43
Table 27: CAGR for passenger traffic and ATM ................................................................................ 44
Table 28: Traffic proposed to be considered by the Authority for the Second Control Period ........... 46
Table 29: Allocation of opening gross block of assets for April 1, 2024, between Aeronautical and
Non-aeronautical as per AAI ............................................................................................... 48
Table 30: Allocation of Opening Gross Block of Assets as on April 1, 2024 between Aeronautical and
Non-aeronautical proposed by the Authority ....................................................................... 49
Table 31: Summary of Capital Expenditure projects submitted by AAI on 30th May 2024 (MYTP) for
VIA for Second Control Period ........................................................................................... 50
Table 32: Project wise revised Capital Expenditure submitted by AAI on August 7, 2024 for VIA for
Second Control Period ......................................................................................................... 52
Table 33:WPI Inflation adjusted Normative rate (per Sq.m.) derived by the Authority for Terminal
Building ............................................................................................................................... 55
Table 34:Cost of construction of Terminal Building submitted by AAI ............................................. 56
Table 35:Recomputed cost of construction of Terminal Building based on AAI’s Submission ......... 57
Table 36: Normative cost of Terminal Building proposed by the Authority for Varanasi International
Airport .................................................................................................................................. 57
Table 37: Estimated area (sqm.) of Apron and Isolation Bay submitted by AAI ................................ 65
Table 38: WPI Inflation adjusted Normative rate (per Sq.m.) considered by the Authority for Apron
Consultation Paper No. 05/2024-25 Page 6 of 119`
LIST OF TABLES
............................................................................................................................................. 66
Table 39: Normative cost of Apron considered by the Authority for Varanasi International Airport 67
Table 40: Area (sqm.) considered by the Authority for Taxiway system for Second Control Period . 68
Table 41: Normative Cost of Parallel Taxi Track derived by the Authority for Varanasi International
Airport .................................................................................................................................. 69
Table 42: Cost of Runway extension and associated works derived by the Authority for Varanasi
International Airport ............................................................................................................ 69
Table 43: Breakup of Electrical works as submitted by AAI for the Second Control Period ............. 70
Table 44: Electrical works proposed by the Authority for the Second Control Period ....................... 71
Table 45: Capital Expenditure (Project-wise) proposed by the Authority for Second Control Period 77
Table 46: Depreciation proposed by AAI for VIA for the Second Control Period ............................. 79
Table 47: Depreciation proposed by the Authority for the Second Control Period ............................. 80
Table 48: RAB submitted by AAI for VIA for the Second Control Period ........................................ 81
Table 49: RAB proposed to be considered by the Authority for the Second Control Period .............. 82
Table 50: Fair Rate of Return proposed to be considered by the Authority for the Second Control Period
............................................................................................................................................. 84
Table 51: Inflation rates proposed by the Authority for the Second Control Period for VIA ............. 85
Table 52: Operation and Maintenance (O&M) expenditure submitted by AAI for VIA .................... 86
Table 53: Growth rates in O&M expenditure submitted by VIA ........................................................ 86
Table 54: Allocation of O&M expenses submitted by AAI for VIA for FY 2023-24 ........................ 87
Table 55: Allocation of O&M expenses proposed to be considered by Authority for VIA for FY 2023-
24 ......................................................................................................................................... 88
Table 56: Repairs and Maintenance on Opening Net block of Assets claimed by AAI and Proposed by
the Authority for the Second Control Period ....................................................................... 90
Table 57: Operation and Maintenance (O&M) expenses proposed to be considered by the Authority
for the Second Control Period.............................................................................................. 91
Table 58: Growth rates in O&M expenses considered by the Authority for the Second Control Period
............................................................................................................................................. 92
Table 59: Non-aeronautical revenue projections for the Second Control Period submitted by AAI for
VIA ...................................................................................................................................... 93
Table 60: Growth rates assumed by AAI for VIA for Non-aeronautical revenue ............................... 93
Table 61: Non-aeronautical revenues proposed by the Authority for VIA for the Second Control Period
............................................................................................................................................. 94
Table 62:Growth rates in non-aeronautical revenue proposed by the Authority ................................. 95
Table 63: Tax Expense submitted by AAI for VIA for the Second Control Period ............................ 96
Table 64: Taxation proposed to be considered by the Authority for the Second Control Period ........ 96
Table 65: ASQ rating for VIA for the years 2018-2024 ...................................................................... 98
Table 66: ARR submitted by AAI for VIA for the Second Control Period ........................................ 99
Table 67: ARR proposed to be considered by the Authority for the Second Control Period .............. 99
Table 68: Increase in UDF rates proposed by AAI ............................................................................ 101
Table 69: Aeronautical revenue submitted by AAI for VIA for the Second Control Period ............ 101
Table 70: UDF charges proposed by the Authority for VIA for the Second Control Period ............ 102
Table 71: Aeronautical revenues proposed to be considered by the Authority for the Second Control
Period ................................................................................................................................. 102
Table 72: Existing Landing charges .................................................................................................. 107
Table 73: Landing charges (domestic) proposed by AAI for the Second Control Period ................ 107
Table 74: Landing charges (international) proposed by AAI for the Second Control Period ........... 108
Table 75: Existing Parking charges (domestic ATM) ....................................................................... 108
Table 76: Parking charges (domestic ATM) proposed by AAI for the Second Control Period (up to
four hours after first two free hours) .................................................................................. 109
Consultation Paper No. 05/2024-25 Page 7 of 119`
LIST OF TABLES
Table 77: Parking charges (domestic ATM) proposed by AAI for the Second Control Period (beyond
first four hours) .................................................................................................................. 110
Table 78: Existing Parking charges (international ATM) .................................................................. 110
Table 79: Parking charges (international ATM) proposed by AAI for the Second Control Period (up
to four hours after first two free hours) .............................................................................. 111
Table 80: Parking charges (international ATM) proposed by AAI for the Second Control Period
(beyond first four hours) .................................................................................................... 111
Table 81: UDF Proposed by AAI (per embarking passenger) ........................................................... 112
Table 82: Landing charges(domestic) proposed by the Authority for VIA for the Second Control Period
........................................................................................................................................... 114
Table 83: Landing charges(international) proposed by the Authority for VIA for the Second Control
Period ................................................................................................................................. 114
Table 84: Parking charges (per hour) (Domestic ATM) up to four hours after first two free hours for
the Second Control Period proposed by the Authority ...................................................... 115
Table 85: Parking charges (Domestic ATM) beyond first four hours for the Second Control Period
proposed by the Authority ................................................................................................. 116
Table 86: Parking charges (per hour) (International ATM) up to four hours after first two free hours
for the Second Control Period proposed by the Authority ................................................ 116
Table 87: Parking charges (International ATM) beyond first four hours for the Second Control Period
proposed by the Authority ................................................................................................. 117
Consultation Paper No. 05/2024-25 Page 8 of 119GLOSSARY
GLOSSARY
Abbreviation Full Form
AAI Airports Authority of India
AAICLAS AAI Cargo Logistics and Allied Services
ACI Airports Council International
AERA/ The Authority Airports Economic Regulatory Authority of India
ANS Air Navigation Services
AOCC Airport Operations Control Centre
AIASL AI Airport Services Limited
ARR Aggregate Revenue Requirement
ATM Aircraft Traffic Movement
AUCC Airport Users Consultative Committee
AVDGS Advanced Visual Docking Guidance System
BCAS Bureau of Civil Aviation Security
BDDS Bomb Detection and Disposal Squad
BSF Border Security Force
CAG Comptroller and Auditor General of India
CAGR Compounded Annual Growth Rate
CAPEX Capital Expenditure
CCEA Cabinet Committee on Economic Affairs
CFT Crash Fire Tender
CHQ Corporate Headquarters
CIAL Cochin International Airport Limited
CISF Central Industrial Security Force
CRPF Central Reserve Police Force
CSR Corporate Social Responsibility
DGCA Directorate General of Civil Aviation
DIAL Delhi International Airport Limited
EOD Explosive Ordinance Disposal
EPC Engineering, Procurement and Construction
ETD Explosive Trace Detector
FA Financing Allowance
FIDS Flight Information Display System
FRoR Fair Rate of Return
GCCM Grass Cut and Collect Machine.
FRoR
GoI Government of India
GST Goods and Services Tax
IAF Indian Air Force
IATA International Air Transport Association
IDC Interest During Construction
IMG Inter-Ministerial Group
IOCL Indian Oil Corporation Limited
IVPL Indo Thai Varanasi Private Limited
MLCP Multilevel Car Parking
MoCA Ministry of Civil Aviation
Consultation Paper No. 05/2024-25 Page 9 of 119GLOSSARY
Abbreviation Full Form
MPPA Million Passengers per Annum
MYTP Multi-Year Tariff Proposal
NAR Non-aeronautical revenue
NDT New Domestic Terminal
PBB Passenger Boarding Bridge
PDC Probable Date of Completion
PERT Program Evaluation and Review Technique
PIB Public Investment Board
PLF Passenger Load Factor
PMC Project Management Consultancy
PPP Public Private Partnership
PSF Passenger Service Fee
PTB Passenger Terminal Building
PTT Parallel Taxi Track
RAB Regulatory Asset Base
RCC Reinforced Cement Concrete
RESA Runway End Safety Area
RHQ Regional Headquarters
RPK Revenue Passenger Kilometre
RWS Runway Strip
SCCTV Secure Closed-Circuit Television.
SHA Security Hold Area
SITC Supply, Installation, Testing & Commissioning
Sq.m. Square Metres
TB Terminal Building
UDF User Development Fees
VIA/ VNS Varanasi International Airport
WPI Wholesale Price Index
XBIS X-ray Baggage Inspection System
YTD Year to Date
YPP` Yield per Passenger
Consultation Paper No. 05/2024-25 Page 10 of 119INTRODUCTION
1 INTRODUCTION
1.1. Background
1.1.1 Lal Bahadur Shastri International Airport (‘Varanasi International Airport’ or VIA), owned and
operated by Airports Authority of India, is currently the 24th busiest Airport1 in India by passengers
handled and 25th busiest Airport by air traffic movements. It is located at Babatpur, which is 26 km
from northwest of Varanasi.
1.1.2 The total land area of VIA is 774 Acres. The existing Terminal Building has an area of 26,822.79
square meters, which handles both domestic and international flights.
1.1.3 AERA Act, 2008 was amended in 2019 and definition of “Major Airport” has been changed. As per
section 2(i) of the AERA Act, 2008 read with AERA (Amendment) Act 2019, Major Airport means
any airport which has or is designated to have, passenger throughput in excess of 3.5 MPPA or any
other airport or any other group of airports as the Central Government may by notification, specify
as such.
1.1.4 Varanasi Airport was shortlisted for leasing to private airport operator on PPP mode by AAI.
Considering that, Ministry of Civil Aviation (MoCA) vide notification no AV-24011/141/2015-AD
(Vol. V) dated October 10, 2019 has notified it as “Major Airport”.
1.1.5 As per the actual traffic of FY 2023-24, Varanasi Airport has achieved the passenger throughput of
3 MPPA.
The Authority determined tariff for the First Control Period (FY 2019-20 to FY 2023-24) vide Order
Number 59/ 2020-21 dated December 31, 2020.
1.2. Profile of Varanasi International Airport (VIA)
1.2.1 Technical and Terminal Building details of VIA submitted by the Airport Operator are provided in
the table below:
Table 1: Technical and Terminal Building details of VIA
Technical details
Particulars Details
Total airport land area 774 Acres
Runway orientation and length 09-27 and 2.45 kms
No. of Parking Bays 09
No. of Taxi Tracks 04
Operational hours 24 hours
Terminal Building details
Terminal Building Area 26,822.79 Sqm
Designed Passenger handling Capacity 2.5 MPPA
Peak Hour Passengers Handling capacity Domestic: 750 Pax
International: 250 Pax
Conveyor Belts in Arrival Area 02
No. of check-in counters 21
1 As per data on top 50 busiest airports for FY 2022-23, published by AAI
Consultation Paper No. 05/2024-25 Page 11 of 119INTRODUCTION
1.3. Cargo Facility, Ground Handling and Supply of Fuel to Aircraft
Cargo Handling
1.3.1. M/s AAI Cargo Logistics and Allied Services (AAICLAS) is a 100% subsidiary company of Airports
Authority of India (AAI) providing Cargo Handling Services at VIA. AAI has considered a revenue share
of 30% from AAICLAS as part of the Aeronautical revenues as per AAI’s agreement with AAICLAS.
1.3.2. AERA vide Order No. 43/ 2020-21 dated September 1, 2020 determined the tariff for AAI Cargo
Logistics & Allied Service Company Limited for the First Control Period (FY 2019-20 to FY 2023-24).
Ground Handling
1.3.3. Currently, there are two Service Providers at the Airport viz., Indo Thai Varanasi Private Limited (IVPL)
and AI Airport Services Limited (AIASL) providing Ground Handling services at VIA.
i. AERA vide Order No. 32/2023-24 dated January 08, 2024 determined tariff for Ground Handling
Services for IVPL for the period from FY 2024 to FY 2028.
ii. In respect of AIASL, AERA vide Order No. 18/2021-22 dated September 15, 2021 determined
tariff for Ground Handling Services from October 01, 2021 to March 31, 2022. The Authority,
from time to time through various Orders had extended the applicability of prevailing tariff (as
on March 31, 2022) up to March 31, 2025.
Supply of Fuel to Aircraft
1.3.4. Oil Companies namely M/s IOCL, M/s BPCL, M/s HPCL and M/s Reliance BP Mobility Limited are
directly providing Aviation Turbine Fuel (ATF) Supply to Aircrafts at VIA.
Consultation Paper No. 05/2024-25 Page 12 of 119TARIFF DETERMINATION OF VARANASI INTERNATIONAL AIRPORT
2 TARIFF DETERMINATION OF VARANASI INTERNATIONAL AIRPORT
2.1 Introduction
2.1.1 AERA was established by the Government of India vide notification No. GSR 317(E) dated 12th May
2009. The functions of AERA, in respect of Major Airports, are specified in section 13(1) of The
Airports Economic Regulatory Authority of India Act, 2008 (‘AERA Act’ or ‘the Act’) which are as
below:
a) To determine the tariff for Aeronautical services taking into consideration –
i. the capital expenditure incurred and timely investment in the improvement of airport facilities.
ii. the service provided, its quality and other relevant factors
iii. the cost for improving efficiency.
iv. economic and viable operation of Major Airports
v. revenue received from services other than the Aeronautical services
vi. the concession offered by the Central Government in any agreement or memorandum of
understanding or otherwise; and
vii. any other factor which may be relevant for the purpose of this Act:
Provided that different tariff structures may be determined for different airports having regard to all
or any of the above considerations specified at sub-clauses (i) to (vii).
b) To determine the amount of the development fees in respect of Major Airports.
c) To determine the amount of the passenger service fee levied under Rule 88 of the Aircraft Rules,
1937 made under the Aircraft Act, 1934.
d) To monitor the set performance standards relating to quality, continuity and reliability of service as
may be specified by the Central Government or any authority authorized by it in this behalf.
e) To call for any such information as may be necessary to determine the tariff for Aeronautical services;
and
f) To perform such other functions relating to tariff, as may be entrusted to it by the Central Government
or as may be necessary to carry out the provisions of the Act.
2.1.2 The terms “aeronautical services‟ and “Major Airports‟ are defined in Sections 2(a) and 2(i) of the Act,
respectively.
2.1.3 As per the AERA Act, 2008, “aeronautical service” means any service provided:
i. for navigation, surveillance and supportive communication thereto for air traffic management;
ii. for the landing, housing or parking of an aircraft or any other ground facility offered in connection
with aircraft operations at any airport;
iii. for ground safety services at an airport;
iv. for ground handling services relating to aircraft, passengers and cargo at an airport;
v. for the cargo facility at an airport;
Consultation Paper No. 05/2024-25 Page 13 of 119TARIFF DETERMINATION OF VARANASI INTERNATIONAL AIRPORT
vi. for supplying fuel to the aircraft at an airport; and
vii. for a stake-holder at an airport, for which the charges, in the opinion of the Central Government for
the reasons to be recorded in writing, may be determined by the Authority.
Tariff determination for Air Navigation Services is carried out by the Ministry of Civil Aviation (MoCA)
across all airports to maintain uniformity.
2.1.4 Detailed Guidelines laying down information requirements, periodicity and procedure for Tariff
determination have also been issued. The details of Orders and Guidelines issued in this behalf are as
under:
i. Order No. 13 dated 12.01.2011 (Regulatory philosophy and approach in Economic Regulation of
Airport Operators) and Direction No. 5 dated 28.02.2011 (Terms and conditions for determination
of tariff for Airport Operators); and
ii. Order No. 07/2018-19 dated 13.06.2016 (Normative Approach to Building Blocks in Economic
Regulation of Major Airports).
iii. Order No. 14/2018-19 dated 23.01.2017 in the matter of aligning certain aspects of AERA’s
Regulatory Approach (Adoption of Regulatory Till) with the provisions of the National Civil
Aviation Policy – 2016 (NCAP-2016) approved by the Government of India.
iv. Order No. 35/2019-20 dated 12.01.2018 and Amendment No. 01 to Order No. 35/2019-20 dated
09.04.2018 in the matter of determination of useful life of Airport assets.
v. Order No. 42/2020-21 dated 05.03.2019 (Determination of FRoR to be provided on the cost of Land
incurred by various Airport Operators in India).
2.1.5 AAI submitted Multi Year Tariff Proposal (MYTP) for the First Control Period from April 1, 2019 to
March 31, 2024 and AERA vide its Order No. 59/2020-21 dated December 31, 2020, had determined
tariffs for Aeronautical services for VIA for the First Control Period (FY 2019-20 to FY 2023-24).
Further, AERA vide Order No. 40/ 2023-24 dated March 15,2024 extended the levy of existing tariff for
a further period of 6 months (i.e. up to September 30, 2024). Thereafter, the Authority vide Order No. 09/
2024-25 dated September 24, 2024 has further extended the validity of tariff prevailing as on September
30, 2024 up to March 31, 2025.
2.1.6 As per proviso to clause 3.1 of the Airport Guidelines, the Airport Operator(s) are required to submit to
the Authority for its consideration, a Multi-Year Tariff Proposal (MYTP) for the respective Control
Periods within the due date as specified by the Authority. Accordingly, the Authority vide its letter dated
July 20, 2023 asked AAI, to submit MYTP by October 31, 2023. However, the AAI has submitted the
MYTP for the Second Control Period commencing from FY 2024-25 to FY 2028-29 for VIA on May 30,
2024, after a gap of seven months from the aforementioned due date communicated by the Authority.
The MYTP document is available on the AERA’s website. Further, the date wise chronology of events
is given in Table 2 below.
2.1.7 The Authority had appointed an independent consultant, M/s R. Subramanian and Company LLP to
assess the MYTP submitted by AAI for the Second Control Period. Accordingly, M/s R. Subramanian
and Company LLP has assisted the Authority in examining the true up submission by AAI by comparing
each regulatory building block with the Tariff Order for the First Control period. The Independent
Consultant has examined the MYTP of AAI for the current Control Period, by verifying the data from
various supporting documents submitted by AAI such as audited financials, Fixed Asset Register (FAR),
Consultation Paper No. 05/2024-25 Page 14 of 119TARIFF DETERMINATION OF VARANASI INTERNATIONAL AIRPORT
documentary evidence of the process of approval of Capital expenses, Operation and Maintenance
expenses, examining the building blocks in tariff determination and ensuring that the treatment given to
it is consistent with the Authority's methodology, approach, etc.
The Authority obtained clarifications for the information shared by the AAI from time to time, to review
the appropriateness of the classification of assets, the reasonableness of the proposed Capital Expenditure,
Operation & Maintenance expenditure, for finalizing this Consultation Paper. AAI had initially submitted
the audited Trial Balance of FY 2019-20 to FY 2022-23 and projections for FY 2023-24 and FY 2024-
25 to FY 2028-29 on May 30, 2024. Later, AAI had shared the audited Trial Balance of Varanasi
International Airport for FY 2023-24 vide email dated August 27, 2024. The Authority has considered
the same as part of its examination of the MYTP for true up of the First Control Period and of the Second
Control Period of VIA. The sequential timeline of the above events has been presented in the table below:
Table 2 :Timelines for submission of MYTP and other information by AAI
Dates Event
May 30, 2024 MYTP Submission by AAI
Clarifications sought on passenger capacity, CAPEX, Operation and
June 2024
Maintenance expenses, Non-aeronautical revenue etc. of VIA
Clarifications sought on cost breakup of key projects such as Runway
July 03, 2024 Extension, NHAI Underpass. Requested study report on allocation of CHQ/
RHQ expenses.
Clarifications sought on CAPEX and OPEX post preliminary meeting with
July 17, 2024
AERA.
Detailed clarifications sought on CAPEX along with follow up for previous
July 24, 2024
data requirements.
Follow up mail sent for addressing queries raised by AERA’s Independent
August 01, 2024
Consultant.
AAI submitted revised CAPEX by revising estimates of key CAPEX such as
August 07, 2024 Terminal Building, Runway extension in response to queries raised by AERA’s
consultant.
August 27, 2024 AAI submitted the actual figures for FY 2023-24.
September and Sought Clarifications from AAI from time to time on detailed estimates/ data
October 2024 substantiating major CAPEX projected for Second Control Period
2.1.8 AAI has informed that accounts of AAI are audited by the Comptroller and Auditor General of India
(‘CAG’) as mandated by the AAI Act. The CAG audits the financial records and statements of AAI
airports, regional and field offices. However, the CAG issues the final audit certificate for AAI as a whole
and only trial balance is available for VIA. The Authority has examined the audited trial balance (FY
2019-20 to FY 2023-24) submitted by AAI for determination of tariff.
2.1.9 All the figures presented in this Consultation Paper, have been rounded off up to two decimals.
2.2 Construct of the Consultation Paper
2.2.1 This Consultation Paper has been developed/ constructed in the following sequence of Chapters:
i. The background of the Authority’s tariff determination process is explained in this Chapter (Chapter
2) and in Chapter 3, wherein the framework for determination of tariff is discussed.
ii. Chapter 4 lists out the submissions of AAI for true up of the First Control Period which is from
FY 2019-20 to FY 2023-24. This is followed by the Authority’s examination and proposals on the
specific issues regarding the true up of the First Control Period.
iii. Chapter 5 presents the submissions of AAI regarding Traffic Projections and the Authority’s
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examination and proposals on the same.
iv. Chapter 6 includes the submissions of AAI regarding Capital Expenditure (CAPEX), Depreciation
and RAB for the Second Control Period along with the Authority’s detailed examination,
adjustments, rationalisation and proposals on the Aeronautical capital expenditure, Depreciation
and RAB for the Second Control Period.
v. Chapter 7-12 includes the submissions of AAI regarding various building blocks pertaining to the
Second Control Period including Fair Rate of Return, Inflation, Operation and Maintenance
Expenses, Non-aeronautical Revenue, Taxation and Quality of Service along with Authority's
examination and proposals on each matter.
vi. Chapter 13 presents the Aggregate Revenue Requirement as determined by the Authority based
on the proposals for the Second Control Period.
vii. Chapter 14 presents the Aeronautical Revenue proposed by the Authority for VIA for the Second
Control Period.
viii. Chapter 15 summarizes the Authority’s proposals put forward for consultation.
ix. In Chapter 16, the Authority invites views of all the stakeholders regarding proposals put forward
for tariff determination for the Second Control Period in the Consultation Paper.
x. Chapter 17 contains Annexures:
• Annexure I: Annual Tariff proposal submitted by AAI for VIA for the Second Control Period.
• Annexure II: Annual Tariff proposed by the Authority for Consultation process.
Consultation Paper No. 05/2024-25 Page 16 of 119FRAMEWORK FOR DETERMINATION OF TARIFF FOR VIA
3 FRAMEWORK FOR DETERMINATION OF TARIFF FOR VIA
3.1 Methodology
3.1.1 The methodology adopted by the Authority to determine Aggregate Revenue Requirement (ARR) is
based on AERA Act, 2008 and the Airport Guidelines issued by AERA from time to time.
3.1.2 As per the guidelines, for the First Control Period, the Authority had adopted the Hybrid-Till mechanism
for tariff determination, wherein, only 30% of the Non-aeronautical revenue is to be used for cross-
subsidizing the Aeronautical charges. The Authority has considered the same methodology in the true up
of the First Control Period and for tariff determination in the Second Control Period.
3.1.3 The ARR under hybrid till for the Control Period (ARR) shall be expressed as under:
ARR =∑5 𝐴𝑅𝑅
𝑡=1 𝑡
ARR = (FRoR x RAB) + D + O + T - s x NAR
t t t t t t
Where,
t is the tariff year in the control period, ranging from 1 to 5
ARR is the Aggregate Revenue Requirement for tariff year ‘t’
t
FRoR is the Fair Rate of Return for the Control Period
RAB is the Aeronautical Regulatory Asset Base for tariff year ‘t’
t
D is the Depreciation corresponding to the Regulatory Asset Base for tariff year ‘t’
t
O is the Aeronautical Operation and Maintenance expenditure for the tariff year ‘t’
t
T is the Aeronautical taxation expense for the tariff year ‘t’
t
s is the cross-subsidy factor for revenue from services other than Aeronautical services. Under the
Hybrid Till methodology followed by the Authority, s = 30%.
NAR is the Non-aeronautical revenue in tariff year ‘t’.
t
3.1.4 Based on ARR, Yield per passenger (Y) is calculated as per the formula given below:
∑5 𝑃𝑉(𝐴𝑅𝑅 )
𝑡=1 𝑡
𝑌𝑖𝑒𝑙𝑑 𝑝𝑒𝑟 𝑝𝑎𝑠𝑠𝑒𝑛𝑔𝑒𝑟(𝑌) =
∑5 𝑉𝐸
𝑡=1 𝑡
Where, PV (ARR) is the Present Value of ARR for all the tariff years. All cash flows are assumed
t
to occur at the end of the year. The Authority has considered discounting cash flows, one year from
the start of the Control Period.
VE is the passenger traffic in year ‘t’.
t
3.2 Control Period
3.2.1 In terms of Direction No. 5 issued on 28 February 2011, Control Period means “a period of five Tariff
Years during which the Multi Year Tariff Order and Tariff(s) as determined by the Authority pursuant to
such order shall subsist”. The First Control Period for VIA commenced from April 1, 2019 and the Second
Consultation Paper No. 05/2024-25 Page 17 of 119FRAMEWORK FOR DETERMINATION OF TARIFF FOR VIA
Control Period has commenced from April 1, 2024.
3.3 Revenues from Air Navigation Services (ANS) and Cargo
3.3.1 AAI provides Air Navigation Services (ANS) in addition to Aeronautical services at VIA. AAI has
submitted that the tariff proposal does not consider assets, expenses and revenues relating to ANS. This
Consultation Paper discusses the determination of tariffs for Aeronautical services at the airport
excluding ANS, as tariff for ANS is presently approved by the Ministry of Civil Aviation for all the
airports. Therefore, all the assets, expenses and revenues pertaining to ANS are considered separately by
the Ministry while determining tariff for ANS services Further, the tariff for ANS services is determined
at the Central level by the Ministry of Civil Aviation to ensure uniformity across all the Airports in the
Country. Hence, AERA determines tariff for Aeronautical services of the Airport Operator, by excluding
the assets, expenses and revenues from ANS.
3.3.2 AAI has further submitted that all Cargo Operations have been transferred to AAI Cargo Logistics and
Allied Services (AAICLAS), a wholly owned subsidiary of AAI and the tariff proposal does not consider
expenditure and assets on account of cargo operations. AAI has considered a revenue share of 30% from
AAICLAS as part of the Aeronautical revenues as per AAI’s internal agreement with AAICLAS.
3.3.3 This Consultation Paper discusses the determination of tariff for Aeronautical services at VIA excluding
Cargo Operations. The tariff related to Cargo Operations of VIA will be determined separately since its
operations are carried out by AAICLAS.
Consultation Paper No. 05/2024-25 Page 18 of 119TRUE UP OF THE FIRST CONTROL PERIOD
4 TRUE UP OF THE FIRST CONTROL PERIOD
4.1 AAI’s submission on True up of the First Control Period for VIA
4.1.1 AAI has submitted a shortfall of ₹ 305.36 Crores in Aeronautical revenue recovery for VIA for the
First Control Period, as part of its MYTP submission for the Second Control Period:
Table 3: True up for First Control Period submitted by AAI
(₹ Crores)
FY FY FY FY FY
Particulars Total
Ref 2019-20 2020-21 2021-22 2022-23 2023-24
Fair Rate of Return (a) 14% 14% 14% 14% 14%
Revenue from Regulated Services (b) 66.24 30.39 52.82 81.22 98.65 329.32
Revenue from services other than
Regulated Services - 30% (c) 6.81 2.98 3.88 6.46 7.36 27.50
considered as per Hybrid Till
Operating Expenditure (d) 74.93 71.48 87.23 82.26 94.96 410.86
Depreciation 9.64 10.82 11.49 12.05 13.71 57.72
(e)
Total Expenditure (f) = (d) + (e) 84.57 82.30 98.72 94.32 108.67 468.58
(g)= (b) + (c) -
Regulatory operating Profit (11.52) (48.93) (42.02) (6.63) (2.66) (111.75)
(f)
Average RAB (h) 91.37 112.36 112.87 115.99 132.06 564.64
Return on Average RAB (i)= (a)*(h) 12.79 15.73 15.80 16.24 18.49 79.05
Corporate Tax (j) 0.00 0.00 0.00 0.00 0.00 0.00
Interest on Working Capital (k) 1.12 1.51 2.30 1.07 0.30 6.30
(l)=
ARR {[(d)+(e)+(i) 91.67 96.56 112.93 105.16 120.10 526.43
+(j)+(k)]-(c)}
Shortfall (m)=(l-b) 25.43 66.17 60.12 23.94 21.45 197.11
PV Factor (n) 1.93 1.69 1.48 1.30 1.14
Shortfall (o) = (m)*(n) 48.97 111.76 89.07 31.11 24.46 305.36
Total Shortfall 305.36
4.2 Authority’s examination of True up of the First Control Period
4.2.1 The decisions taken at the time of determination of tariff for Aeronautical services for the First
Control Period vide Order No. 59/ 2020-21 dated December 31, 2020 have been reproduced below:
Decision No. 1. Regarding traffic forecast
(i) The Authority decides to consider the ATM and passenger traffic for the 1st Control Period for
Varanasi Airport as per Table 11.
(ii) The Authority proposes to true-up the traffic volume (ATM and passengers) on the basis of actual
traffic in 1st Control Period while determining tariffs for the 2nd Control Period.
Consultation Paper No. 05/2024-25 Page 19 of 119TRUE UP OF THE FIRST CONTROL PERIOD
Decision No. 2. Regarding allocation of assets
(i) The Authority decides to consider the allocation of Gross Block of Assets as on 1st April 2017 between
aeronautical and non-aeronautical assets as detailed in Table 22.
Decision No. 3. Regarding Initial RAB
(i) The Authority decides to consider the initial regulatory asset base for the 1st Control Period for
Varanasi Airport as INR 74.80 crores in accordance with Table 26.
Decision No. 4. Regarding capital expenditures.
(i) The Authority decides to adopt the Aeronautical capitalisation for the 1st control period in
accordance with Table 47.
(ii) The Authority has decided that subject to the terms and conditions of privatization of Varanasi
Airport, it will consider to true up the Capital expenditure incurred based on actual costs subject to
the normative approach at the time of determination of tariff for the 2nd Control Period.
(iii) The Authority decides to rework the RAB of the Airport Operator for the Second Control Period, by
reducing the RAB by 1% of the cost of the Terminal Building, if the Airport Operator (AAI/
prospective PPP builder) fails to commission and capitalize the new Terminal Building by November
2023.
(iv) The Authority decides to consider the 100% of the capital cost of the new terminal building at the
time of ‘true-up’ subject to the treatment of retention payment by AAI i.e. payment withholding or
acceptance of security deposit.
Decision No. 5. Regarding depreciation.
(i) The Authority decides to adopt depreciation rates for Varanasi Airport as per Table 51 for the 1st
control period.
(ii) The Authority decides depreciation amounts as per Table 54 for the 1st control period.
Decision No. 6. Regarding average RAB.
(i) The Authority decides to consider average RAB for the 1st Control Period for Varanasi Airport as
per Table 58.
Decision No. 7. Regarding Fair Rate of Return (FROR).
(i) The Authority decides to consider FroR for Varanasi Airport for the 1st Control Period as per Table
64.
Decision No. 8. Regarding non-aeronautical revenues
(i) The Authority decides to consider the non-aeronautical revenues for the 1st control period for
Varanasi Airport in accordance with Table 71.
Decision No. 9. Regarding O&M expenses
(i) The Authority decides to consider the O&M expenses for the 1st Control Period for Varanasi Airport
as per Table 83.
Decision No. 10. Regarding Aeronautical Revenues
(i) The Authority decides to consider the Aeronautical revenues for the 1st Control Period for Varanasi
Airport as per Table 87.
Consultation Paper No. 05/2024-25 Page 20 of 119TRUE UP OF THE FIRST CONTROL PERIOD
Decision No. 11. Regarding tax expense
(i) The Authority decides to consider the Tax Expense for the 1st Control Period for Varanasi Airport as
per Table 92.
Decision No. 12. Regarding Aggregate Revenue Requirement.
(i) The Authority decides to consider the ARR and YPP for the 1st Control Period for Varanasi Airport in
accordance with the Table 96.
Decision No. 13. Regarding tariff rate card.
(i) The Authority decides to approve the tariffs for the 1st Control Period for Varanasi Airport as given
in the Tariff Card annexed as Annexure-1.
4.3 True up of Traffic
4.3.1 AAI has submitted Passenger Traffic and ATM for VIA for the First Control Period which is as follows:
Table 4: AAI’s submission for True up of traffic for the First Control Period for VIA
FY FY FY FY FY
Partic ulars Total
2019-20 2020-21 2021-22 2022-23 2023-24
Passenger (In Millions)
Domestic 2.78 1.45 1.65 2.41 2.89 11.18
International 0.23 0.02 0.06 0.11 0.16 0.58
Total 3.01 1.47 1.71 2.52 3.06 11.76
ATM (In No’s)
Domestic 21,987 14,227 15,650 18,218 20,404 90,486
International 2,069 169 493 940 1,316 4,987
Total 24,056 14,396 16,143 19,158 21,720 95,473
Authority’s examination and proposal regarding true up of traffic of the First Control
Period:
4.3.2 The traffic approved by the Authority in the Tariff Order No. 59/ 2020-21 for the First Control Period
is shown in Table 5 below:
Table 5: Passenger traffic and ATM approved by the Authority in the Tariff Order for the First Control Period
Particulars FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 Total
Passenger (In millions)
Domestic 2.78 1.80 2.16 2.78 3.33 12.85
International 0.23 0.09 0.16 0.23 0.28 0.99
Total 3.01 1.89 2.32 3.01 3.61 13.84
ATM (In No’s)
Domestic 21,987 15,000 17,700 22,000 26400 1,03,087
International 2,069 900 1,575 2,100 2,520 9,164
Total 24,056 15,900 19,275 24,100 28,920 1,12,251
4.3.3 The Authority notes that the major variation between the passenger traffic and ATM for the First Control
Period (actual traffic vis-à-vis the projections approved in the Tariff Order for the First Control Period)
Consultation Paper No. 05/2024-25 Page 21 of 119TRUE UP OF THE FIRST CONTROL PERIOD
is attributable to the adverse impact of COVID-19 pandemic. After the outbreak of COVID-19
pandemic in December 2019, many chartered flights were cancelled, due to which the domestic
passenger traffic have been showing a decreasing trend.
4.3.4 The Authority verified the actual Passenger traffic and ATM from FY 2019-20 to FY 2022-23 (as per
Table 4) for the First Control Period based on the details available on AAI’s website and noted no
variances. AAI has submitted the projections for the passenger traffic and ATM for the FY 2023-24.
However, the Authority has considered the actual passenger traffic and ATM traffic data for FY 2023-
24 for true up of traffic for the First Control Period.
4.3.5 Based on the above analysis, the Authority proposes to consider the actual traffic for the First Control
Period, as shown in Table 6, in line with its Decision no. 1 (ii) of the Tariff Order No. 59/ 2020-21
dated December 31, 2020, which states “The Authority decides to true up the traffic volume (ATM
and Passengers) based on actual traffic in First Control Period while determining tariff for the
Second Control Period.”
Table 6: True up of traffic proposed by the Authority for the First Control Period for VIA
FY FY FY FY FY
Particulars Total
2019-20 2020-21 2021-22 2022-23 2023-24
Passenger (In Millions)
Domestic 2.78 1.45 1.65 2.41 2.88 11.17
International 0.23 0.02 0.06 0.11 0.12 0.53
Total 3.01 1.47 1.71 2.52 3.00 11.70
ATM (In No’s)
Domestic 21,987 14,227 15,650 18,218 19,544 89,626
International 2,069 169 493 940 976 4,647
Total 24,056 14,396 16,143 19,158 20,520 94,273
4.4 True up of Capital Expenditure (CAPEX), Depreciation and RAB
4.4.1 The actual CAPEX submitted by AAI for true up of the First Control Period for VIA is as follows:
Table 7: Capital additions during the First Control Period submitted by AAI for VIA
(₹ Crores)
Approved Actual CAPEX
Variance
S. No Asset category CAPEX as per incurred in 1st
(2)-(1)
Tariff Order (1) Control Period (2)
A. CAPEX incurred towards projects approved by AERA for First Control Period
A1 Road, Bridges & Culverts 2.56 - (2.56)
A2 Runway, Taxiway and Aprons 33.73 18.81 (14.92)
A3 Building- Terminal 356.06 3.51 (352.55)
A4 Building – Residential 20.82 - (20.82)
A5 Boundary Wall- Operational 0.52 - (0.52)
A6 Other Buildings-Unclassified 25.4 13.77 (11.63)
A7 Plant & Machinery 17.83 17.55 (0.28)
A8 Tools & Equipment 1.49 0.60 (0.89)
A9 Electrical Installations 195.31 (195.31)
Consultation Paper No. 05/2024-25 Page 22 of 119TRUE UP OF THE FIRST CONTROL PERIOD
Approved Actual CAPEX
Variance
S. No Asset category CAPEX as per incurred in 1st
(2)-(1)
Tariff Order (1) Control Period (2)
A10 Furniture & Fixtures: Other than Trolleys 0.05 (0.05)
A11 Furniture & Fixtures: Trolleys 2.02 2.12 0.10
A12 X Ray Baggage System 22.35 (22.35)
A13 CFT/Fire Fighting Equipment 4.52 (4.52)
Total Approved CAPEX (A) 682.66 56.35 (626.31)
B. Unplanned/ Unapproved CAPEX incurred by VIA during First Control Period
B14 Runway, Taxiway and Aprons - 19.80 19.80
B15 Road, Bridges & Culverts - 2.22 2.22
B16 Building- Terminal - 1.92 1.92
B17 Building – Residential - 2.40 2.40
B18 Boundary Wall- Operational - 2.21 2.21
B19 Other Buildings-Unclassified - 1.82 1.82
B20 computer: End User Services - 0.58 0.58
B21 Intangibles: Software - 0.05 0.05
B22 Plant & Machinery - 23.29 23.29
B23 Tools & Equipment - 1.92 1.92
B24 Office Furniture - 3.10 3.10
B25 Other Office Equipment - 0.80 0.80
B26 Other Vehicles - 6.40 6.40
B27 X Ray Baggage System - 0.92 0.92
B28 CFT/Fire Fighting Equipment - 0.25 0.25
Total Unapproved CAPEX incurred (B) - 67.69 67.69
Total CAPEX incurred (A+B) 682.66 124.04 (558.62)
4.4.2 The CAPEX approved by the Authority in the Tariff Order for the First Control Period was ₹ 682.66
Crores. Year- wise details of the CAPEX (capitalization of assets) approved by the Authority have been
provided as follows:
Table 8: Capital expenditure approved in the Tariff Order for the First Control Period
(₹ Crores)
FY FY FY FY FY
S. No Particulars Total
2019-20 2020-21 2021-22 2022-23 2023-24
1 Runway, Taxiway and Aprons 0.25 9.38 14.60 0.00 9.50 33.73
2 Road, Bridges & Culverts 0.82 1.74 0.00 0.00 0.00 2.56
3 Building- Terminal 0.85 2.92 0.00 22.50 329.78 356.06
4 Building – Residential 0.00 0.00 0.00 20.82 0.00 20.82
5 Boundary Wall- Operational 0.52 0.00 0.00 0.00 0.00 0.52
6 Other Buildings-Unclassified 0.81 4.58 10.39 0.00 9.62 25.40
7 Plant & Machinery 1.42 5.39 11.01 0.00 0.00 17.83
8 Tools & Equipment 1.49 0.00 0.00 0.00 0.00 1.49
9 Electrical Installations 0.64 4.43 1.45 11.21 177.58 195.31
Furniture & Fixtures: Other than
10
Trolleys 0.05 0.00 0.00 0.00 0.00 0.05
11 Furniture & Fixtures: Trolleys 0.00 0.00 0.00 2.02 0.00 2.02
12 X Ray Baggage System 3.35 19.00 0.00 0.00 0.00 2235
Consultation Paper No. 05/2024-25 Page 23 of 119TRUE UP OF THE FIRST CONTROL PERIOD
FY FY FY FY FY
S. No Particulars Total
2019-20 2020-21 2021-22 2022-23 2023-24
13 CFT/Fire Fighting Equipment 0.02 0.00 4.50 0.00 0.00 4.52
Total 10.24 47.44 41.95 56.55 526.48 682.66
4.4.3 The Authority notes a variance of ₹ 558.62 Crores (82%) between CAPEX approved by the Authority
and that incurred by AAI against the Approved CAPEX for the First Control Period, as per Table 7.
4.4.4 AAI has submitted the following depreciation for the First Control Period for VIA:
Table 9: Depreciation for the First Control Period submitted by AAI for VIA
(₹ Crores)
Particulars FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 Total
Land - - - - - -
Leasehold Land - - - - - -
Runways 0.32 0.62 0.63 0.76 1.04 3.37
Taxiway - - - - - -
Aprons - - - - - -
Road, Bridges & Culverts 0.05 0.05 0.04 0.04 0.04 0.22
Building- Terminal 2.74 2.81 2.87 2.93 2.99 14.33
Building - Temporary - - - - - -
Building - Residential 0.01 0.01 - - 0.04 0.06
Security Fencing - Temporary - - - - - -
Boundary Wall -Operational 0.06 0.05 0.07 0.07 0.14 0.40
Boundary Wall - Residential 0.01 0.01 0.01 0.00 - 0.02
Other Buildings-Unclassified 0.22 0.27 0.34 0.42 0.60 1.85
Computer & Peripherals 0.11 0.14 0.17 0.21 0.18 0.82
Computer Servers and networks - - - - - -
Intangible Assets- Software 0.00 0.00 0.00 0.00 0.01 0.01
Plant & Machinery 1.45 2.08 2.28 2.65 3.02 11.49
Tools & Equipment 0.79 0.82 0.84 0.88 0.92 4.23
Office Furniture 0.22 0.50 0.56 0.57 0.64 2.49
Furniture & Fixtures: Other
0.05 0.05 0.04 0.04 0.04 0.21
than Trolley
Furniture & Fixtures: Trolley 0.22 0.14 0.11 - 0.49 0.96
Other Vehicles 0.13 0.50 0.86 0.88 0.87 3.23
Vehicle- Cars & Jeeps - - - - - -
Electrical Installations 1.64 1.04 0.93 0.86 0.84 5.31
Other Office Equipment 0.09 0.16 0.16 0.16 0.17 0.73
X Ray Baggage System 0.22 0.25 0.24 0.24 0.24 1.19
CFT/Fire Fighting Equipment 1.33 1.33 1.33 1.34 1.34 6.67
Total 9.64 10.82 11.49 12.05 13.59 57.59
Authority’s examination and proposal regarding true up of Capital expenditure (CAPEX),
Depreciation and RAB of the First Control Period:
4.4.5 The Authority notes that there are variances between the costs approved by the Authority in the
First Control Period Tariff Order and the actual cost incurred by the Airport Operator. The CAPEX
incurred by AAI has been capitalized in the books of account, based on work orders issued by AAI
for each component of CAPEX. The Authority, through its Independent Consultant, has examined
and verified the CAPEX incurred by AAI in First Control Period from the Fixed Assets Register.
For analysis purposes, the Authority has clubbed some of the assets under “A” category which is
Consultation Paper No. 05/2024-25 Page 24 of 119TRUE UP OF THE FIRST CONTROL PERIOD
planned CAPEX with “B” category which is Unplanned CAPEX, as detailed in Table 7.
The major items of variances have been presented asset-wise in the below paragraphs.
A2 and B14: Runways, Taxiways and Aprons: AAI had incurred the CAPEX of ₹ 40.83 Crores
towards Runways/ taxiways and Aprons as against approved expenditure of ₹ 33.73 Crores. The
CAPEX includes:
Widening of turning pad - ₹ 7.17 Crores towards
Expansion of Apron - ₹ 10.03 Crores,
Surface grading - ₹ 5.12 Crores,
Construction and extension of RESA - ₹ 3.60 Crores,
Construction of vehicular lane - ₹ 1.74 Crores,
Construction of turning pad - ₹ 10.04 Crores
Widening of Perimeter Road - ₹ 2.22 Crores.
The Authority notes that AAI has classified widening of Perimeter Road (of ₹ 2.22 Crores) under
Runways, Taxiways and Aprons, whereas the same should be part of Roads, Bridges and
Culverts. Therefore, the Authority proposes to shift the widening of Perimeter Road to Roads,
Bridges and Culverts and consider the remaining assets as part of Runway/ Taxiway/ Apron for
true up of the First Control Period. Considering that the above CAPEX is essential for airside
operations and the reasonableness of costs, based on completion of work, the Authority proposes
to consider the same for true up of the First Control Period.
A3, A9 and B16: Terminal Building and Electrical Installations: The Authority had approved
capital expenditure of ₹ 551.37 Crores (out of which 65% is towards Civil works and 35% is
allocated to electrical installations) towards Construction of Terminal Building in the Tariff Order
for the First Control Period for VIA. However, the Authority notes that AAI has not executed the
above project and has shifted the capitalization of this project to the Second Control Period i.e.
FY 2027-28.
The Authority through its Independent Consultant vide email dated July 17, 2024 had enquired
AAI for the justification for shifting the project on Terminal Building to the next Control Period
and notes the following:
• Varanasi along with 5 other Airports was shortlisted for privatization. However, to due to the
adverse impact of COVID-19 pandemic, the project of construction of New Terminal
Building was not carried out in the First Control Period.
• Further, as the above project required approval from Public Investment Board (PIB) and the
same was accorded in February, 2024.
Due to the above factors, this project could not be executed during the First Control period and
has been shifted to the Second Control Period.
A3 and B16: Terminal Building (actual expenses incurred): The Authority notes that AAI had
incurred ₹ 2.78 Crores (civil works) in the First Control Period towards construction of 2
passenger boarding bridges, ₹ 3.51 Crores towards Renovation of Toilets at Varanasi Airport and
₹1.20 Crores for fixed glass partition and extension of tensile membrane relating to Terminal
Building. The above capital expenses have been approved in the Tariff Order for the First Control
Period. As these capital expenses were incurred for better passenger facilitation and operational
requirements of the Airport, the Authority proposes to consider the same for true up of the First
Control Period of Varanasi Airport.
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A4 and B17: Building- Residential: AAI had incurred the CAPEX of ₹ 2.40 Crores towards
Residential Building as against approved expenditure of ₹ 20.82 Crores. Also, AAI had proposed
for densification of residential quarters by constructing multi storey buildings. However, due to
the adverse effects of COVID-19 pandemic, the proposal had been postponed. The Authority
notes that AAI incurred CAPEX on renovation of residential buildings, including vitrified floor
tiling work and recarpeting of Colony Roads. The above works, which were approved in the
Tariff Order for the First Control Period, have been executed and capitalised in the Fixed Assets
Register (FAR) in FY2023-24. Therefore, the Authority proposes to consider the same for True
Up of the First Control Period.
A6 and B19: Other Buildings- Unclassified: AAI had incurred the CAPEX ₹ 15.59 Crores
towards Other Building as against approved expenditure of ₹ 25.40 Crores. AAI had incurred the
following CAPEX:
Construction of CISF Barracks and civil work for VIP Area - ₹ 3.13 Crores,
Construction of Security Watch Tower and Dog Kennel - ₹ 1.31 Crores,
Construction of Localizer and Glide Path - ₹ 3.46 Crores,
Construction of Bus Parking, Fire Section and Medical Centre - ₹7.63 Crores.
The Authority also notes that AAI had approved the construction of Administrative Block for
AAI staff, but had not initiated this project during the First Control Period. As the projects
executed by AAI are essential for security/ operational purposes and within the approved limits,
the Authority proposes to consider the same for true up of the First Control Period.
A12, B27, A7 and B22: Plant & Machinery: AAI had incurred the CAPEX of ₹ 31.55 Crores
towards Plant & Machinery as against approved expenditure of ₹ 40.18 Crores (₹ 22.35 Crores
for ILBS and ₹17.83 Crores for Plant & Machinery). The Authority had approved provision of 2
Passenger Boarding Bridges, AVDGS, Runway mechanical Sweeper and other miscellaneous
assets at the time of tariff determination of the First Control Period. AAI had incurred the
following CAPEX:
SITC of Inline X-BIS - ₹ 13.47 Crores,
Implementation of Digi Yatra - ₹ 7.20 Crores,
Runway Edge lighting - ₹ 1.22 Crores,
Construction of Passenger Boarding Bridges and AVDGS - ₹ 8.88 Crores,
Shifting of GLF Cables and other miscellaneous assets - ₹ 0.78 Crores.
It is noted that AAI had incurred approved Capital Expenditure to meet Operational, Security
requirements and better passenger facilitation. It is also noted that the unplanned CAPEX includes
implementation of Digi Yatra scheme amounting to ₹ 7.20 Crores and same is as per Government
of India initiative to reduce the time taken for security check and to enhance passenger experience.
Considering the essentiality of CAPEX and taking into account reasonability of cost, based on
review of completion cost/ prevailing market rates, the Authority proposes to consider the above
CAPEX for true up of the First Control Period.
A11: Furniture & Fixtures- Trolley: The Authority had approved the Capital Expenditure of
₹ 2.02 Crores for Furniture & Fixtures- Trolley against which AAI had incurred ₹ 2.12 Crores of
CAPEX. The Authority notes that AAI had procured 1,240 passenger baggage trolleys for
Varanasi International Airport during FY 2023-24 and as the same are needed for operational
requirements, the Authority proposes to consider it for true-up of the First Control Period.
Consultation Paper No. 05/2024-25 Page 26 of 119TRUE UP OF THE FIRST CONTROL PERIOD
A13 and B28: CFT: The Authority had approved the Capital Expenditure of ₹ 4.52 Crores
whereas AAI had incurred only ₹ 0.25 Crore towards transfer of 1 CFT to VIA. It is noted that
the proposal for procurement of new CFT (1 no.) had been postponed.
B24: Office Furniture: AAI had incurred ₹ 3.10 Crores towards purchase of furniture such as
chairs, tables, check-in counters, almirah and cabinets for the Terminal Building and other areas.
The above procurement is considered for smooth operations of the airport. Based on essentiality
and reasonableness of costs based on prevailing market rates, the Authority proposes to consider
the same for true up of the First control Period.
B26: Other Vehicles: The Authority notes that ₹ 6.40 Crores were incurred by AAI towards
purchase of Rubber Removal Machine, Ambulances, Tractors, Grass Cutting Machines and Car.
The Authority notes that the above CAPEX was incurred for operational purposes. Considering
the essentiality and reasonableness of costs (by comparing with the costs incurred by other similar
airports), the Authority proposes to consider the above assets for True up of the First control
Period.
Upon analysis of the above capital expenditure, the Authority notes that most of these expenses
were incurred by VIA either for Passenger facilitation or Security purposes or on operational
needs. Therefore, the Authority proposes to consider the same for true up of the capital
expenditure of the First Control Period.
4.4.6 Based on the above factors, the Authority proposes to consider the actual CAPEX amounting to
₹ 124.04 Crores for the purpose of true up for the First Control Period. The same is detailed as follows:
Table 10: Capital additions proposed by the Authority for True up of the First Control Period
(₹ Crores)
S. FY FY FY FY FY
Asset category Total
No 2019-20 2020-21 2021-22 2022-23 2023-24
A. CAPEX incurred towards projects approved by AERA for First Control Period
1 Road, Bridges & Culverts - - - - - -
2 Runway, Taxiway and Aprons 10.04 - 0.81 2.85 5.12 18.81
3 Building- Terminal - 2.78 - - 3.51 6.28
4 Building – Residential - - - - - -
5 Boundary Wall- Operational - - - - - -
6 Other Buildings-Unclassified - 2.99 - 3.46 7.32 13.77
7 Plant & Machinery 6.42 6.12 - 0.78 1.47 14.80
8 Tools & Equipment - - - 0.60 - 0.60
9 Electrical Installations - - - - - -
10 Furniture & Fixtures: Other than Trolleys - - - - - -
11 Furniture & Fixtures: Trolleys - - - - 2.12 2.12
12 X Ray Baggage System 13.47 - - - - -
13 CFT/Fire Fighting Equipment - - - - - -
Total Approved CAPEX (A) 29.93 11.87 0.81 7.69 19.53 69.82
B. Unplanned/ Unapproved CAPEX incurred by Varanasi International Airport during First Control Period
14 Runway, Taxiway and Aprons 8.01 - - 1.74 10.05 19.80
15 Road, Bridges & Culverts - - - 2.22 - 2.22
16 Building- Terminal 1.21 0.49 - - 0.23 1.92
17 Building – Residential - - - - 2.40 2.40
18 Boundary Wall- Operational - 0.65 - - 1.56 2.21
Consultation Paper No. 05/2024-25 Page 27 of 119TRUE UP OF THE FIRST CONTROL PERIOD
S. FY FY FY FY FY
Asset category Total
No 2019-20 2020-21 2021-22 2022-23 2023-24
19 Other Buildings-Unclassified 0.06 0.15 1.31 - 0.30 1.82
20 computer: End User Services 0.02 0.20 - 0.23 0.14 0.58
21 Intangibles: Software - - 0.01 - 0.04 0.05
22 Plant & Machinery 0.12 0.02 0.31 10.30 - 10.74
23 Tools & Equipment 0.73 0.15 0.48 0.13 0.43 1.92
24 Office Furniture 1.29 0.79 0.12 0.00 0.88 3.10
25 Other Office Equipment 0.75 0.00 0.01 0.03 - 0.80
26 Other Vehicles 0.67 5.33 0.41 - - 6.40
27 CFT/Fire Fighting Equipment - - 0.25 - - 0.25
Total Unapproved CAPEX incurred (B) 12.86 7.77 2.89 14.66 16.03 54.22
Total CAPEX incurred (A+B) 42.79 19.64 3.70 22.35 35.57 124.04
4.4.7 The Authority proposes to consider CAPEX of ₹ 124.04 Crores as claimed by AAI for True up of the
First Control Period. The CAPEX considered by the Authority for true up of the First Control Period
(₹ 124.04 Crores) includes unplanned/unapproved CAPEX of ₹ 67.69 Crores. From the review of
unplanned CAPEX, the Authority notes that the same was incurred by AAI for VIA for passenger
facilitation and/or security purposes and operational requirements. The CAPEX of ₹ 124.04 Crores
has been arrived, after factoring the Terminal Building ratio of 90:10 as approved by the Authority,
at the time of determination of tariff for the First Control Period. The same has also been considered
by AAI, while submitting the true up of CAPEX for First Control Period.
4.4.8 With respect to Authority’s decision no. 4(iii) of the Tariff Order for the First Control Period, which
states “The Authority decides to rework the RAB of the Airport Operator for the Second Control Period,
by reducing the RAB by 1% of the cost of the Terminal Building, if the Airport Operator (AAI/ prospective
PPP builder) fails to commission and capitalize the new Terminal Building by November 2023”, the
Authority notes that the project on Terminal Building has been postponed to the Second Control Period
on account of the factors such as adverse impact of COVID 19 pandemic, requirement of statutory
approval from PIB, as mentioned in para 4.4.5 (A3, A9 and B16) (refer page 25). Therefore, the
Authority proposes not to reduce the RAB by 1% of the cost of Terminal Building, while
determining true up of the Capital Expenditure for the First Control Period for Varanasi Airport.
True up of Depreciation for the First Control Period
4.4.9 The Authority notes that while submitting the True up for the First Control Period, AAI has taken
cognizance of the rates of depreciation as per Order No. 35/ 2017-18 dated January 12, 2018 read with
Amendment No. 01 to Order No. 35/ 2017-18 on ‘Determination of Useful Life on Airport Assets’).
Accordingly, the rates of depreciation approved by AERA have been applied by AAI from FY 2018-19
onwards.
4.4.10 The Authority observed that AAI has depreciated assets @ 50% of depreciation rates in the year of
capitalization of assets. However, the Authority proposes to consider the depreciation based on the date
of capitalization of the asset and compute the depreciation accordingly, instead of considering 50% of
the depreciation in the year of capitalization of the assets. As per the consistent approach of the Authority
followed for all major airports, Depreciation in the year of capitalisation (for True up purpose) is
calculated considering the actual date of capitalisation of assets as reflected in the Fixed Assets Register
maintained by the Airport Operator. Therefore, the Authority proposes to consider depreciation on capital
additions for the First Control Period for Varanasi Airport, based on the date of the date of capitalization/
Consultation Paper No. 05/2024-25 Page 28 of 119TRUE UP OF THE FIRST CONTROL PERIOD
date of asset being “put to use” by the Airport Operator.
4.4.11 Based on the above factors, the Authority has re-computed the depreciation as ₹ 58.00 Crores against the
depreciation amounting to ₹ 57.59 Crores proposed by AAI and the same is presented below:
Table 11 : Depreciation proposed by the Authority for True up of the First Control Period
(in ₹ Crores)
FY FY FY FY FY
Particulars Total
2019-20 2020-21 2021-22 2022-23 2023-24
Land - - - - - -
Leasehold Land - - - - - -
Runways 0.31 0.62 0.63 0.70 1.05 3.31
Taxiway - - - - - -
Aprons - - - - - -
Road, Bridges & Culverts 0.05 0.05 0.04 0.21 0.26 0.62
Building- Terminal 2.74 2.83 2.87 2.93 2.99 14.35
Building – Temporary - - - - - -
Building – Residential 0.01 0.01 - - 0.06 0.08
Security Fencing – Temporary - - - - - -
Boundary Wall -Operational 0.06 0.06 0.07 0.07 0.20 0.46
Boundary Wall – Residential 0.01 0.01 0.01 0.00 - 0.02
Other Buildings-Unclassified 0.22 0.28 0.34 0.44 0.56 1.84
Computer & Peripherals 0.10 0.13 0.09 0.12 0.13 0.58
Computer Servers and networks - - 0.00 0.00 0.01 0.01
Intangible Assets- Software 0.00 0.00 - - - 0.00
Plant & Machinery 1.70 2.13 2.27 2.58 3.02 11.70
Tools & Equipment 0.79 0.81 0.84 0.89 0.92 4.25
Office Furniture 0.47 0.63 0.66 0.61 0.69 3.07
Furniture & Fixtures: Other than Trolley 0.01 0.01 0.00 0.00 - 0.01
Furniture & Fixtures: Trolley 0.08 - - - 0.04 0.12
Environment Management Works - - - - - -
Other Vehicles 0.13 0.49 0.88 0.88 0.87 3.25
Vehicle- Cars & Jeeps - - - - - -
Electrical Installations 1.64 1.04 0.93 0.86 0.84 5.31
Other Office Equipment 0.13 0.16 0.16 0.16 0.16 0.77
X Ray Baggage System 0.25 0.25 0.24 0.24 0.24 1.22
CFT/Fire Fighting Equipment 1.33 1.33 1.33 1.34 1.34 6.66
Total 10.01 10.84 11.37 12.05 13.39 57.66
Note: Variance in the depreciation proposed by the Authority (₹ 57.66 Crores) and that claimed by AAI (₹
57.59 Crores) is on account of shifting of the Widening of Perimeter Road from Runways to Roads, Bridges
and Culverts and re-computation of depreciation in the year of capitalisation based on the date of
capitalization of the asset, instead of 50% claimed by AAI as part of its true up submission for the First
Control Period.
Consultation Paper No. 05/2024-25 Page 29 of 119TRUE UP OF THE FIRST CONTROL PERIOD
4.4.12 The RAB for true up of the First Control Period is provided in the Table below:
Table 12: RAB proposed by the Authority for True up of the First Control Period
(₹ Crores)
Particulars FY FY FY FY FY Total
2019-20 2020-21 2021-22 2022-23 2023-24
Opening RAB (A)* 74.80 107.57 116.37 108.70 122.73
Additions (B) (refer Table 10) 42.79 19.64 3.70 26.08 31.84 124.04
Disposal/Transfers (C) - - - - - -
Depreciation (D) (Refer Table 11) 10.01 10.84 11.37 12.05 13.39 57.66
Closing RAB (E) = [(A) +(B) –
107.57 116.37 108.70 122.73 141.18
(C) – (D)]
Average RAB = [(A) + (E)]/2 91.18 111.97 112.53 115.72 131.96
* Opening RAB has been obtained from Table No. 58 of Tariff Order 59/2020-21 dated December 31, 2020.
4.5 True up of Fair Rate of Return
4.5.1 The Authority notes that AAI has claimed 14% as Fair Rate of Return as part of its True up
submission for the First control period.
4.5.2 The Authority notes that AAI has not availed any debt during the First Control Period.
4.5.3 At the time of determination of tariff for the First Control Period, the Authority had decided to
consider the FRoR for VIA as 14% for first 4 years and 13.18% for last tariff year (assuming that
AAI may avail debts for construction of Terminal Building in the last tariff year). As the
construction of Terminal Building has been shifted to Second Control Period and no debts were
availed in the First Control Period. Therefore, the Authority proposes to consider the FRoR as 14%
for true up of the First Control Period as considered for other similar Airports.
4.6 True up of Non-aeronautical revenues
4.6.1 The Authority notes that the actual non-aeronautical revenue submitted by AAI for VIA for true up of
the First Control Period is ₹ 91.68 Crores and the same has been presented in the table below:
Table 13: Actual Non-aeronautical revenue for the First Control Period submitted by AAI for VIA
(₹ Crores)
FY FY FY FY FY
Revenue Category 2019-20 2020-21 2021-22 2022-23 2023-24 TOTAL
Restaurant / Snack Bars 4.25 1.64 1.09 3.08 4.05 14.11
T.R. Stall 6.76 2.74 4.58 7.05 6.07 27.20
Hoarding & Display 3.77 1.54 1.54 4.11 4.49 15.46
Land Leases 0.00 0.00 0.04 0.23 0.30 0.57
Building (Residential) 0.02 0.02 0.02 0.02 0.02 0.11
Building (Non-Residential) 1.44 1.69 1.52 1.39 1.90 7.95
Car Rentals 1.13 0.44 0.47 0.47 0.83 3.34
Car Parking 2.23 1.04 2.58 2.81 3.02 11.68
Admission Tickets 0.24 0.02 0.03 0.04 0.05 0.38
Other Income/ Sale Of Scrap 2.85 0.81 1.06 2.34 3.83 10.89
TOTAL 22.70 9.95 12.94 21.53 24.56 91.68
Consultation Paper No. 05/2024-25 Page 30 of 119TRUE UP OF THE FIRST CONTROL PERIOD
4.6.2 The Non-aeronautical revenue approved by the Authority in the Tariff Order for First Control Period
was ₹ 96.29 Crores. Component wise details of the Non-aeronautical revenue approved by the Authority
in the Tariff Order for the First Control Period is as follows:
Table 14: Non-aeronautical revenue approved in the Tariff Order by the Authority for the First Control Period
(₹ Crores)
S. FY FY FY FY FY
No. Revenue Category 2019-20 2020-21 2021-22 2022-23 2023-24 TOTAL
1 Restaurant / Snack Bars 3.89 1.95 2.73 3.89 4.67 17.14
2 T.R. Stall 5.68 2.84 3.98 5.68 6.81 24.99
3 Hoarding & Display 3.77 1.89 2.64 3.77 4.53 16.60
4 Building (Residential) 0.04 0.04 0.04 0.04 0.04 0.21
4 Building (Non-Residential) 1.75 0.88 1.23 1.75 2.10 7.71
5 Car Rentals 0.77 0.38 0.54 0.77 0.92 3.38
6 Car Parking 2.34 0.90 1.26 1.80 2.16 8.46
7 Admission Tickets 0.31 0.16 0.22 0.31 0.37 1.37
8 Other Income/ Sale of Scrap 2.96 3.10 3.26 3.42 3.59 16.34
TOTAL 21.54 12.16 15.91 21.46 25.23 96.29
Authority’s examination and proposal regarding true up of Non-aeronautical revenues of
the First Control Period:
4.6.3 The Authority notes that the actual Non-aeronautical revenue (₹ 91.68 Crores) submitted by AAI for VIA
for the First Control Period is lower than the NAR approved by AERA in the tariff order for the First
Control Period (₹ 96.29 Crores). The Authority examined variances between projected and actual revenue
of Restaurants and Snack bar, hoardings and displays, admission tickets and notes that the same is on
account of decline in passenger traffic due to adverse effects of COVID 19 pandemic during FY 2020-21
and FY 2021-22.
4.6.4 The Authority notes that AAI in their MYTP submission had already excluded the Space rental from
Airlines amounting to ₹ 3.22 Crores from Non-Aeronautical revenue and included the same as part of the
Aeronautical revenue, which is in line with its decisions of the Authority in other similar airports..
4.6.5 Based on the above analysis, the Authority proposes to consider the actual Non-aeronautical revenue as
presented in Table 13 for the purpose of true up of the First Control Period.
4.7 True up of Operation and Maintenance (O&M) expenses
The Authority notes that the actual O&M expenses submitted by AAI for VIA for true up of the First
Control Period is ₹ 410.87 Crores and the same has been presented in the table below:
Table 15: Actual O&M expenses submitted by AAI for VIA for the First Control Period
(₹ Crores)
S. Particulars FY FY FY FY FY Total
No. 2019-20 2020-21 2021-22 2022-23 2023-24
1 Payroll expenses 16.93 18.38 19.82 20.18 21.59 96.90
Retirement Benefit of employees
2 4.87 1.77 1.48 0.02 2.98 11.12
of Varanasi Airport.
A Total Payroll Expenditure(A) 21.80 20.15 21.30 20.20 24.57 108.02
Admin & Gen Expenses(Non
3 5.50 4.78 10.84 6.92 11.28 39.32
CHQ /RHQ)
Consultation Paper No. 05/2024-25 Page 31 of 119TRUE UP OF THE FIRST CONTROL PERIOD
S. Particulars FY FY FY FY FY Total
No. 2019-20 2020-21 2021-22 2022-23 2023-24
Admin & Gen Expenses (CHQ/
4 29.46 27.30 35.73 37.52 39.39 169.40
RHQ)
Total Administration & General
B 34.96 32.08 46.57 44.44 50.68 208.73
Expenditure (B)
C Total R&M Expenses (C) 12.45 14.93 14.29 11.15 12.13 64.95
5 Power 4.57 3.72 4.16 5.42 5.57 23.44
6 Water - - - - - -
7 Consumption of Stores and Spares 0.35 0.32 0.69 0.51 0.48 2.35
8 Other charges 0.16 0.32 0.15 0.47 0.49 1.59
D Utilities & outsourcing (D) 5.08 4.36 5.00 6.40 6.55 27.39
Other Outflow- Collection
E 0.63 (0.04) 0.07 0.07 1.04 1.77
charges on UDF (E)
TOTAL (A+B+C+D+E) 74.93 71.48 87.23 82.26 94.97 410.87
4.7.1 The O&M expenses approved by the Authority in the Tariff Order for First Control Period was
₹ 313.26 Crores. Component wise details of the O&M expenses approved by the Authority in the Tariff
Order for the First Control Period is as follows:
Table 16: O&M expenses as per the Tariff Order for the First Control Period
(₹ Crores)
FY FY FY FY FY
Particulars Total
2019-20 2020-21 2021-22 2022-23 2023-24
Payroll exp- Non CHQ/RHQ 13.44 14.12 14.82 15.56 17.90 75.84
Payroll exp- CHQ/RHQ 1.83 1.92 2.02 2.12 2.43 10.31
Total Payroll Expenditure(A) 15.27 16.04 16.84 17.68 20.33 86.15
Admin & Gen Expenses -Non CHQ
3.44 3.78 4.16 4.58 5.04 21.00
/RHQ
Admin & Gen Expenses CHQ/ RHQ 16.23 17.05 17.90 18.79 19.73 89.70
Total Administration & General
19.67 20.83 22.06 23.37 24.77 110.7
Expenditure (B)
R&M Expenses (C) 15.39 16.35 17.39 13.15 15.27 77.54
Utilities & outsourcing (D) 4.88 5.97 6.74 6.80 10.97 35.35
Other Outflow- Collection charges on
0.76 0.48 0.59 0.76 0.91 3.50
UDF (E)
TOTAL (A+B+C+D+E) 55.98 59.66 63.62 61.76 72.25 313.26
Authority’s examination and proposal regarding true up of O&M expenses of the First Control Period:
4.7.2 There is a variance of ₹ 97.61 Crores (31.16%) between the actual O&M expenses incurred by the VIA
and that approved by the Authority in the Tariff Order for the First Control Period. The Authority has
examined the variances and the same has been explained in the below-mentioned paragraphs
4.7.3 The analysis of the Authority on variances between the projected and actual expenses for true up in
respect of various components of O&M expenses as discussed in below paragraphs:
4.7.4 Payroll expenses: The Authority notes that the actual payroll expenses other than CHQ/ RHQ
submitted by AAI for VIA (₹ 96.90 Crores) are much higher than the expense approved by the Authority
in the Tariff Order of the First Control Period (₹ 75.84 Crores). The above variance is due to the fact
that AAI had proposed 7% increase Y-o-Y for the First Control Period, whereas the Authority had only
Consultation Paper No. 05/2024-25 Page 32 of 119TRUE UP OF THE FIRST CONTROL PERIOD
approved 5% increase for Y-o-Y increase in payroll expenses. Further there was an increase in overtime
rates in FY 2019-20 which is another factor for increase in payroll expenses. In view of the above, the
Authority proposes to consider 6% increase Y-o-Y from FY 2020-21 to FY 2023-24 for true up of the
First Control Period (by considering FY 2019-20 as the base), in line with the approach followed in
other similar airports.
4.7.5 Retirement Benefits of employees: AAI had submitted ₹ 4.87 Crores towards retirement benefits for
FY 2019-20 which was significantly higher than the amount submitted for the other tariff years in the
First Control Period. This was on account of payment of arrears for Non-Executives. Also, as part of its
examination, the Authority notes that AAI had submitted ₹ 2.98 Crores towards retirement benefits for
FY 2023-24, which was higher than the previous tariff year, due to a clerical error. The actual amount
incurred in FY 2023-24 was only ₹ 1.69 Crores. The Authority has taken cognizance of the same while
truing up the O&M expenses for the First Control Period.
4.7.6 Apportionment of Administration & General expenditure of CHQ/RHQ:
The Authority notes that AAI has claimed 30% increase in the allocation of CHQ/ RHQ expenses in
FY 2021-22, as compared to the previous FY and 5% Y-o-Y increase for the remaining tariff years
in the First Control Period.
In this regard, the Authority has received a report on the study of allocation of expenses incurred
at CHQ/RHQ, vide letter dated 21st August 2024 from AAI. The Study report summarizes the
observations on the existing process and provides recommendations for refining the methodology to
be followed by AAI for allocation of CHQ/RHQ expenses to all airports, which includes the
following:
i. Adoption of Weighted Average which includes quantitative factors that drive revenue such as
ATM and PAX, cost of employees working at the respective airports, as against the existing
process of allocating CHQ/RHQ expenses on the basis of revenue achieved by the airports.
ii. Identifying and booking of Legal expenses relatable to respective profit centers i.e. AAI
Airports, JVCs, PPP etc.
iii. Create separate cost Centre/segment for booking of expenses and revenue related to non-
aeronautical assets.
iv. Penalties and Interest on delays should be excluded from the allocable CHQ/RHQ expenses
However, AAI has not provided detailed workings (component wise) to substantiate the allocable
expenses of CHQ/ RHQ derived for FY 2021-22 based on the above study report. Therefore, the
Authority is unable to draw any conclusion/ outcome regarding the computation of CHQ/ RHQ
expenses that have been allocated to the AAI Airports. Hence, the Authority has relied and adopted
the existing methodology of computing CHQ/ RHQ expenses as being uniformly applied across all
AAI airports, for determining the Administration and General CHQ/ RHQ expenses, allocable to
Varanasi Airport. The same has been explained in the subsequent paragraphs.
The Authority also reviewed the basis adopted by AAI for allocation of CHQ and RHQ expenses to
VIA and other airports and noted the following:
All expenses incurred by CHQ and RHQ (like staff costs, Admin and Gen. expenses, Repairs
and Maintenance, utilities, outsourcing expenses etc.) are allocated to all the AAI airports,
in the ratio of revenues earned by each Airport.
Expenses such as legal costs, interest/ penalties are related to some specific airports. However,
these have been allocated to the common pool and apportioned to all the AAI airports.
Consultation Paper No. 05/2024-25 Page 33 of 119TRUE UP OF THE FIRST CONTROL PERIOD
The Authority has been reiterating in all its Tariff Orders of AAI Airports that the above process
followed by AAI for allocating the expenses is on a higher side and necessitates adoption of a
scientific/ rational approach for justifiable allocation of expenses to the Airports.
The Authority proposes the following towards allocation of CHQ and RHQ expenses:
a. Pay and Allowances of CHQ and RHQ:
AAI has considered pay and allowances of Commercial department at CHQ and RHQ as
Aeronautical expenses, whereas such expenses are non-aeronautical in nature.
AAI has excluded pay and allowances of employees involved in ATM, CNS and Cargo
departments at CHQ and RHQ while working out the allocation to the airport. However, no
exclusion has been done for support services of the departments of HR, Finance, Civil, Terminal
Management (Housekeeping), etc. pertaining to the aforesaid departments (ANS and Cargo)
Manpower of CHQ and RHQ also provide services to non-aeronautical activities, ATC, and CNS
cadres at respective airports. Hence, pay and allowances need to be adjusted accordingly.
Considering all the facts and figures as stated above, the Authority is of the view that 20% of pay
and allowances of CHQ and RHQ is to be excluded towards the following:
i. Support services provided by CHQ/RHQs to ANS, Cargo and Commercial departments at various
airports.
ii. Officials of Directorate of Commercial.
Balance 80% of pay and allowances of CHQ and RHQ to be allocated to the Airports.
b. Administration & General Expenses of CHQ and RHQ:
AAI has incurred Legal & Arbitration Expenses at both CHQ and RHQ level. The Authority is of
the view that this expense should be analyzed and distributed to stations on a case-to-case basis.
As the above details have not been provided by AAI, the same has not been allocated to the stations.
AAI has paid interest/penalties to Government of India at both CHQ and RHQ levels. The
Authority is of the view that the stakeholders should not be burdened with interest/penalties paid
to Government of India, due to various lapses/delays on the part of the Airport Operator. Hence,
the Authority proposes to not consider interest/penalties appearing in AAI submission.
4.7.7 The Authority is of the view that the users should pay only for the services availed by them. This view
is also consistent with the International Civil Aviation Organization’s (ICAO) principle of ‘Cost-
relatedness’. Based on the above principles, the Authority has rationalized the CHQ/ RHQ expenses
being allocated to Varanasi International Airport.
4.7.8 The Authority feels that the allocation of CHQ & RHQ expenses by AAI on the basis of revenue is on
higher side, as it brings large variation in such expenses Y-o-Y, due to change in revenue and is against
the basic principle of cost relatedness in tariff determination. Users of the Major Airports have to pay
higher tariff due to higher allocation of CHQ/RHQ expenses to these airports. Further, as the revenue
from these airports goes up due to higher tariffs, it further leads to higher allocation of CHQ/RHQ
expenses with chain of cascading effect.
The Authority has derived the revised allocation of CHQ and RHQ expenses, based on the methodology,
explained in the above-mentioned paragraphs and the same is presented in the table below:
Consultation Paper No. 05/2024-25 Page 34 of 119TRUE UP OF THE FIRST CONTROL PERIOD
Table 17: Re-allocation of CHQ/ RHQ – Admin and Gen expenses proposed by the Authority for the
First Control Period
(₹ Crores)
FY FY FY FY FY
Particulars Total
2019-20 2020-21 2021-22 2022-23 2023-24
CHQ/ RHQ – Admin & General
expenses (approved in the Tariff Order 16.23 17.05 17.90 18.79 19.73 89.70
of the First Control Period)
CHQ/ RHQ – Admin & General
29.46 27.30 35.73 37.52 39.39 169.40
expenses (allocation done by AAI) = A
Revised allocation of CHQ/ RHQ
24.98 23.75 24.93 26.18 27.49 127.32
expenses proposed by the Authority = B
Variance (A-B) 4.48 3.55 10.80 11.34 11.90 42.08
4.7.9 Administration expenses (Other than CHQ/ RHQ): There is significant variance between the
Administration Expenses approved in the Tariff Order of the First Control Period (₹ 21.00 Crores) and
actual expense claimed by AAI (₹ 39.32 Crores). The major components of the actual Administration
expenses (other than CHQ/ RHQ), includes
• Upkeep expenses amounting to ₹ 15.25 Crores,
• CSR expenses amounting to ₹ 7.38 Crores,
• Manpower expenses for Inline baggage and other works amounting to ₹ 8.90 Crores and,
• Travelling expenses amounting to ₹ 2.62 Crores, etc.
The Authority notes that such increase in Administration Expenses is due to awarding of new contract
from FY 2019-20 onwards which entailed higher upkeep expenses, installation of ‘May I Help You’
counters etc.
CSR expenses
The Authority notes that AAI has incurred ₹ 7.38 Crores towards CSR expenses during the First
Control Period (i.e., ₹ 1.99 Crores in FY 2019-20, ₹ 1.48 Crores in FY 2020-21, ₹ 2.86 Crores in FY
2021-22, ₹ 0.49 Crores in FY 2022-23 and projected ₹ 0.54 Crores in FY 2023-24). In this regard, the
Authority took cognizance of the statutory provisions of the Companies Act, 2013 towards allowance
of CSR expenses and the extract of the same has been provided as under:
Section 135 (1) of Companies Act, 2013 states that ‘Every company having net worth of rupees five
hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five
crore or more during immediately preceding financial year shall constitute a Corporate Social
Responsibility Committee of the Board consisting of three or more directors, out of which at least one
shall be an independent director.’ Further section 135(5) states that ‘The Board of every company
referred in section 135(1), shall ensure that the company spends, in every financial year, at least two
percent of the average net profits of the company made during the three immediately preceding
financial years, in pursuance of its Corporate Social Responsibility’.
In this regard, the Authority is of the view that as the CSR is a mandatory Social Responsibility of the
Companies (covered under Section 135(1) of Companies Act). As the CSR expenditure is to be
incurred by Companies out of their net profits, it is to be regarded as an element of appropriation of
Net Profits and not as a part of their Operating Expenditure. Therefore, CSR expenses could not be
construed as a pass-through expenditure of the companies, otherwise, it would defeat the very purpose
of the social responsibility entrusted on the companies.
Consultation Paper No. 05/2024-25 Page 35 of 119TRUE UP OF THE FIRST CONTROL PERIOD
Section 37(1) of Income Tax Act also disallows CSR expenses, as these are not considered expenses
incurred wholly and exclusively for the purpose of business of the entity.
In view of the above, the Authority will not consider CSR expenses under the O&M Expenditure.
Interest on Loan
Further, Administration and General expenses (other than CHQ/ RHQ and upkeep expenses),
includes Interest on Loan amounting to ₹ 1.56 crores, apportioned to Varanasi Airport, from the
total interest on loan incurred by AAI on the debts availed by AAI as a whole, for all airports. The
Authority notes that AAI has not availed any debts for Varanasi Airport. Therefore, the Authority
proposes not to consider the above interest on loan apportioned to Varanasi Airport by AAI.
Based on the above factors, the Authority proposes to consider the Administration expenses - other
that CHQ/ RHQ amounting to ₹ 30.14 Crores, for true up of the First Control Period.
4.7.10 Repair and Maintenance (R&M) expenses: The Authority notes that the actual repair and
maintenance cost for the First Control Period amounts to ₹ 64.95 Crores and the same is within the limit
of ₹ 77.54 Crores approved by AERA in the Tariff Order for the First Control Period. The Authority
notes that the said Repairs & Maintenance had been incurred by AAI mainly for operational
requirements and maintenance of Aeronautical Infrastructure including AMCs for Electrical Installation
including following:
i Runway Recarpeting charges of ₹ 16.50 Crores had been charged off to expenses in FY 2019-20
to FY 2021-22.
ii R&M Electrical amounting to ₹ 0.48 Crores were incurred towards Solar Power plant and
replacement of damaged panel, ₹ 0.75 Crores towards E&M installation at Terminal Building and
Sub Station and ₹ 0.15 Crores towards supply of electrical spares.
Based on the above factors, the Authority proposes to consider the actual R&M expenses amounting
to ₹ 64.95 Crores incurred by AAI for True up of the First Control Period.
4.7.11 Utilities & Outsourcing Expenses: These expenses include Power charges, Fees paid to outsiders,
water charges, hire charges of Car/Jeep & Consumption of Stores & Spares. AAI has incurred actual
Utilities & Outsourcing Expenses of ₹ 27.39 Crores during the First Control Period, which is lower than
the expense of ₹ 35.35 Crores approved in the Tariff Order for the First Control Period.
Power Expenses: AAI has incurred actual power charges of ₹ 27.90 Crores during First Control
Period, out of which ₹ 4.45 Crores has been recovered from the Concessionaires and has claimed the
net power charges of ₹ 23.44 Crores (Actual power charges less recoveries from Concessionaires) as
a part of true up for the First Control Period.
The total power costs incurred, recoveries made from Concessionaires and the net power costs have
been summarized in the table below:-
Table 18: Details of power costs incurred and recoveries made from Concessionaires
(₹ Crores)
FY FY FY FY FY
Particulars Total
2019-20 2020-21 2021-22 2022-23 2023-24
Electricity Consumed (in 000’) 3,989 3,001 3,351 4,368 4,487
Total power costs (A) 5.43 4.42 5.07 6.19 6.80 27.90
Recoveries from Concessionaires (B) 0.86 0.69 0.91 0.76 1.23 4.45
Consultation Paper No. 05/2024-25 Page 36 of 119TRUE UP OF THE FIRST CONTROL PERIOD
FY FY FY FY FY
Particulars Total
2019-20 2020-21 2021-22 2022-23 2023-24
Recoveries (%) = (B/A%) 16% 16% 18% 12% 18%
Net power costs (A-B) 4.57 3.72 4.16 5.42 5.57 23.44
However, the actual power charges claimed by AAI (₹ 23.44 Crores) are within the approved limit of
₹ 35.35 Crores. Based on the above factors, the Authority proposes to consider the actual power costs
incurred by AAI for Varanasi International Airport for true up of the First Control Period.
Consumption of Stores and Spares and other charges: The Authority notes that the actual expenses
amounting to ₹ 2.35 Crores for the consumption of Stores & Spares expenses include petrol expenses
for Jeep/ Car and other consumables. Expenses towards consumption of stores and spares has not been
separately approved in the Tariff Order for the First Control Period. The Authority notes the actual
expenses towards consumption of Stores and spares to be reasonable and therefore proposes to consider
the same for true up of the First Control Period.
Other charges: The Other charges include Consultancy/ Advisory fees paid for the Consultancy
services availed for Land/ Terminal Management services, ACI ASQ Survey Fees and hire charges-
car/jeep & others by AAI for VIA. The Authority notes that the actual expenses amounting to ₹ 1.59
Crores incurred by AAI on such expenses towards consultancy has not been separately approved in the
Tariff Order for the First Control Period. Based on the nature and essentiality of services, the Authority
proposes to consider for true up of the First Control Period.
4.7.12Based on the above review and analysis, the revised Operation and Maintenance expenses
proposed to be considered by the Authority for the First Control Period is provided in the table
below:
Table 19: O&M expenses as proposed by the Authority for True up of the First Control Period
(₹ Crores)
S. FY FY FY FY FY
Particulars Total
No. 2019-20 2020-21 2021-22 2022-23 2023-24
1 Pay roll expenditure of VIA 16.93 17.95 19.03 20.17 21.38 95.46
Expenditure for VIA employee's
2 retirement benefits allocated at 4.87 1.77 1.48 0.02 1.69 9.84
CHQ
A Total Payroll expenditure (1+2) 21.80 19.72 20.51 20.19 23.07 105.30
Administrative and General
3 3.45 3.22 7.81 6.24 9.41 30.14
Expenditure
Apportionment of Administration
4 & General expenditure of 24.98 23.75 24.93 26.18 27.49 127.32
CHQ/RHQ
Total Administration and
B 28.43 26.97 32.74 32.42 36.90 157.46
General expenditure (3+4)
Repair & Maintenance
C 12.45 14.93 14.29 11.15 12.13 64.95
Expenditure (Total)
5 Power Charges 4.57 3.72 4.16 5.42 5.57 23.44
6 Consumption of Stores and Spares 0.35 0.32 0.69 0.51 0.48 2.35
Consultation Paper No. 05/2024-25 Page 37 of 119TRUE UP OF THE FIRST CONTROL PERIOD
S. FY FY FY FY FY
Particulars Total
No. 2019-20 2020-21 2021-22 2022-23 2023-24
7 Other charges 0.16 0.32 0.15 0.47 0.49 1.59
Utility and Outsourcing
D 5.08 4.36 5.00 6.40 6.55 27.39
Expenditure (5+6+7)
E Other Outflows 0.63 (0.04) 0.07 0.07 1.04 1.77
Total (A+B+C+D+E) 68.39 65.95 72.61 70.23 79.69 356.87
4.7.13Reasons for variance in O&M expenses as submitted by AAI ₹ 410.87 Crores and as proposed by
the Authority ₹ 356.87 Crores for true up of the First Control Period is as follows:
• Administration & General Expenses (CHQ/RHQ) – Rationalization of expenses by ₹ 42.08 crores
based on methodology followed for other similar airports.
• Administration & General Expenses (Other than CHQ/RHQ) – Rationalization by ₹ 9.18 crores
due to non-consideration of CSR expenses and interest on loan.
• Payroll Expenses (Other than CHQ/RHQ) & Payroll Expenses (CHQ/RHQ) – Rationalization
of ₹ 2.72 Crores due to consideration of 6% increase Y-o-Y as against 7% Y-o-Y increase considered
by AAI.
4.8 True up of Taxation
4.8.1 AAI has submitted taxation for the First Control Period as follows:
Table 20: Taxation submitted by AAI for VIA
(₹ Crores)
FY FY FY FY FY
Particulars
2019-20 2020-21 2021-22 2022-23 2023-24 TOTAL
REVENUE
Aeronautical Revenue 66.24 30.39 52.82 81.22 98.65 329.32
Total Revenue (A) 66.24 30.39 52.82 81.22 98.65 329.32
EXPENSES
O&M expenses 74.93 71.48 87.23 82.26 94.96 410.86
Dep. As WDV As Per Income Tax 13.71 15.90 15.37 15.25 16.53 76.76
Total Expenses (B) 88.64 87.38 102.60 97.51 111.49 487.62
Profit /Loss (A-B) (22.40) (56.99) (49.79) (16.29) (12.84) (158.30)
Tax Rates (D) 25.17% 25.17% 25.17% 25.17% 25.17%
TAX (C*D) - - - - -
4.8.2 The Authority has re-computed Aeronautical Taxation based on Regulatory Building Blocks as
discussed in the previous paragraphs and the same is as follows:
Table 21 : Taxation proposed to be considered by the Authority
(in ₹ Crores)
FY FY FY FY FY
Particulars Total
2019-20 2020-21 2021-22 2022-23 2023-24
Revenue (A)
Aeronautical Revenue 66.24 30.39 52.82 81.22 98.65 329.32
Total (A) 66.24 30.39 52.82 81.22 98.65 329.32
Expenses (B)
Consultation Paper No. 05/2024-25 Page 38 of 119TRUE UP OF THE FIRST CONTROL PERIOD
FY FY FY FY FY
Particulars Total
2019-20 2020-21 2021-22 2022-23 2023-24
O&M expenses (Refer Table 19) 68.39 65.95 72.61 70.23 79.69 356.87
Depreciation (as per Income Tax Act, 1961) 13.71 15.90 15.37 15.25 16.53 76.76
Total (B) 0.06 0.08 0.17 0.19 1.07
Profit /Loss (C=A-B) 82.16 81.92 88.15 85.67 97.28 435.19
Set off of prior period tax losses (D) -15.93 -51.53 -35.34 -4.44 1.36 -105.87
Profit/ Loss after set off of prior period tax
losses (E) -15.93 -51.60 -35.46 -4.53 0.00
Tax Rates (F) 25.17% 25.17% 25.17% 25.17% 25.17%
Tax (E*F) 0.00 0.00 0.00 0.00 0.00 0.00
4.8.3 The Authority notes that AAI has incurred losses during the First Control Period i.e., from FY
2019-20 to FY 2022-23 and profit of ₹ 1.36 Crores for FY 2023-24, which would be set off against
the losses incurred in the prior period. The Authority proposes to consider Aeronautical Tax as
NIL for true up of the First Control Period, as shown in Table 21.
4.9 True up of Aeronautical Revenue
4.9.1 AAI has submitted the actual Aeronautical revenue for the First Control Period for VIA, which is as
follows:
Table 22: Aeronautical revenue submitted by AAI for VIA
(₹ Crores)
FY FY FY FY FY
Particulars
2019-20 2020-21 2021-22 2022-23 2023-24 Total
Parking & Housing Charges Revenue
Landing (Domestic + International) 16.42 9.61 14.99 19.89 23.62 84.53
Parking & Housing 0.03 0.09 0.06 0.03 0.44 0.64
PSF and UDF Charges
PSF(Facilitation)-Domestic + International 11.61 5.63 0.15 - - 17.39
UDF (Domestic + International) 32.05 11.29 34.30 55.30 66.31 199.24
Other Revenue
Throughput Charges 1.50 0.05 - - - 1.55
Land Lease 0.56 0.56 0.59 0.64 0.80 3.14
Ground Handling Charges 0.84 0.47 0.59 1.43 2.18 5.52
Royalty from Cute Charges 2.12 1.68 1.42 2.67 3.55 11.44
Space Rental from Airlines 0.82 0.71 0.29 0.64 0.76 3.22
Royalty cargo revenue-30% 0.28 0.31 0.44 0.62 0.99 2.64
Total 66.24 30.39 52.82 81.22 98.65 329.32
4.9.2 The Authority compared the actual Aeronautical Revenue submitted by AAI with the Aeronautical
Revenues as per the Tariff Order for the First Control Period and the same is detailed below:
Table 23: Comparison of Aeronautical Revenue as submitted by AAI with Tariff Order of the First Control
Period
(₹ Crores)
FY FY FY FY FY
Particulars
Reference 2019-20 2020-21 2021-22 2022-23 2023-24 Total
As per Tariff Order A 66.88 39.32 76.03 100.92 122.85 406.01
As per True-up by AAI B 66.24 30.39 52.82 81.22 98.65 329.32
Difference C=B-A -0.64 -8.93 -23.21 -19.70 -24.20 -76.69
Change % D=C/A -0.96% -22.71% -30.53% -19.52% -19.70% -18.89%
Consultation Paper No. 05/2024-25 Page 39 of 119TRUE UP OF THE FIRST CONTROL PERIOD
4.9.3 The Authority notes that there is a significant variance between actual Aeronautical Revenues and
Aeronautical Revenues as approved by the Authority in Tariff Order for the First Control Period for FY
2020-21 to FY 2022-23, which is attributable to lower passenger traffic and ATMs due to the adverse
impact of the COVID-19 pandemic on the aviation sector.
4.9.4 The Authority reviewed the Aeronautical revenue submitted by AAI with the Audited figures for the
Financial Years (FY 2019-20 to FY 2022-23) and Actuals (Unaudited) for FY 2023-24 and noted no
deviations. Therefore, the Authority proposes to consider the Aeronautical revenue as per Table 22 for
True up of the First control period.
4.10 True up of Aggregate Revenue Requirement (ARR) for the First Control Period
4.10.1 Based on the above factors and the regulatory building blocks discussed under the above sections, the
Authority has derived the ARR for true up of the First Control Period which is enumerated in the table
below:
Table 24: ARR proposed by the Authority for True up of the First Control Period
(₹ Crores)
FY FY FY FY FY
Particulars Ref. Total
2019-20 2020-21 2021-22 2022-23 2023-24
Average RAB (refer Table
(a) 91.18 111.97 112.53 115.72 131.96
12)
FRoR (refer para 4.5.3) (b) 14.00% 14.00% 14.00% 14.00% 14.00%
(c)= (a)
Return on Average RAB 12.77 15.68 15.75 16.20 18.47 78.87
* (b)
Depreciation (refer Table 11) (d) 10.01 10.84 11.37 12.05 13.39 57.66
O&M expenses (refer Table
(e) 68.39 65.95 72.61 70.23 79.69 356.87
19)
Tax (refer Table 21) (f) 0.00 0.00 0.00 0.00 0.00 -
Interest on Working Capital (g) 0.85 1.21 1.63 0.41 - 4.10
(h) =
Gross ARR (c+ d+ 92.02 93.67 101.35 98.90 111.55 497.49
e+ f+ g)
NAR (refer Table 13) 22.70 9.95 12.94 21.53 24.56 91.68
Less 30% NAR (i) 6.81 2.98 3.88 6.46 7.37 27.50
(j) =
Net ARR 85.21 90.69 97.47 92.44 104.18 469.99
(h)-(i)
Actual Aeronautical Revenue
(k) 66.24 30.39 52.82 81.22 98.65 329.32
(refer Table 22)
Under/ (Over) recovery of
l=(j-k) 18.97 60.29 44.66 11.21 5.53 140.67
First Control Period
Discount Factor (@14.00%) (m) 1.93 1.69 1.48 1.30 1.14
Under/ (Over) recovery of
First Control Period as on (l)*(m) 36.53 101.83 66.16 14.57 6.31 225.41
March 31, 2024
True up of Under Recovery of
First Control Period as on 225.41
March 31, 2024
4.10.2 The Authority has re-computed the under-recovery of ₹ 225.41 Crores in the First Control Period as
against ₹ 305.36 crores (refer Table 3) claimed by AAI and proposes to readjust the same in the ARR
Consultation Paper No. 05/2024-25 Page 40 of 119TRUE UP OF THE FIRST CONTROL PERIOD
computation of the Second Control Period.
4.10.3 The variation between the ARR proposed by the Authority and that claimed by AAI are attributable
to following factors:
i. Rationalisation of O&M expenses such as CHQ/ RHQ expenses, Administration expenses, etc.
amounting to ₹ 53.99 Crores.
ii. Rationalisation resulting in reduction in Interest on Working Capital amounting to ₹ 1.90 Crores.
iii. Impact of compounding on net ARR (as per discounting factor) due to rationalization of O&M
expenses.
4.11 Authority’s proposal regarding True up of the First Control Period
Based on the material before it and its analysis, the Authority proposes the following with respect to
true up of the First Control Period for VIA:
4.11.1 To consider capital additions as detailed in Table 10 for true up of the First Control Period.
4.11.2 To consider Aeronautical depreciation as mentioned in Table 11 for true up of the First Control Period.
4.11.3 To consider RAB as per Table 12 for true up for the First Control Period.
4.11.4 To consider FRoR as 14% for the purpose of true up of the First Control Period.
4.11.5 To consider the non-aeronautical revenues as presented in Table 13 for the purpose of true up of the
First Control Period.
4.11.6 To consider O&M expenses as detailed in Table 19 for the purpose of true up of the First Control Period.
4.11.7 To consider actual Aeronautical revenue as per Table 22 for true up of the First Control Period for VIA.
4.11.8 To consider ARR and Under-recovery as detailed in Table 24 for true up of the First Control Period for
VIA and readjust the shortfall for the Second Control Period.
Consultation Paper No. 05/2024-25 Page 41 of 119EVALUATION OF MYTP FOR THE SECOND
CONTROL PERIOD
Consultation Paper No. 05/2024-25 Page 42 of 119TRAFFIC FOR THE SECOND CONTROL PERIOD
5 TRAFFIC FOR THE SECOND CONTROL PERIOD
5.1 AAI’s Submission on Traffic for the Second Control Period for VIA
5.1.1 The historical passenger traffic2 and ATM at the airport has been shown in the table below:
Table 25: Historical passenger and ATM traffic at VIA (in numbers)
Year Domestic International Total Passenger Domestic Internatio Total
Passengers Passengers traffic ATM nal ATM ATM
2016-17 18,11,617 1,04,837 19,16,454 14,019 1,016 15,035
2017-18 19,36,616 1,50,965 20,87,581 14,323 1,335 15,658
2018-19 25,86,311 1,98,704 27,85,015 19,984 1,834 21,818
2019-20 27,78,972 2,31,730 30,10,702 21,987 2,069 24,056
2020-21 14,48,155 18,563 14,66,718 14,227 169 14,396
2021-22 16,53,082 55,138 17,08,220 15,650 493 16,143
2022-23 24,12,023 1,09,419 25,21,442 18,218 940 19,158
2023-24 28,79,994 1,16,704 29,96,698 19,544 976 20,520
5.1.2 The traffic growth rates (Y-o-Y) and traffic as submitted by AAI for the Second Control Period are
as follows:
Table 26: Traffic growth rates and traffic proposed by AAI
Passenger ATM
Year
Domestic International Combined Domestic International Combined
Growth rates (based on FY 23-24)
2024-25 18.00% 45.00% 19.45% 12.00% 39.97% 13.70%
2025-26 15.00% 25.00% 15.65% 12.00% 22.04% 12.75%
2026-27 15.00% 25.00% 15.70% 12.00% 21.98% 12.80%
2027-28 10.00% 15.00% 10.38% 9.50% 14.00% 9.90%
2028-29 10.00% 15.00% 10.40% 9.50% 14.01% 9.91%
Traffic
2024-25 34,15,425 2,37,986 36,53,411 22,853 1,842 24,695
2025-26 39,27,738 2,97,483 42,25,221 25,595 2,248 27,843
2026-27 45,16,899 3,71,854 48,88,753 28,666 2,742 31,408
2027-28 49,68,589 4,27,632 53,96,221 31,390 3,126 34,516
2028-29 54,65,448 4,91,776 59,57,224 34,372 3,564 37,936
5.1.3 AAI has submitted that the passenger traffic and aircraft movement projections are based on past trends,
econometric and regression analysis, and various economic factors including policy framework.
5.2 Authority’s examination regarding Traffic for the SecondControl Period of VIA
5.2.1 As part of its examination of AAI’s forecast of traffic at VIA, the Authority calculated Compounded
Annual Growth Rate, or CAGR, for passenger traffic and ATM from FY 2019-20 to FY 2023-24 (5-year
CAGR) and FY 2021-22 to FY 2023-24 (3-year CAGR).
2 Source: Traffic News from AAI website
Consultation Paper No. 05/2024-25 Page 43 of 119TRAFFIC FOR THE SECOND CONTROL PERIOD
5.2.2 The Authority notes that 5-year CAGR of Domestic and International passenger and ATM is significantly
low due to the COVID 19 pandemic. The CAGR details so computed have been provided in the table
below:
Table 27: CAGR for passenger traffic and ATM
Particulars 5-year CAGR 3-year CAGR
Passengers:
Domestic 1% 32%
International -8% 72%
ATM:
Domestic -2% 20%
International -11% 179%
5.2.3 The Authority notes that the wide variation in traffic in the recent past, had caused the 3-year CAGR to
be the highest for International Passenger Traffic and ATM.
5.2.4 The Authority notes that VIA has growth of 19% and 7% in domestic passenger traffic and domestic
ATM traffic respectively for FY 2023-24 (over previous financial year). Similarly, there is a growth of
7% and 4% international passenger traffic and international ATM traffic respectively for FY 2023-24
(over previous financial year).
Derivation of traffic forecasts by the Authority
The traffic forecasts have been computed by the Authority, after considering the study and analysis
by the following agencies regarding future air traffic demand and same is as follows:
5.2.5 Airports Council International (ACI)
ACI in its recent report has analysed air travel outlook revealing global passenger traffic expected to
reach 9.4 billion passengers:
• While the Asia-Pacific region is expected to have a substantial jump in passenger traffic in the first
half of 2023 along with the ongoing opening of the Chinese market, its recovery is predicted to slow
down significantly in the second half of the year due to challenges in overseas tourism and looming
economic concerns. The region is expected to reach approximately 3.4 billion passengers in 2024.
• Global passenger volume in 2023 is expected to reach 8.6 billion passengers, which is 94.2% of the
2019 level.
• The year 2024 is expected to be a milestone for global passenger traffic recovery as it reaches 9.4
billion passengers, surpassing the year 2019 that welcomed 9.2 billion passengers (102.5% of the
2019 level).
• The gap between the Business as Usual (BAU) forecast from 2019 and the current recovery
projections reveal that the percentage of lost traffic continues to decrease on a quarterly basis, from
-23% in Q1 2023 to -13% in Q4 2024.
5.2.6 International Air Transport Association (IATA)
IATA in its report on July 03, 2024 had enumerated that:
• Industry total Revenue Passenger-Kilometres (RPK) maintained a positive trajectory in May
growing 10.7% annually, slightly outpacing the 8.5% Y-o-Y growth in Available Seat-Kilometre
(ASK). Passenger load factors (PLF) were higher than in comparison to previous years indicating
Consultation Paper No. 05/2024-25 Page 44 of 119TRAFFIC FOR THE SECOND CONTROL PERIOD
stronger demand for air travel as industry wide traffic continues to rise.
• Domestic traffic rose 4.7% over the year. PR China remained the fastest growing market among
those monitored with 7.6% Y-o-Y growth. Japan RPK contracted for two (2) consecutive months;
wherein May figures be 1.8% lower than the previous year.
• International traffic continued to show resilient momentum in May with 14.6% Y-o-Y growth in RPK
across the region. Traffic from Asia Pacific still surges at a rapid pace with 27.0% Y-o-Y, while the
remaining regions saw consistent results in regard of the previous month.
• India domestic passenger traffic continue to climb at a stable rate, increasing 4.6% Y-o-Y.
• Industry total Revenue Passenger-Kilometers (RPK) maintained a positive trajectory in March
growing 13.8% annually, mostly carried by strong momentum of international traffic. Passenger
load factors (PLF) were higher than in comparison to previous years while available seat capacity
continue to follow increases in demand.
• Domestic traffic rose 6.6% over the year. PR China remained the fastest growing market among
those monitored with 17.6% Y-o-Y growth.
• International traffic continued to show resilient momentum in March with 18.9% Y-o-Y growth in
RPK across the entire industry. Traffic from Asia Pacific still surges at a rapid pace, while the
remaining regions saw consistent results in regard of the previous month.
• India passenger traffic continue to climb at a stable rate, increasing 3.8% Y-o-Y.
Conclusion on traffic forecasts based on the above assumptions
5.2.7 The Authority has taken into consideration the forecast/data published by ACI and IATA cited in para
5.2.5 and para 5.2.6 above, which indicate stable domestic passenger growth for India (4.6% Y-o-Y, as
stated in IATA’s recent report). The positive outlook has been taken into consideration for determining
traffic projections for Varanasi Airport, which is currently expanding its Airport infrastructure and is
poised to handle higher passenger traffic.
5.2.8 The Authority notes that AAI has projected the following growth rates in traffic
• 10%-18% growth for domestic passenger traffic
• 15%-49% growth for international passenger traffic
• 10%-12% growth for domestic ATM
• 14%-40% growth for international ATM
The Authority takes cognizance of the rebounding of domestic passenger traffic in FY 2022-23, where it
has reached the pre COVID level of FY 2019-20.
5.2.9 Further, Varanasi being a tourist destination and with the commissioning of New Terminal Building in
the current Control Period, the Authority is of the view that VIA would be able to handle higher passenger
traffic in the Second Control Period.
Based on the above factors, the Authority finds the traffic projections of AAI for VIA to be
reasonable and proposes to consider the same for the Second Control Period.
5.2.10 The traffic growth rates and the corresponding traffic for passengers and ATM as considered by the
Authority for the Second Control Period has been given in the table below
:
Consultation Paper No. 05/2024-25 Page 45 of 119TRAFFIC FOR THE SECOND CONTROL PERIOD
Table 28: Traffic proposed to be considered by the Authority for the Second Control Period
FY FY FY FY FY
Domestic Passengers (in Millions) Total
2024-25 2025-26 2026-27 2027-28 2028-29
As submitted by AAI for VIA 3.42 3.93 4.52 4.97 5.47 22.29
As proposed by the Authority 3.42 3.93 4.52 4.97 5.47 22.29
Y-o-Y growth of Domestic PAX submitted
18.00% 15.00% 15.00% 10.00% 10.00%
by AAI for VIA
Y-o-Y growth of Domestic PAX proposed
18.59% 15.00% 15.00% 10.00% 10.00%
by the Authority
FY FY FY FY FY
International Passengers (in Millions) Total
2024-25 2025-26 2026-27 2027-28 2028-29
As submitted by AAI for VIA 0.24 0.30 0.37 0.43 0.49 1.83
As proposed by the Authority 0.24 0.30 0.37 0.43 0.49 1.83
Y-o-Y growth of International PAX
48.74% 25.00% 25.00% 15.00% 15.00%
submitted by AAI for VIA
Y-o-Y growth of International PAX
48.74% 25.00% 25.00% 15.00% 15.00%
proposed by the Authority
FY FY FY FY FY
Total Passengers (in Millions) Total
2024-25 2025-26 2026-27 2027-28 2028-29
As submitted by AAI for VIA 3.65 4.23 4.89 5.40 5.96 24.12
As proposed by the Authority 3.65 4.23 4.89 5.40 5.96 24.12
Y-o-Y growth of Total PAX submitted by
19.45% 15.65% 15.70% 10.38% 10.40%
AAI for VIA
Y-o-Y growth of Total PAX proposed by
21.91% 15.65% 15.70% 10.38% 10.40%
the Authority
FY FY FY FY FY
Domestic ATM (in '000) Total
2024-25 2025-26 2026-27 2027-28 2028-29
Domestic ATM submitted by AAI for VIA 22.85 25.60 28.67 31.39 34.37 142.88
Domestic ATM proposed by the Authority 22.85 25.60 28.67 31.39 34.37 142.88
Y-o-Y growth of Domestic ATM
12.00% 12.00% 12.00% 9.50% 9.50%
submitted by AAI for VIA
Y-o-Y growth of Domestic ATM proposed
16.93% 12.00% 12.00% 9.50% 9.50%
by the Authority
FY FY FY FY FY
International ATM (in '000) Total
2024-25 2025-26 2026-27 2027-28 2028-29
International ATM submitted by AAI for
1.84 2.25 2.74 3.13 3.56 13.52
VIA
International ATM proposed by the
1.84 2.25 2.74 3.13 3.56 13.52
Authority
Y-o-Y growth of International ATM
39.97% 22.04% 21.98% 14.00% 14.01%
submitted by AAI for VIA
Y-o-Y growth of International ATM
88.73% 22.04% 21.98% 14.00% 14.01%
proposed by the Authority
FY FY FY FY FY
Total ATM (in '000) Total
2024-25 2025-26 2026-27 2027-28 2028-29
Total ATM submitted by AAI for VIA 24.70 27.84 31.41 34.52 37.94 156.40
Total ATM proposed by the Authority 24.70 27.84 31.41 34.52 37.94 156.40
Y-o-Y growth of Total ATM submitted by
13.70% 12.75% 12.80% 9.90% 9.91%
AAI for VIA
Y-o-Y growth of Total ATM proposed by
20.35% 12.75% 12.80% 9.90% 9.91%
the Authority
Consultation Paper No. 05/2024-25 Page 46 of 119TRAFFIC FOR THE SECOND CONTROL PERIOD
5.2.11 The Authority proposes to true up the traffic as per actual growth achieved during the Second Control
Period at the time of determination of tariff for the Third Control Period.
5.3 Authority’s Proposal regarding Traffic for the Second Control Period
Based on the available facts and analysis thereupon, the Authority proposes the following with regards to
traffic forecast for the Second Control Period:
5.3.1 To consider the ATM and passenger traffic for the Second Control Period for VIA as per Table 28.
5.3.2 To true up the traffic volume (ATM and passengers) on the basis of actual traffic in the Second
Control Period while determining tariff for the Third Control Period.
Consultation Paper No. 05/2024-25 Page 47 of 119CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE SECOND
CONTROL PERIOD
6 CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET
BASE (RAB) FOR THE SECOND CONTROL PERIOD
The Authority has presented its analysis on CAPEX in the following order:
• Allocation of Gross block of assets into Aeronautical and Non-aeronautical.
• Capital Expenditure proposed for Second Control Period
• Depreciation for the Second Control Period
• Regulatory Asset Base for the Second Control Period
6.1 Allocation of Gross block of assets into Aeronautical and Non-aeronautical
6.1.1 AAI has submitted for VIA the following allocation of gross block of assets as on April 1, 2024, between
Aeronautical and Non-aeronautical services:
Table 29: Allocation of opening gross block of assets for April 1, 2024, between Aeronautical and Non-
aeronautical as per AAI
(₹ Crores)
Asset Category Total ANS Cargo Non- Pure Common Common Total %
Assets Assets Aero Aero- Assets Assets Aeronauti
(Inclusive Assets nautical cal
Aero Non- Aeronautical
of ANS) Assets Assets
Aero
A= B+ C+ B C D E F = G+H G H I= E+G J=I/A
D+E+ F
Land 0.31 - - - 0.31 - - - 0.31 100.00%
Runway, Taxi Way & Apron 44.74 - - - 44.74 - - - 44.74 100.00%
Road, Bridge & Culverts. 2.77 0.07 - - 2.69 - - - 2.69 97.29%
Other Buildings 5.03 1.52 - - 3.05 0.46 0.46 0.01 3.51 69.63%
Terminal Building 88.54 0.26 - - - 88.28 79.45 8.83 79.45 89.74%
Buildings – Temporary 1.18 - - - 1.18 - - - 1.18 100.00%
Buildings – Residential 0.83 0.37 - - 0.11 0.36 0.35 0.00 0.46 55.10%
Security Fencing- Temporary 0.11 - - - 0.11 - - - 0.11 100.00%
Boundary Wall- Operational 2.21 - - - 2.21 - - - 2.21 100.00%
Boundary Wall-Residential 0.17 0.09 - - - 0.09 0.08 0.00 0.08 48.34%
Computers & Peripherals- End
1.10 0.08 - - 1.03 - - - 1.03 92.94%
User Devices
Computer Software 1.02 0.00 - - 1.01 0.01 0.01 0.00 1.01 99.38%
Plant and Machinery 55.11 31.16 0.38 - 23.35 0.22 0.20 0.02 23.55 42.73%
Tools & Equipment 4.57 0.57 - - 3.22 0.78 0.70 0.08 3.92 85.76%
Vehicles 1.20 0.05 - - 1.15 - - - 1.15 95.90%
Electrical Installations 45.26 1.80 - - 7.91 35.55 32.00 3.56 39.90 88.17%
Office Equipment 0.49 0.01 - - - 0.48 0.46 0.02 0.46 94.40%
Furniture & Fixtures-Other than
1.84 0.09 - - 1.74 0.00 0.00 0.00 1.74 94.92%
Trolley
Furniture & Fixtures – Trolleys 0.36 - - - 0.36 - - - 0.36 100.00%
X-Ray Baggage System 5.83 0.21 - - 5.62 - - - 5.62 96.46%
CFT & Firefighting equipment 19.06 - - - 19.06 - - - 19.06 100.00%
Total 281.74 36.29 0.38 - 118.85 126.22 113.71 12.51 232.56 82.55%
Consultation Paper No. 05/2024-25 Page 48 of 119CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE SECOND
CONTROL PERIOD
Authority’s examination of allocation of Gross block of assets into Aeronautical and Non-
aeronautical
6.1.2 The Authority notes that the common assets within the Terminal Building have been apportioned to
Aeronautical and Non-aeronautical activities by AAI for VIA in the Terminal Building ratio of
90%:10% for the First Control Period, which was also considered in the Tariff Order for the First Control
Period. Therefore, the Authority proposes to consider the same Terminal Building ratio (90:10) for
allocation of common assets within the Terminal Building for the Second Control Period.
6.1.3 The Authority considers the allocation of Gross Block of assets submitted by AAI as reasonable. Based
on the above, the Authority has presented the allocation of Gross Block of assets as on April 1, 2024
between Aeronautical and Non-aeronautical as per table below:
Table 30: Allocation of Opening Gross Block of Assets as on April 1, 2024 between Aeronautical and Non-
aeronautical proposed by the Authority
(₹ Crores)
Common
Total Non- %
Aero- Assets Total
Assets ANS Aero Commo
Cargo nautical Aero
Asset Category (Inclusive Assets Asset n Assets
Assets Non- Assets Aeronauti
of ANS) s Aero
Aero cal
A= B+ C+ B C D E F = G+H G H I= E+G J=I/A
D+E+ F
Land 0.31 - - - 0.31 - - - 0.31 100.00%
Runway, Taxi Way & Apron 44.74 - - - 44.74 - - - 44.74 100.00%
Road, Bridge & Culverts. 2.77 0.07 - - 2.69 - - - 2.69 97.29%
Other Buildings 5.03 1.52 - - 3.05 0.46 0.46 0.01 3.51 69.63%
Terminal Building 88.54 0.26 - - - 88.28 79.45 8.83 79.45 89.74%
Buildings – Temporary 1.18 - - - 1.18 - - - 1.18 100.00%
Buildings – Residential 0.83 0.37 - - 0.11 0.36 0.35 0.00 0.46 55.10%
Security Fencing- Temporary 0.11 - - - 0.11 - - - 0.11 100.00%
Boundary Wall- Operational 2.21 - - - 2.21 - - - 2.21 100.00%
Boundary Wall-Residential 0.17 0.09 - - - 0.09 0.08 0.00 0.08 48.34%
Computers & Peripherals-
1.10 0.08 - - 1.03 - - - 1.03 92.94%
End User Devices
Computer Software 1.02 0.00 - - 1.01 0.01 0.01 0.00 1.01 99.38%
Plant and Machinery 55.11 31.16 0.38 - 23.35 0.22 0.20 0.02 23.55 42.73%
Tools & Equipment 4.57 0.57 - - 3.22 0.78 0.70 0.08 3.92 85.76%
Vehicles 1.20 0.05 - - 1.15 - - - 1.15 95.90%
Electrical Installations 45.26 1.80 - - 7.91 35.55 32.00 3.56 39.90 88.17%
Office Equipment 0.49 0.01 - - - 0.48 0.46 0.02 0.46 94.40%
Furniture & Fixtures-Other
1.84 0.09 - - 1.74 0.00 0.00 0.00 1.74 94.92%
than Trolley
Furniture & Fixtures –
0.36 - - - 0.36 - - - 0.36 100.00%
Trolleys
X-Ray Baggage System 5.83 0.21 - - 5.62 - - - 5.62 96.46%
CFT & Firefighting
19.06 - - - 19.06 - - - 19.06 100.00%
equipment
Total 281.74 36.29 0.38 - 118.85 126.22 113.71 12.51 232.56 82.55%
Consultation Paper No. 05/2024-25 Page 49 of 119CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE SECOND
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6.1.4 The total Gross block of Aeronautical assets, as on April 1, 2024 is ₹ 232.56 Crores.
AAI’s Submission on Capital Expenditure (CAPEX), Depreciation and RAB for the
Second Control Period
6.2 Capital expenditure for the Second Control Period
6.2.1 AAI has proposed capital expenditure of ₹ 3,005.65 Crores for the Second Control Period for VIA,
which has been summarized in the table below:
Table 31: Summary of Capital Expenditure projects submitted by AAI on 30th May 2024 (MYTP) for VIA
for Second Control Period
(₹ Crores)
Project/ No. Particulars Amount
Group
1 Runway, Taxiways & Aprons 690.14
2 Road, Bridges & Culverts 562.29
3 Building- Terminal 1,375.16
4 Boundary Wall -Operational 27.11
Capital expenditure proposed
5 Other Buildings-Unclassified 44.34
for the Second Control Period
6 Plant & Machinery 7.50
7 Office Furniture 1.39
8 X-BIS 1.50
Capital expenditure proposed for the Second Control 2,709.43
Period
Financing allowance (FA) 296.22
Total (including FA) 3,005.65
Authority’s examination of Capital Expenditure (CAPEX) for the Second Control Period
6.2.2 The Authority while analyzing the Aeronautical Expenditure proposed by AAI for the Second Control
Period, has appropriately rationalized the proposed CAPEX taking into cognizance of the essentiality
and necessity of the CAPEX which is absolutely required to cater current and future traffic demand for
the smooth operations of the Airport, as explained in the following paragraphs.
The Independent Consultant appointed by the Authority has performed an in-depth analysis of the
submissions made by AAI for Varanasi Airport towards Aeronautical Capital Additions, Depreciation
and RAB. In this respect, the Independent Consultant has performed the following functions:
Reviewed construction plan submitted by AAI for Varanasi Airport, including various technical
details, Airport Master Plan, BOQs, Letter of Award (LOA), Work Orders etc.. The Independent
Consultant also considered the responses of AAI to the clarification sought in relation with
CAPEX plan from time to time.
Sought documentary evidence and the process of approval of capital addition projects including
Consultation Paper No. 05/2024-25 Page 50 of 119CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE SECOND
CONTROL PERIOD
process for award of various work orders to the contractors, wherever applicable.
The consultants also visited VIA for a site visit on 29th & 30th June, 2024, focusing specifically on
review of current airport operations and proposed airport development plans.
Based on the review of documents as stated above and the essentiality and necessity for Airport
operations, the Authority had rationalized the cost of various CAPEX projects submitted by AAI and
also shifted the capitalization date of some of the projects, based on the project progress, verification
of item rates and optimization of the capacity augmentation proposed by AAI for various assets.
Further, the Authority tried to ensure that there is no excessive capacity creation in this Control Period
as it would result in higher tariff and would have no link to the actual utilization of services/facilities
created at the Airport and the resultant high Aeronautical charges would be unfair to the end users.
Hence, the Authority through its Independent Consultant had examined the entire CAPEX plan in detail
including CWIP projects and the new CAPEX for VIA, considering the historical traffic trends and
future traffic estimates such that only essential, reasonable and efficient CAPEX is considered as part
of RAB for the Second Control Period with a view to maintain a balanced approach between the
sustainable operations of VIA and the interest of the airport users.
6.2.3 The Authority notes that AAI has conducted Airport Users Consultative Committee (AUCC) meeting
with all the stakeholders, in respect of the capital expenditure for Construction of New Terminal
Building to meet the requirements of robust traffic growth and passenger facilitation at Varanasi
International Airport. The same has been approved in the AUCC meeting no AAI/APD/VNS-2019/
dated November 25, 2019.
Subsequently, AAI had also obtained approval of PIB through note no. 27(03)/ PFC-1/ 2024 dated
February 20, 2024 for major capital projects such as the new Terminal Building, extension of Runway,
NHAI Underpass.
6.2.4 The capital additions proposed by AAI for the Second Control Period have been segregated into the
following categories:
A. Capital Addition projects shifted from the First Control Period to the Second Control Period.
B. New Capital Addition projects proposed by AAI for Varanasi International Airport for the Second
Control Period.
6.2.5 The Authority, based on its site visit through its Independent Consultant and review of the documents
submitted by AAI has considered the revised projections submitted by AAI, for its further analysis of
the CAPEX proposed by Airport Operator for the Second Control Period.
• The Authority through its Independent Consultant has raised various queries from time to time
regarding CAPEX submitted by AAI. In this regard, AAI has submitted the revised estimates/
additional details for some of its key projects such as Construction of Terminal Building and
Extension of Runway etc. vide email dated August 07, 2024.
• The Authority also notes that AAI had projected green energy initiatives along with multiple
projects. The Authority has combined them under the head Environment Management Works,
while examining the CAPEX proposed for the Second Control Period.
The capital additions, as projected by AAI has been grouped and explained in the table below:
Consultation Paper No. 05/2024-25 Page 51 of 119CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE SECOND
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Table 32: Project wise revised Capital Expenditure submitted by AAI on August 7, 2024 for VIA for Second
Control Period
(₹ Crores)
Financing
Revised project cost
Financial Year allow ance
Total CAPEX
S. No Capital Expenditure Project of (includes design, (FA) (incl. FA)
Commissioning PMC, Pre- operative
expenses etc)
A. Capital additions projects shifted from the First Control Period to the Second Control Period
A1 Building- Terminal
i) Construction of Terminal Building 2027-28 1,375.16 151.06 1,526.22
A2 X-BIS
i) X-BIS 2024-25 1.50 - 1.50
A3 Environment Management Work
i) Solar Power 2027-28 20.60 - 20.60
ii) Rain Water Harvesting 2027-28 1.00 - 1.00
iii) Solid Waste Plant 2027-28 0.50 - 0.50
Corporate Environment
iv) 2027-28 3.50 - 3.50
Responsibility
TOTAL (A) 1,402.26 151.06 1,553.32
B. New Capital Addition projects proposed by AAI for the Second Control Period
B1 Runways, Taxiways & Apron
i) Extension of Runway 2027-28 521.50 57.29 578.79
CAT- III lighting, apron flood
ii) 2027-28 126.80 18.52 145.32
lighting (Electrical)
B2 Road, Bridges & Culverts
i) Recarpeting of Perimeter Road 2024-25 2.42 - 2.42
ii) Construction of Elevated Road 2027-28 50.02 4.56 54.48
Construction of National Highway
iii) 2027-28 360.99 56.94 417.93
Under Pass
B3 Boundary Wall
i) Construction of B/Wall 2027-28 27.12 2.98 30.10
B4 Other Buildings
Box Culvert, LLZ, GP, DVoR
i) 2027-28 11.58 1.27 12.85
Security Watch Tower
ii) Sub Station 2027-28 34.75 3.60 38.35
B5 Plant and Machinery
i) Body Scanner 2025-26 7.50 - 7.50
B6 Office Furniture
Providing Baggage checking table
i) 2024-25 1.39 - 1.39
stamping and frisking stand
TOTAL (B) 1,144.07 145.16 1,289.23
Capital expenditure proposed for
TOTAL (A+B) 2,546.33 296.22 2,842.55
the Second Control Period
6.2.6 The Authority has examined the CAPEX projects submitted by AAI, in the following manner:
A. Capital additions projects shifted from the First Control Period to the Second Control Period
Consultation Paper No. 05/2024-25 Page 52 of 119CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE SECOND
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A1 Terminal Building (TB)
The Authority examined the capital expenditure for Terminal Building approved in the First Control
Period and identified that major CAPEX has not been executed in the First Control Period due to
COVID-19 pandemic. AAI has proposed to shift the said CAPEX on Terminal Building from the First
Control Period to the Second Control Period. The Authority on its examination has noted the following:
i. Background:
AAI has initially proposed construction of a new Terminal Building (TB) in the First Control Period,
by integrating it with the existing Terminal Building having an area of 24,000 sqm. The new Terminal
Building area as per the initial plan was 52,000 sqm along with 15,000 sqm basement, totalling to
67,000 sqm, with an estimated cost of ₹ 948 Crores and capacity of 4.5 MPPA. Additionally, a separate
Utility building of 4,800 sqm has been proposed by AAI.
The Authority had assessed the proposed CAPEX of new Terminal Building of ₹676.48 crore for the
First Control Period, including IDC. Due to anticipated capacity redundancy, only 75% was considered
for RAB, reducing it to ₹ 507.36 crore (₹329.78 crore Civil, ₹177.58 crore Electrical), scheduled for
capitalization in FY 2023-24. However, AAI had not commenced with the construction of Terminal
Building as approved and reasons for the same had not been stated in its MYTP submission. With
current traffic exceeding pre-COVID levels, AAI has revised its proposal based on updated trends and
forecasts.
The Authority notes from the Detailed Project Report (DPR) submitted by AAI to PIB in December
2023, that the proposal for the new Terminal Building has been revised. The new Terminal Building
has been proposed as a standalone structure with 75,000 sqm built-up area, designed for 5,000 Peak
Hour Passengers, with capacity of 6 MPPA. The new Terminal Building is separated from the existing
Terminal Building and AAI has proposed to use the existing Terminal Building for international
operations. Traffic forecasts show total traffic would reach 6 MPPA by FY 2028-29, with domestic
traffic surpassing this threshold in FY 2029-30.
ii. EPC contract awarded for Terminal Building
The Authority notes that AAI has awarded the contract on EPC basis for ₹ 893.48 Crores towards
the construction of Terminal Building and allied works. The above contract includes the Civil and
Electrical works proposed to be carried out for construction of Terminal Building.
However, the following works have been excluded from the Scope of Work of the above EPC
contract, such as:
a. Inline Baggage Handling System.
b. Passenger Boarding Bridge.
c. X-BIS HB with Automatic Tray Retrieval System.
d. Dual View X-BIS HB & RB.
e. Full Body Scanner.
f. ETD, DFMD, HHMD.
g. VHF FM System.
h. Entertainment TV, In building Solutions etc.
i. Interiors of Leased Spaces for Retail/ Commercial Spaces inside the Terminal Building.
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j. In flooring for all applicable building services within each leased space.
iii. Challenges in completing the Project
AAI has projected the timeline for completing the new Terminal Building project as 36 months.
However, the Authority based on the site visit through its Independent Consultant, notes
challenges in the completion and commissioning of this project within the above-mentioned
timelines, due to the following reasons:
• State Highway SH 98, connecting the airport to the Babatpur railway station and NH 28
intersects the proposed Multi Level Car Parking (MLCP), city side of Terminal Building,
Apron, and PTT areas.
• Successful completion of this project depends on diverting or closing this road, requiring
finalization of a layout plan and land acquisition by the State government.
• It is understood that the State govt is yet to firm up a concrete proposal for closing or diverting
this highway.
• Further, AAI proposes to take up the works excluded in EPC tender by inviting tenders
through other agencies potentially resulting in delays in the overall completion of the project.
Based on the above factors, the Authority is of the view that the new Terminal Building may be
commissioned by June 2028 (FY 2028-29). Accordingly, the Authority proposes to consider the
Commissioning of Terminal Building in FY 2028-29.
iv. Inflation adjusted normative cost determination
a. The Authority, vide its Order No. 07/2016-17 dated June 6, 2016 (Normative Order), had
considered normative cost of ₹65,000/- per Sqm. for Terminal Building. The normative cost
specification provided as Annexure-I of Normative Order. This mainly includes cost toward
structural works of the terminal building, air conditioning, fire-fighting system, water supply,
sanitary, substation equipment for power supply including stand by system, passenger facilities
viz FIDS, Furniture, Signages and Security surveillance, airlines related services viz Check-in,
CUTE, CUSS and Baggage Reconciliation System, In-line X ray screening, Standalone
screening, BHS for arrival and departure, Escalators, Elevators, Travellators and PBB. The cost
of other items required for terminal building such as elevated road connecting the terminal
building etc. is not covered in the aforementioned list. The cost of such items will be derived
separately and added to the overall cost of the project.
b. Considering the superior specifications, fit & finishes, processes, and the architectural features
of modern Terminal Buildings, the Authority has considered a normative cost for construction
of Terminal Building @ ₹ 1,00,000 per sqm for FY 2020-21. Inflation adjusted normative cost
of terminal building is being uniformly considered for other airports. In view of the same, the
Authority in case of VIA, proposes to consider ₹ 100,000 per sqm in the base year FY 2021 for
terminal building works.
c. The Authority has worked out the inflation adjusted normative rates for the CAPEX proposed
in the Second Control Period by considering the rate of inflation as follows:
The authority noted that the inflation rates as the press release dated April 18th ,2022
Department of Promotion and Industry & Internal Trade, Govt. of India for FY 2201-22 to
FY 2022-23 as under:
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FY 2020-21 - 1.29%
FY 2021-22 - 12.97%
FY 2022-23 - 9.42%
The Authority also noted that during the period FY 2016-17 to FY 2020-21, the rate of
inflation was in the range of 1.31% to 4.26%.
Considering that inflation rate for FY 2021-22 is on the higher side due to the unprecedented
impact due to COVID, AERA views that the rate has to be rationalized. Hence, the Authority
has considered the average rate of inflation of FY 2020-21 (1.29%) and FY 2021-22
(12.97%) which works to 7.14% as the inflation for FY 2021-22 in order to smoothen out
the volatility in commodity price caused by COVID-19 pandemic.
The inflation rates for the FY 2023-24 to FY 2026-27 has been considered as per 89th round
of survey of professional forecasters a macroeconomic indicator as under:
a) FY 2023-24 - 3.00 %
b) FY 2024-25 - 3.00 %
c) FY 2025-26 - 3.20 %*
* (The same rate has been considered for the remaining years of the Control Period)
d. In the Order No.07/2016-17 dated 13th June 2016 on "In the matter of Normative Approach to
Building blocks in Economic Regulation of Major Airports - Capital costs Regarding" the
ceiling cost mentioned is inclusive of service taxes applicable at that time i.e. 12%.
Subsequently, GST had been introduced wherein the GST rate is 18%. Hence, the inflation
adjusted normative cost was worked out below by adding another 6% to ensure the total GST
rate of 18% was considered in the cost. The Authority, in this regard noted that the proposed
normative cost of ₹ 1,00,000 per sqm (for FY 2020-21) is inclusive of GST. This rate is adjusted
for inflation in subsequent years and after adding 6% GST, the Normative rate has been
determined as ₹1,44,734 per sqm for FY 2028-29, as detailed in the table below:
Table 33:WPI Inflation adjusted Normative rate (per Sq.m.) derived by the Authority for
Terminal Building
Inflation adjusted
Inflation adjusted
Normative cost
Financial Year Inflation Rate normative rate
(including GST)
(in ₹ per sqm)
(in ₹ per sqm.)
FY 2020-21 - 1,00,000 1,05,357
FY 2021-22 7.14% 1,07,140 1,12,880
FY 2022-23 9.42% 1,17,233 1,23,513
FY 2023-24 0.30% 1,17,584 1,23,883
FY 2024-25 3.00% 1,21,112 1,27,600
FY 2025-26 3.20% 1,24,987 1,31,683
FY 2026-27 3.20% 1,28,987 1,35,897
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Inflation adjusted
Inflation adjusted
Normative cost
Financial Year Inflation Rate normative rate
(including GST)
(in ₹ per sqm)
(in ₹ per sqm.)
FY 2027-28 3.20% 1,33,115 1,40,246
FY 2028-29 3.20% 1,37,374 1,44,734
Note:
Inflation adjusted base amount (inclusive of 12% GST) (A) = Rs. 1,00,000 per sqm
Inflation adjusted base amount (exclusive of 12% GST) (B=A*100/112) = Rs. 89,286 per sqm
Add GST @ 18% (C=B*18%) = Rs. 16,071 per sqm
Normative cost including GST (D = B+C) = Rs. 1.05,357 per sqm
As shown in the above table the normative rate (inclusive of GST) for FY 2028-29 is ₹ 1,44,734
per Sqm.
v. Comparison of cost of Terminal Building submitted by AAI and Normative cost derived by
Authority
Cost of construction of Terminal Building submitted by AAI
The estimated costs of construction of Terminal Building submitted by AAI in its MYTP is as
follows:
Table 34:Cost of construction of Terminal Building submitted by AAI
(₹ Crores)
Particulars Formula Estimated cost for Normative
capitalisation in FY 2027-28 rate
Terminal Building Area (Sq.m) A 77,660.00
Cost Estimated (₹ Cr.) B 1,375.15
Less:- Additional Works C
i. Solar Energy 15.00
ii. Dual View X-Bis-HB CTX with
91.00
ATR
iii. Self-Baggage Drop system 7.00
iv. Deposit with Electricity Board 15.00
Estimated Cost for TB excluding
B-C 1,247.15
additional works
D = CX100
Cost excluding GST (₹ In Cr.) 1,056.91
/118
Cost of PMC @ 2.54% E 26.18
Cost excluding PMC (₹ Cr.) F 1,030.73
Cost per SQM (₹ Rs. ) F / A 1,32,722.94 1,42,617
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Particulars Formula Estimated cost for Normative
capitalisation in FY 2027-28 rate
Cost proposed by AAI (₹ Cr.) 1,375.15
For a meaningful comparison, the Authority has considered the cost of following works as a part of
Terminal Building, whereas these works have been claimed separately by AAI.
• Substation building (refer B4 (ii) in Table 32) – Substation is considered as part of Normative
cost as per AERA Guidelines.
• Elevated roads (refer B2 (ii) in Table 32) – As Elevated Road is considered essential as per
design of the new Terminal Building at VIA. Therefore, the same has been proposed to be
considered along with the cost of new Terminal Building.
The re-computed cost of Terminal Building based on by AAI’s submission is as follows:
Table 35:Recomputed cost of construction of Terminal Building based on AAI’s Submission
(₹ Crores)
Particulars of CAPEX Amount
Aeronautical Cost of Construction of Terminal Building (refer Table 35) = A 1,375.15
Aeronautical Cost of Substation building = B 34.75
Aeronautical Cost of Elevated Roads = C 50.02
Total Aeronautical cost of Terminal Building as per AAI’s submission (A+B+C) 1,459.92
Normative cost of Terminal Building as per the Authority
The total area considered for computation of normative costing is as follows:
• Area excluding Basement = 75,220 sqm.
• Fixed wing of PBB = 1,640 sqm
• Area of Substation/ Utility Building = 4,485 sqm
• Total = 81,345 sqm.
The Authority proposes to consider the area of 81,345 sqm. for deriving Normative cost, which
amounts to ₹ 1,177.34 Crores (81,345 sqm. x ₹ 1,44,734 per sqm.)
The Authority notes that the above normative cost, derived based on Normative rate as per Table 33,
includes costs for civil work, electrical works, airport system, IT system, infrastructure, etc.
However, by drawing inference from past experience in other similar airports, the Authority notes
that there are certain exclusions to the normative costs such as Art work, PMC, etc.
The details of inclusions/ exclusions from normative costs of Terminal Building, considered, based
on details furnished by AAI vide email dated August 7, 2024, have been explained in the table
below:
Table 36: Normative cost of Terminal Building proposed by the Authority for Varanasi International
Airport
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(in ₹ Crores)
S. No Particulars Amount Remarks
1) Cost as per Normative Rate 1,177.34 (refer para above)
2) Add:
i. CTX machine 91.00 Refer Note below
ii. Artwork 10.00
iii. PMC charges 26.18
iv. Skywalk from MLCP 9.54
v. Underground water tank 6.90
vi. Roads and footpaths 41.29
vii. Underpass for road crossing 18.77
viii. Elevated Road 50.02 refer para 6.2.6 B2 (ii))
Total (2) 253.70
Total (1+2) 1,431.04
Aeronautical cost of Terminal Building derived by 1,287.94
the Authority, by considering TB ratio of 90:10 (refer
para 6.2.10)
Notes:
i. As CTX is a new technology and essential from Security perspective, the Authority proposes to consider the
same as part of Terminal Building, in addition to the normative costs.
ii. Art Work – As Varanasi is an important tourist destination and religious place, in order to depict the rich
heritage of Varanasi city, CAPEX for Artworks amounting to ₹10 crores has been proposed.
iii. PMC – PMC – During project clearance by PIB, it was conveyed that MoCA/ AAI should ensure that the PMC
charges are restricted at 2.54% of estimated cost/ awarded cost/ completion cost, whichever is lowest. AAI has
considered PMC as ₹ 26.18 Crores which is within 2.54% of the estimated cost.
iv. Skywalk from Multi Level Car Parking (MLCP) to TB- Link Bridge from the MLCP to departure level of the
Terminal Building is required for facilitation/ convenience of the users of Terminal Building. The Authority
through its Independent Consultant notes that the estimated cost amounting to ₹ 9.54 Crores is reasonable as
per the CPWD norms/ market rates.
Layout map of Terminal Building – MLCP is given below:
v. Under Ground Water Tank – AAI has proposed for construction of an Under Ground Water Tank of 23 lakh
liters capacity. This is not only for the Terminal Building, but for the overall airport and has not been considered
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as part of the normative costs. Based on the essentiality, the cost estimates were checked based on market rates
and the same is considered to be reasonable.
vi. Roads and Footpaths – Roads & Footpaths are not part of the Normative cost and are considered separately
(Ref. Table 36). The cost estimates, in this regard have been checked as per the CPWD norms/ market rates by
the aviation expert of the independent consultant and found to be reasonable.
vii. Underpass for road crossing – The existing Entry Road to the New Terminal Building is crossing the Exit Road
of Old Terminal Building, for smooth flow of traffic and the same is considered an essential requirement. It is
proposed to have an Underpass, as shown in the map below:.
The cost estimates have been checked as per the CPWD norms/ market rates by the aviation expert of
the independent consultant and found to be reasonable.
The Authority based on the above analysis, proposes to consider the aeronautical cost of construction
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of Terminal Building and other works for capitalization in FY 2028-29 as ₹ 1,287.94 Crores, as shown
in Table 36.
A2 - X-BIS
i X-BIS: AAI has proposed ₹ 1.50 Crores towards the procurement of Double view XBIS (RB-
3 no’s and HB – 6 no’s) to replace the Single view XBIS in the existing TB. The Authority
notes that single view type X-BIS are available in existing Terminal Building. According to
BCAS circular 11/2017, new X-BIS machines must be equipped with dual view image
technology. This requirement extends to the computer-based programs associated with these
machines, which should also incorporate dual view image capabilities as a standard feature.
This directive aims to enhance security screening effectiveness by providing multiple
perspectives of scanned items. Based on the above factors, the Authority considers the proposal
as justifiable and the estimated cost as reasonable, based on prevailing market rates, for
capitalization in FY 2024-25.
A3 - Environment Management Works
The Authority notes that AAI has considered multiple Environment Management Works along with
the estimate of new Terminal Building, which is as follows:
a. Solar Power: AAI has proposed a 5 MW Roof top solar power plant above MLCP amounting
to ₹ 20.60 Crores and it is comparable to costs considered for other similar airports.
b. Rain Water Harvesting: AAI has proposed to provide Rain Water harvesting along with drains
amounting to ₹ 1.00 Crore. The cost estimates have been checked as per the CPWD norms/
market rates by the aviation expert of the independent consultant and found to be reasonable.
c. Solid Waste Management Plant: AAI has provisioned ₹ 0.50 Crore for Solid Waste
Management Plant. The cost estimates have been checked as per the CPWD norms/ market
rates by the aviation expert of the independent consultant and found to be reasonable.
d. Corporate Environment Responsibility: AAI has projected ₹ 3.50 Crores for Corporate
Environment Responsibility as a statutory requirement to spend 0.25% of the project cost
outside the Airport for Environmental works.
The Authority on the above lines proposes to consider ₹ 25.60 Crores towards Environment
Management Works, as the same are part of Green Initiatives for reduction of carbon footprints which
has been accorded high priority by the Government too that are recognized by the Authority.
New Capital Addition projects proposed by AAI for the Second Control Period
B1 – Runways, Taxiways and Apron
i Extension of Runway: AAI has proposed the Capital Expenditure of ₹ 521.50 Crores towards
Extension of Runway for capitalisation in FY 2027-28.
Currently, the Airport features a single 2,745-meter asphalt runway (09/27) capable of
accommodating B-767 and A-321 aircraft. The proposed plan of AAI, aims to extend the runway
to 4,075 meters, enabling operations for larger Code E aircraft like the B-777. Also, the Authority
notes that extension involves shifting the eastern threshold 374 meters westward to accommodate
a CAT-I Approach Lighting System (upgradable to CAT-III) and adding 1,704 meters to the
western end.
Additional improvements proposed by AAI encompass a Runway End Safety Area (RESA), a
Code E Runway Turning Pad, enhanced runway strip grading and a new drainage system.
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Infrastructure upgrades include a perimeter road, strengthening of existing Runway and Taxiways,
an isolated parking bay for Code E aircraft, an expanded apron for 20 A321 aircraft, new link
taxiways, a 3,400-meter parallel taxiway, and rapid exit taxiways. This approach aims to
modernize Varanasi Airport, significantly enhancing its operational capacity, safety, and
efficiency to meet growing aviation demands.
The Master Plan provided below illustrates the layout and locations of the proposed works,
explaining how the airport's infrastructure will be transformed to meet future aviation needs.
The Authority through the site visit conducted by its Independent Consultant notes that the project
requires addressing the issues connected with National Highway (NH-31) that intersects the area
proposed for the Runway Extension work. Pictorial representation of the same has been presented
below:
In order to facilitate the execution of this project, two options were considered such as:
• diversion of the highway or
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• construction of an underpass.
NHAI had provided the cost estimates for both the options and after evaluation, AAI has opted for
construction of underpass. In order to avoid the skewing of the underpass and have smooth traffic
flow it has been suggested to provide a separate alignment, as shown in the Layout Plan below:
NHAI has finalized plans for the underpass to accommodate the runway extension at Varanasi
airport and the same necessitates acquisition of approximately 10.70 hectares (26.44 acres) of land.
AAI has requested the State Government to acquire this land and transfer it to NHAI for the
project. As the underpass is essential for the runway extension at the initial stage, AAI agreed to
bear the costs associated with its construction. On April 26, 2024, NHAI provided AAI the
following cost estimates for the Underpass project.
a. Cost of land acquisition of 10.70 Hectares land, including cost of effected structure = ₹ 154.49
Crores
b. Cost of Construction = ₹ 360.99 Crores (Initially, NHAI had given the estimated cost as ₹
518.39 Crores, based on which the projections made in the MYTP)
The Authority notes that the State Government is yet to commence the process of land acquisition
for NHAI/ AAI. It is understandable that NHAI would be able to proceed with the underpass
construction only after acquiring the entire land and after removing any affected structures.
Completion of the underpass and associated roadwork is necessary before traffic can be re-routed
from the current National Highway and transferred it to AAI for runway extension work. The
Authority through its Independent Consultant has assessed that 18 months to 24 months are
required for completion of Underpass project, after the acquisition and transfer of encumbrance
free land to NHAI.
Based on the above factors, it can be discerned that the runway extension can be commenced only
upon acquisition of land, after resolving all encumbrances. Also, the PIB’s recommendation
emphasizes the need for encumbrance-free land and obtaining necessary statutory clearances
before awarding the contract. Typically, runway extension work requires a minimum of 24 to 30
months. As AAI has not provided a project schedule or PERT chart, the Authority is of the view
that the runway extension project may be completed only in the next Control Period. However, if
the same work gets completed in the current Control Period, the Authority will consider such
projects on actual incurrence basis subject to efficiency and reasonability at the time of
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determination of tariff of the next Control Period.
The Authority notes that there are other associated works which have been included under the
Runway Extension project and the same are as follows:
a) Provision of RESA on extended end of Runway measuring 240 m x 90 m.
The Authority notes that this project is integral for the commissioning of Runway Extension,
since the Civil Aviation Requirement (CAR) of DGCA stipulates that for all licensed airports,
RESA of specified dimension needs to be provided. For the runway at Varanasi, with IFR and
proposed Code E operations, the RESA of size 240m X 90m is required along with the Runway
extension. Considering that the runway extension can be completed and commissioned only in
the next Control Period, the Authority, therefore proposes to shift this project to the next Control
Period.
b) Provision of Runway Turning Pad for Code E.
The Turning Pad at the west side is integral to the Runway Extension, therefore, the Authority
proposes to shift this project to the next Control Period. The Turning Pad at the east side of the
Runway is linked with the shifting of the threshold for the Approach Lighting System. Therefore,
the Authority proposes to consider this work along with the “Strengthening of Existing Runway”.
c) Development of Runway Strip with suitable grading
Runway strip is needed for the project on Runway Extension and hence, the Authority proposes
to shift it to the next Control Period.
d) Provision of drainage system
Drainage/ rain water disposal system is available for the existing operational area. Upon Runway
Extension and additional infrastructure construction, there would be a need for redesign and
construction of a proper drainage system. As this work relates to the project on extension of
Runway, the Authority proposes to shift it to the next Control Period.
e) Perimeter Road
AAI has proposed to extend the runway on the west side and widen the existing Runway Strip on
the east side. The total length of the Perimeter Road is 8,900 m, out of which, 3,460 m is in the
operational area, where the land is available. However, with the widening of the Runway Strip,
the perimeter road will need to be realigned and reconstructed closer to the new boundary. The
Authority through its Independent Consultant notes that the road within the runway extension area
can be completed along with the runway extension in the next Control Period, while the proposed
perimeter road on the east side may be completed along with the project on Apron in FY 2028-29.
AAI has estimated the total cost for the perimeter road at ₹ 26.70 crore i.e. ₹ 15.46 Crores for the
road in the Runway Extension area and ₹ 11.24 Crores for the road on the east side. Based on the
above factors, the Authority proposes to consider ₹ 11.24 Crores for Perimeter Road on the East
side, which is reasonable based on the prevailing market rates, for capitalisation in the Second
Control Period.
As elaborated, the Runway Extension is totally dependent upon acquisition of additional
land by following the due process of land acquisition as per the stipulated timeline and hence
if the above associated works or its part directly related to Runway Extension as mentioned
above at para (a), (b), (c), (d) and (e) gets started and then fully completed and capitalised in
the current Control Period then the Authority shall consider such projects on actual
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incurrence basis subject to efficiency and reasonableness at the time of determination of
tariff of the next Control Period.
f) Strengthening and Recarpeting of existing Runway and Taxiways
AAI proposes to develop the operational area to accommodate Code E aircraft. This involves
extending the existing runway, as previously mentioned, and strengthening both the runway and
taxiways to support Code E operations. Additionally, any necessary corrections to the runway
surface profile will also be undertaken. The last recarpeting of the runway had been carried out in
December 2017. Typically, recarpeting is needed, on an average of every 10 years, based on the
number of ATMs and therefore it is likely to be due within this Control Period. As the
strengthening of runway needs to be completed before recarpeting, the Authority is of the view
that this project can be undertaken and completed within this Control Period. AAI has provided
estimates for various components of the project, based on which the cost of this project has been
derived as ₹ 26.20 crore. The Authority considers the same as reasonable, based on review of
prevailing market rates and proposes to consider capitalisation of this project in FY 2028-29.
g) Construction of Apron for 20 Nos A-321 and Isolation Bay
The Authority notes that currently there are 9 parking bays, suitable for parking of A-321. In the
approved scope of work, the construction of Apron adjacent to the proposed new Terminal
Building for parking of 20 Nos A-321 type of aircraft in Power in - Push back configuration has
been considered. The layout plan of the same is shown below:
Figure 1: Layout Map of new Apron & proposed Parking bays
The Authority notes that out of the 20 bays, 8 parking bays would be designated for parking 4 nos.
of Code E aircrafts or 8 nos. of A-321 type of aircrafts (Multiple Aircrafts Ramp System -MARS).
The structural design of the Apron and its connecting Taxiways is for Code E operations. The
Authority notes the importance of balancing Terminal Building capacity with Airside capacity.
The new Terminal Building (TB) will increase the terminal capacity to accommodate up to 5,000
passengers during peak hours. To support this capacity, both Runway and Apron capacities must
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be enhanced. Considering the need for more contact bays and the optimal positioning of remote
bays for efficient operations, constructing 20 bays for A-321 aircraft near the new Terminal
Building is justified.
A new Isolated Parking Bay suitable for parking B-777 aircraft has been proposed by AAI at the
North side of runway, as shown in the diagram below:
The Authority observes that the current Isolated Parking Bay obstructs the Parallel Taxi Track and
the future Apron expansion. Moreover, it can only accommodate Code C aircraft. Considering the
limitations, there is a need to construct a new Isolated Parking Bay in a more suitable location.
Therefore, the Authority proposes to consider the proposal to build a new Isolated Parking Bay on
the north side of the runway.
The estimated cost of Apron and Isolation Bay considered by AAI in the MYTP amounts to ₹ 208
Crores. The area of various pavements, taken by AAI in the estimate are given in Table below:
Table 37: Estimated area (sqm.) of Apron and Isolation Bay submitted by AAI
Sl. No. Particulars Area (Sqm.) Remarks
1(a) Isolation Bay 15,000
(b) Shoulder of Isolation Bay 3,975
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Sl. No. Particulars Area (Sqm.) Remarks
2(a) Apron-1 61,047 Apron 1 and 2 are not included in the
Scope of Work of AAI and hence, no
(b) Shoulder 12,209 justification is available to consider them
3(a) Apron-2 28,607 in Second Control Period.
(b) Shoulder 5,721
4(a) Apron- 3&4 1,29,295
(b) Shoulder 15,998
Total 2,71,852
The Authority notes that the total area of Apron and Isolation Bay, including Shoulders, was
derived by AAI as 2,71,852 sqm, for cost estimation purpose including Apron-1, a proposed 13-
bay A-321 accommodation north of the existing ATC tower, and Apron-2, a planned 4-bay A-321
facility west of the new Fire Station. However, current traffic data suggests these additions may
be premature.
In FY 2022-23, the annual aircraft movement was 19,158, efficiently handled by the existing 9
bays without congestion. Projections for FY 2033-34 indicate 60,277 movements, which can be
managed by adding 20 bays to the current capacity. Furthermore, Apron-1 and Apron-2 were not
included in the project's approved Scope of Work or the DPR submitted to PIB. Consequently,
Apron-1 and Apron-2 have been removed from the current plan. The revised proposal now focuses
on Apron-3, Apron-4, and the Isolation Bay for this phase of development.
The State Government has acquired and transferred the land necessary for Apron construction.
However, the diversion or closure of State Highway 98 is yet to be carried out, as detailed in para
6.2.6 A1 on the project on new Terminal Building. Considering that the Apron's utility is directly
related to the new Terminal Building, the Authority proposes to consider commissioning of both
Apron and Isolation Bay in FY 2028-29, along with capitalisation of the new Terminal Building.
AAI has consolidated the estimated costs for various civil works in the operational area under the
project title "Extension of Runway". To determine the costs of individual assets, the Authority has
extracted figures from the abstract of cost and detailed estimates. These extracted costs have been
compared against Normative costs, with the results presented in the Table below:
Table 38: WPI Inflation adjusted Normative rate (per Sq.m.) considered by the Authority for Apron
Inflation adjusted normative Inflation adjusted Normative
Financial Year Inflation Rate
rate (in ₹ per sqm) rate (in ₹ per sqm.) incl. GST
FY 2022-23 6,198* 6,530
FY 2023-24 0.30% 6,217 6,550
FY 2024-25 3.00% 6,403 6,746
FY 2025-26 3.20% 6,608 6,962
FY 2026-27 3.20% 6,819 7,185
FY 2027-28 3.20% 7,038 7,415
FY 2028-29 3.20% 7,263 7,652
*Derived based on AERA Order on Normative Cost of TB & Apron
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Note:
Inflation adjusted base amount (inclusive of 12% GST) (A) = Rs. 6,198 per sqm
Inflation adjusted base amount (exclusive of 12% GST) (B=A*100/112) = Rs. 5,534 per sqm
Add GST @ 18% (C=B*18%) = Rs. 996 per sqm
Normative cost for FY 2023 including GST (D = B+C) = Rs. 6,530 per sqm
As shown in the above table the normative rate (inclusive of GST) for FY 2028-29 is ₹ 7,652 Sqm.
Table 39: Normative cost of Apron considered by the Authority for Varanasi International Airport
Normative Cost
Derived from Estimated Cost of
proposed by the
Work
AAI (₹ in Crores)
Authority (₹ in Crores)
Apron 3&4 and Isolation Bay.
125.84# 125.70*
Work below subgrade
4.60
Add 3% extra for cost escalation for
3.78
one year
Cost of GSE area 3.75 3.75
Total 133.37 134.05
# The estimated cost of AAI for pavements of area 2,71,852 sqm, including painting is ₹ 208.25 Crores.
The proportionate amount derived from the estimate cost, for 1,64,268 sqm (sum of sl. 1a, 1b, 4a and 4b of
Table 37) is ₹ 125.84 Crores.
**The Normative cost for pavements of area 1,64,268 sqm @ Rs 7,652/sqm is ₹ 125.70 Crores.
The Authority notes that AAI had derived cost which is lesser than the Normative costs as per
AERA guidelines and is therefore found to be reasonable. Therefore, the Authority proposes to
consider ₹ 133.37 Crores for this project for capitalization in FY 2028-29.
h) Taxiway System Works
The above works include Link Taxiways, Entry & Exit Taxiways and Parallel Taxi Tracks (PTT),
developed in phases to optimize construction costs while meeting near-term capacity needs.
Currently, Varanasi Airport's limited taxiway infrastructure results in extended runway occupancy
times, with restricted capacity of 10-12 movements per hour, which is sufficient for the present
Peak Hour Passengers (PHP), which is 1,050.
The new Terminal Building is proposed to increase capacity to 5,000 PHP, necessitating at least
30 movements per hour, within 7-8 years, to prevent congestion.
The Authority notes that AAI's proposal to enhance the Taxiway System is justified, though some
adjustments are needed. Considering the delays in land acquisition and construction of Underpass,
the Authority proposes to consider the PTT only for the existing runway in this Control Period.
The Authority is of the view that as RETs is currently not in the Master Plan and same may be
taken up in the next Control Period based on future traffic demand.
The State Government has acquired land for the PTT of the existing runway. However, due to the
challenges in the process of diversion of State Highway SH 98, the commissioning of PTT may
likely to be delayed. Based on the above factors, the Authority proposes to consider 1,700m PTT
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for the existing runway, Entry/Exit Taxiways for the existing runway, two Link Taxiways to the
new Apron, and a Link Taxiway to the Isolation Bay, in the current Control Period, for
capitalisation in FY 2028-29.
AAI has not prepared the estimated cost of various assets separately. The areas of different
pavements submitted in the estimate provided by AAI have been examined by the Authority and
the same are as follows:
Table 40: Area (sqm.) considered by the Authority for Taxiway system for Second Control
Period
Area(sqm) Area(sqm) taken
S. No Particulars Remarks
taken by AAI by Authority
PTT for existing
1(a) PTT 78,200 39,100 Runway considered
(b) Shoulder of PTT 51,000 25,500
2(a) Entry/Exit/Link Taxiways 26,565 15,180 These are in the existing
runway area and hence
(b) Fillets 5,313 3,036 considered
(c) Shoulder 17,325 9,900
(d) Shoulder Fillets 3,465 990 20% estimated by AAI.
10% considered by the
3(a) Link Taxiway to Isolation Bay 6,383 6,383 Authority
(b) Fillets 1,276 1,276
(c) Shoulders 4,163 4,163
(d) Shoulders Fillets 832 416
Runway & Turning Pad Shifted to the next
4(a) Shoulder and Blast Pad 31,403 Control Period
5(a) RET 9,200 Not considered as it is
not part of Master Plan
(b) Fillets 1,840
and approved Scope of
(c) Shoulders 6,000 Work
(d) Shoulders Fillets 1,200
Total 2,44,165 1,05,944
Based on the above factors and details given in Table 40, the Authority proposes to consider
Taxiway area of 1,05,944 sqm for the Second Control Period.
AAI has consolidated the cost estimates under two main project headings: "Extension of Runway"
for various civil works in the operational area, and "Electrical works - CAT-iii Lighting, apron
floodlighting etc" for all electrical works in the same area. To determine individual asset costs,
figures have been extracted by the Authority’s Independent Consultant, from the abstract of cost
and detailed estimates. These extracted costs have been compared against Normative costs, with
the results presented in the table below:
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Table 41: Normative Cost of Parallel Taxi Track derived by the Authority for Varanasi
International Airport
Estimated Cost of AAI (₹ in Normative
Work Crores) Cost
PTT/Entry-Exit & Link Taxiways/ Isolation Bay Taxiway
Taxiways (64975 sqm) 49.20
81.06
Shoulders (40969 sqm) 16.57
Add: cost of earthwork - 2.97
Add: 3% cost escalation one year 1.97
Total 67.74 84.03
The Authority through its Independent Consultant has reviewed the cost estimates provided by
AAI for the Taxiway System Works and found them to be reasonable and within normative costs.
Therefore, the Authority proposes to consider ₹ 67.74 Crores for this project, for capitalisation in
FY 2028-29.
As mentioned in the earlier paragraphs, AAI had grouped all civil works in the operational area
under the broad heading "Ext of Runway" with a total projected cost of ₹ 521.50 Crores in the
MYTP. For a better understanding of the cost of individual projects, the Authority has derived
individual asset costs based on additional information provided by AAI from time to time. This
breakdown, along with the costs of projects proposed to be considered by the Authority, is
presented in the table below:
Table 42: Cost of Runway extension and associated works derived by the Authority for Varanasi
International Airport
S. No Particulars Remarks
Estimated Cost (₹ in Crores)
Projected by Proposed by the
AAI Authority
Runway Extension 123.70 All the items from S. No i to
i. Extension of Runway iv are integral to the Runway
Extension. Therefore, the
ii.
Provision of RESA
Authority proposes to shift
iii. these to the next Control
Turning Pad
Period.
iv. Grading of Runway Strip
v. 5.80 Shifted to the next Control
Drainage System
Period.
vi. 26.70 11.24 Partially considered in the
Perimeter Road
Second Control Period.
vii. Strengthening & Recarpeting of 26.20 26.20
Existing Road
Apron and Isolation Bay 208.25 133.37 AAI has taken 37 bays in the
viii. Isolation Bay estimate, which is beyond
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S. No Particulars Remarks
Estimated Cost (₹ in Crores)
Projected by Proposed by the
AAI Authority
ix. the approved scope of work
Apron for 20 Bays of 20 bays. Therefore, the
same has been rationalised.
Taxiway System 130.85 67.74 PPT and Link Taxiways for
x. Link/ Entry-Exit Taxiways the Runway Extension
portion have been shifted to
the next Control Period.
xi. Parallel Taxi Track (PTT) Hence, the area has been
reduced from 2,44,165 Sqm
to 1,05,944 sqm and cost
rationalised accordingly.
xii. RETs RETs not considered as it is
not part of Master Plan and
approved Scope of Work,
Total 521.50 238.55
The Authority as per the above table has considered ₹ 238.55 Crores for capitalization of assets
pertaining to the runway extension and associated works in this Control Period. It has been
ascertained at the ground level that Runway Extension and the Underpass are dependent on the
acquisition of additional land and also consequent relief and rehabilitation of some of the oustees
on the said land. At present the land acquisition process is yet to progress significantly on the
ground. In the said background, if the required land is made available to AAI and NHAI for
undertaking the projects related to Underpass and the Extension of Runway & other associated
works as illustrated above and the work on these projects are initiated by the NHAI and AAI in
this Control Period, then such works would be considered on actual incurrence basis, subject to
efficiency and reasonableness at the time of determination of tariff for the next Control Period.
ii. CAT III lighting, Apron flood lighting (Electrical): AAI has proposed ₹ 168.40 Crores
towards the construction of CAT III lighting, Apron flood lighting and other miscellaneous
electrical works to be capitalized in October 2027. The Authority notes that AAI had not
provided any detailed breakup but subsequently, AAI had submitted revised estimates for
Electrical works vide email dated August 7, 2024 which are as follows:
Table 43: Breakup of Electrical works as submitted by AAI for the Second Control Period
S. No. Particulars Amount (₹ in Crores)
1. AGL i/c CAT-III Approach Lighting System 107.50
2. Apron Flood Lighting and Perimeter Lighting 10.50
3. NAV-AIDS Electrical 8.80
Total 126.80
The Authority notes that implementation of the Runway extension project at Varanasi Airport is
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undergoing delays due to time lag in land acquisition for both the runway and the proposed
underpass. Consequently, several associated projects may not be completed in the Second Control
Period including the Advanced Ground Lighting (AGL) system with CAT-III Approach Lighting,
and navigational aids like electrical perimeter lighting for the extended runway portion.
However, the Authority is of the view that the following works within the existing operational
area may be undertaken during the Second Control Period:
Table 44: Electrical works proposed by the Authority for the Second Control Period
(₹ in Crores)
Particulars Submission by Proposed by Variance Remarks
S.
AAI the Authority
No.
AGL i/c CAT-III 107.50 42.20 65.30
1. The works relating to (AGL) that
Approach Lighting
pertain to the area under
System
extension of Runway have not
been considered, as the project
on Extension of Runway is
proposed to be shifted to the next
Control Period.
Therefore, the cost of the
remaining areas (after excluding
the areas/ pavements that pertain
to Runway extension) have been
considered for capitalization in
this Control Period.
Apron Flood Lighting 10.50 6.60 3.90 The proportionate costs of the
2.
and Perimeter Lighting works in the operational area
(excluding those pertaining to
area under extension of Runway)
such as Apron Flood Lighting
and Perimeter Lighting at the
East portion of the operational
area have been considered in this
Control Period.
NAV-AIDS Electrical 8.80 - 8.80 This work is required for
3.
facilitating the extension of
Runway. Since the runway
extension project, is shifted to
the next Control Period, the
subject work has also
been shifted.
126.80 48.80 78.00
Hence, the Authority proposes to consider the CAPEX of ₹ 48.80 Crores towards CAT III lighting,
Apron flood lighting (Electrical) for capitalization in FY 2027-28. However, if the balance project
works amounting to ₹ 78 Crores (₹ 126.80 Crores less ₹ 48.80 Crores), is undertaken by AAI in
this Control Period, then the same would be considered by the Authority, on actual incurrence
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basis, subject to efficiency and reasonableness during the determination of tariff for the next
Control Period.
B2 - Road, Bridges & Culverts
i Recarpeting of Perimeter Road: The Authority notes that AAI has proposed ₹2.42 Crores for
recarpeting of Perimeter Road in FY 2024-25. Based on the assessment of its Independent
Consultant, as per the Authority, the recarpeting of perimeter road is a part of maintenance work
and hence, proposes to shift the above-mentioned CAPEX as part of Repair & maintenance
expenses under Operation and Maintenance expenses for the Second Control Period.
ii Elevated Road: The Authority notes that AAI has proposed ₹ 41.48 Crores towards the
construction of Elevated Road to be commissioned in October 2027. Subsequently, AAI vide
email dated August 07, 2024, has revised the cost of the Elevated Road including Civil and
Electrical works to ₹ 50.02 Crores. The Authority notes that the Elevated Road is integral to the
New Terminal Building and same can be commissioned along with the capitalization of the new
Terminal Building. Therefore, the Authority has considered the cost of Elevated Roads (which
seems to be reasonable as per prevailing market rates), along with the cost of new Terminal
Building (refer Table 36).
iii National Highway Underpass:
a. AAI has proposed ₹ 518.39 Crores towards the construction of National Highway Underpass
to facilitate work of Runway Extension and same is considered by AAI under the asset class
‘Roads, Bridges and Culverts’.
The Authority noted from the letter No. 27(03)/PFC-I/2024 dated February 20, 2024 of
PIB, wherein it is stated that MoCA has proposed ₹518.39 Cr. for an Underpass, to be
constructed by NHAI and this is also proposed to be included for calculation of return on
RAB. Further, PIB has recommended MoCA to make submission before AERA to examine
the appropriateness regarding inclusion of the road for consideration in RAB and the
appropriate rate of return to be allowed on it as per extant guidelines.
b. The Authority through the site visit conducted by its Independent Consultant notes that the
project requires to address the issues related to National Highway (NH-31) that intersects the
proposed area for Runway Extension. It was noted that a portion of the National Highway is
an obstacle in the Approach of Runway-09, due to which the runway threshold has been
displaced by approximately 230 m; which implies that the 230m is not usable for landing of
aircraft from the west side of the present runway.
To facilitate the execution of this project, two options were considered such as:
• diversion of the highway or
• construction of an Underpass
NHAI had provided the cost estimates for both the options and after evaluation, AAI has opted
for the construction of the Underpass.
c. The Authority notes that on April 26, 2024, NHAI has provided revised cost estimates of
₹154.49 crore for land acquisition and ₹360.99 Crores for construction of Underpass and
connecting roads.
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d. NHAI had requested 10.70 hectares of land from the Government of Uttar Pradesh, to be
provided free of cost and without encumbrances, for the construction of proposed underpass,
which is primarily for the connecting road segments. For the proposed land acquisition, State
Government as per Section 3 of NH Act, 1956 is processing the matter against which
confirmation is awaited. After obtaining the fund sanction, the Land Acquistion proceedings
and the Rehabilitation & Resettlement (R&R) shall commence.
e. Further, PIB’s recommendation emphasizes the need for encumbrance-free land and obtaining
necessary statutory clearances before award of the work. Taking into consideration the above
requirement of obtaining statutory approvals and also, the time required for the acquisition of
land, the Authority is of the view that the Underpass project is likely to be completed only in
the next Control Period. However, if this project is undertaken in this Control Period, the same
would be considered by the Authority, on actual incurrence basis, subject to efficiency and
reasonableness during the determination of tariff for the next Control Period.
Capitalisation in AAI’s books and NHAI’s books:
f. It is pertinent to note that the bridge / culvert is required to support the runway and its strip
and the same would be in the land acquired for AAI. Therefore, the Box Culvert/Underpass
can be capitalized by AAI in its books, to facilitate its maintenance in future.
g. However, the connecting roads on both sides of the Box Culvert, which is also part of the
Underpass would be on the land acquired for NHAI. Therefore, the same may be capitalized
in the books of NHAI.
h. Although the Underpass is constructed to facilitate the extension of the Runway, there also
seems be potential benefits for NHAI and avenues for cost savings as detailed below:
• For any construction work undertaken by NHAI in future, the resurfacing of the part of the
road connecting the Underpass need not be carried out for the next few years, thereby
resulting in potential cost savings for NHAI.
• Further, for new road alignment, the gradients would be smoothened, facilitating better
drive and comfort.
• Some portion of the existing road alignment, which may be cut off/ corrected (after the
Underpass is constructed), can be used by NHAI for alternative purposes such as parking
of vehicles
Project Execution and cost sharing – can be a collaborative effort
i. It is noted that NHAI is collecting toll from the vehicles making use of the NH-31 between
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Babatpur and Jaunpur at the Hauj Toll Plaza to compensate the expenses on the construction,
maintenance and operation of the National Highway and the toll fee is determined in
accordance with the National Highways Fee (Determination of Rates and Collections) Rules.
As per the above Rules, there is provision for annual revision, subject to conditions provided
in the Concession Agreement.
j. As the Underpass would be part of NH-31, the cost of constructing the roads to the Underpass,
may be recovered through a nominal increase in toll charges, as the number of Road/ Highway
users are more as compared to the Airport Users.
k. Further, it is understandable that such facilities, be it Underpass or Extension of Runway are
created to facilitate the general public and the State Government is also extending its support
by providing necessary land at free of cost.
As both NHAI or AAI are Govt. of India Undertakings, the Authority is of the view that such
facilities may be created by both the regulatory bodies in a collaborative manner such that
there is no excessive burden on the end users through levy of high tariffs.
As explained in the above para, as users of this Underpass may be higher as compared to the
Airport, with a nominal increase in toll charges, NHAI would be able to recover its costs,
unlike Varanasi Airport, which may have to increase its aeronautical tariffs substantially to
recover its investment in assets.
l. Therefore, the Authority in response to PIB’s recommendations, proposes to consider a
balanced view, by suggesting AAI/NHAI to consider capitalization of Box
Culvert/connecting road of Underpass in the next Control Period since in order to extend the
Runway there is a need of additional land overlapping/intersecting the current alignment of
the NH-31 thereby entailing the shifting of the affected alignment of NH-31 stretch in the
form of an Underpass, under the boundary/perimeter of the airport with connecting approach
road that will connect to the existing NH-31. It is therefore proposed that NHAI should bear
the cost of constructing the connecting roads to the Underpass and also work out with AAI
the modalities of sharing of the cost of the Box Culvert/Underpass. This view is also consistent
with the International Civil Aviation Organization’s (ICAO) principle of ‘Cost-relatedness’
such that the airport passengers or road users pay only for services that are availed by them.
m. AAI and NHAI should work out the modalities for sharing of project cost relating to
construction of Box Culvert/Underpass. It is to be noted that as NHAI would earn revenues
through toll collection for the National Highway, which also includes this particular stretch
where the cost of the Box Culvert/Underpass is proposed to be met by AAI in view of the
factors mentioned above and as mentioned in the PIB minutes. Therefore, AAI should discuss
with NHAI about compensating AAI for the expenses incurred towards the same by working
out a proportionate share of the Toll revenues for a certain period of time which may atleast
take care of the General maintenance of the Box Culvert/Underpass. AERA seeks specific
comments of the stakeholders on the above proposal.
B3 – Boundary Wall
Boundary Wall: The Authority notes that AAI has proposed ₹ 27.12 Crores towards the
construction of Boundary Wall. AAI has requested 350 acres of land from the Government of
Uttar Pradesh for Varanasi Airport's expansion, including runway extension, new Terminal
Building construction, and other facilities. As of July 28, 2024, 266.10 acres of land have been
acquired, primarily in the operational area. The wall, spanning 9,524 meters (3,998m east, 5,526m
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west), is deemed necessary for security purposes. However, based on the analysis conducted by
Aviation Expert of the Independent Consultant, the Authority, draw inference from the cost
estimates of other similar airports including CPWD norms, considers the estimated cost of above
work at ₹ 20 Crores as a reasonable. Based on the essentiality of the CAPEX from Security
perspective, the Authority proposes to consider capitalization of this project in FY 2027-28.
B4 – Other Buildings
i Box Culvert, LLZ, DVoR, Security Watch Tower: The Authority notes that AAI has proposed
₹ 11.58 Crores towards the construction of Box Culverts and other enabling works such as LLZ.
This includes construction of six box culverts across the extended runway portion, installing
600mm NP3 pipes for cable and pipeline crossings, relocating existing LLZ and GP systems to
accommodate the runway extension and CAT-III Approach Lighting System, shifting of the
DVOR to allow for future Apron construction on the runway's north side, and erecting 20 security
watch towers along the new perimeter/operational wall. However, since all these components are
directly related to the runway extension project, the Authority proposes to shift the capitalization
of these projects to the next Control Period, in line with the proposed capitalization of the project
on extension of Runway. However, if the same work gets started and then fully completed and
Capitalized in the current Control Period, then the Authority shall consider this project on actual
incurrence basis subject to efficiency and reasonableness at the time of determination of tariff of
the next Control Period.
ii Sub-Station: The Authority notes that AAI has initially submitted ₹ 32.76 Crores towards the
construction of Sub-station to be commissioned in October 2027. Further, AAI vide email dated
August 07, 2024 has revised the estimated cost of Sub-Station as ₹ 34.75 Crores. However, as per
the AERA Order on Normative cost of Terminal Building, Substation is part of the Normative
costs (as stated in para 6.2.6 A1). Therefore, the Authority has considered the capital costs of
Substation, while determining the normative cost of constructing the Terminal Building (refer
Table 36) and proposes not to consider the cost of Sub-station separately under this head.
B5 – Plant & Machinery
Body Scanner: The Authority notes that AAI has proposed ₹ 7.50 Crores towards the procurement
of Body Scanners. The Authority notes that as per BCAS guidelines Full Body Scanners (FBS)
are to be provided in hypersensitive and sensitive airports. AAI has proposed to capitalize 3 nos.
of Body Scanners for ₹ 7.50 Crores in FY 2025-26.
BCAS has mandated the installation of at least one FBS at airports with annual traffic exceeding
five million passengers. Terminal Buildings serving both domestic and international flights must
have a minimum of one FBS for each security checkpoint. The Authority acknowledges that FBS
technology is relatively new and in its nascent stage in Indian airports and suggests a phased
implementation.
The Authority further notes that AAI hasn't specified the location for FBS, hence, it's assumed
they're intended for the existing Terminal Building (TB). Considering the BCAS guidelines, space
constraints in the current Terminal Building, and the proposal for making use of the existing
Terminal Building for International operations once the new Terminal Building commissioned,
the Authority proposes to consider capitalization of one FBS for ₹2.50 Cr (in line with the cost
considered by the Authority for other similar airports) in FY 2025-26.
B6 - Office Furniture
Providing Baggage checking table and stamping and frisking stand: The Authority notes AAI
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has proposed ₹1.39 Crores towards Baggage checking table and stamping and frisking stand to be
commissioned by June 2024. The Authority notes that the work is in progress and is expected to
be completed by September 2024. The Authority further notes that the expected expenditure is ₹
1 Crore. Therefore, the Authority proposes to consider capitalization of this project amounting to
₹ 1 Crore in FY 2024-25.
6.2.7 The Authority notes that VIA has claimed Financing allowance of ₹ 296.22 Crores as part of the
CAPEX proposed for the Second Control Period.
6.2.8 The Authority has examined the AAI’s claim towards Financing Allowance and has the following
views:
• The Authority considers that providing return on capital expenditure from the very beginning of
construction will significantly lower the risks for an airport operator and may require revisiting the
return on equity allowed to airport operators as the investment in the asset class will then be equated
to risk free rate of return.
• Further, provision of Financing Allowance will disincentivize the Airport Operators from ensuring
timely completion of projects and delivery of services to the users. Therefore, the Authority is of
the view that a return should be provided only when the assets are made available to the airport users
except in the case of certain costs like IDC that will have to be incurred in case debt is used for
funding of projects.
• Furthermore, the project should generate adequate returns in future to cover the cost of equity during
the construction stage. The AO is adequately compensated for the risks associated with the equity
investments in a construction project once the project is capitalized by means of a reasonable cost
of equity.
• Developments at greenfield airports inherently take longer durations to commission and
operationalize. Thus, airport operators would have to wait for a considerable duration before getting
returns on large capital projects. Keeping this in view, the Authority had earlier provisioned for
financing allowance in initial stages to such airports. It may be further noted that the Authority has
never provided financing allowance in the case of brownfield airports and any airport of AAI, in its
any of the Tariff Orders. Further, financing allowance for greenfield airports of BIAL, HIAL, CIAL
etc. was allowed only for the initial stages of their development, after which IDC was permitted on
the debt portion of the proposed capital expenditure.
• Financing Allowance is a notional allowance and different from interest during construction.
Therefore, the provision of Financing Allowance on the entire capital work in progress would lead
to a difference between the projected capitalization and actual cost incurred, especially when the
Airport Operator funds the projects through a mix of equity and debt. Further, the Authority opines
that only IDC should be provided on the debt borrowings availed for execution of a project.
Therefore, based on the above analysis, the Authority proposes not to allow the Financing allowance of
₹ 296.22 Crores claimed by AAI for the Second Control Period.
6.2.9 The Authority proposes to readjust (reduce) 1% of the uncapitalized project cost from the ARR / target
revenue as re-adjustment in case any particular capital project is not completed/ capitalized as per the
approved Capitalisation schedule. It is further proposed that if the delay in completion of the project is
beyond the timeline given in the capitalization schedule, due to any reason beyond the control of
Airport Operator or its contracting agency and is properly justified, the same would be considered by
the Authority while truing up the actual cost at the time of determination of tariff for the next Control
Consultation Paper No. 05/2024-25 Page 76 of 119CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE SECOND
CONTROL PERIOD
Period. The readjustment in the ARR/ Target Revenue is to protect the interest of the stakeholders who
are paying for services provided by VIA and is also encouragement for VIA to commission/ capitalize
the proposed assets as per the approved CAPEX plan/schedule.
6.2.10 The Authority notes that AAI has submitted the Terminal Building ratio of 93%: 7% (Aeronautical:
Non-Aeronautical) for apportionment of common assets within the Terminal Building at VIA for the
Second Control Period. The Authority notes that AAI had revised the Terminal Building ratio from
90%:10% (as submitted initially in the MYTP by AAI) to 93%:7% due to shifting of Space allocated
to Airlines from Non-Aeronautical to Aeronautical. As per the Authority, the space allotted to airlines
by virtue of its nature of usage is part of Aeronautical portion. Therefore, the Authority proposes to
consider this Terminal Building ratio of 90%:10% (Aeronautical: Non-Aeronautical) as reasonable, in
accordance with the decision considered in the Tariff Order for the First Control Period for Varanasi
International Airport. Further, the above ratio of 90%:10% is also in line with the optimum non-
aeronautical area allocation of 8% to 12% as recommended by IMG norms (for airports having
passenger traffic of less than 10 MPPA).
6.2.11 In accordance with above, the Authority proposes the capital expenditure for the Second Control Period
as per the table below:
Table 45: Capital Expenditure (Project-wise) proposed by the Authority for Second Control Period
(₹ Crores)
Year of Capitalisation Capitalisation
Revised
S. Initial estimates Propose
Description of the Project Proposed
No Submitted estimate of AAI (2) d by Difference
by the
by AAI of AAI Authorit (4)=(3)-(2)
Authority
(1) y (3)
A1 Terminal Building
Construction of Terminal
i) 2027-28 2028-29 1,375.16 1,375.16 1,287.94 (87.22)
Building
A2 X-BIS
i) X-BIS 2024-25 2024-25 1.50 1.50 1.50 -
Environment Management
A3
Work
i) Solar Power 2027-28 2028-29 - 20.60 20.60 -
ii) Rain Water Harvesting 2027-28 2028-29 - 1.00 1.00 -
iii) Solid Waste Plant 2027-28 2028-29 - 0.50 0.50 -
Corporate Environment
iv) 2027-28 2028-29 - 3.50 3.50 -
Responsibility
TOTAL (A) 1,376.66 1,402.26 1,315.04 (87.22)
B. New Capital Addition projects proposed by AAI for the Second Control Period
B1. Runways, Taxiways & Apron
Extension of Runway (includes
i) PTT, Apron, Link Taxiways, 2027-28 2028-29 521.50 521.50 238.55 (282.95)
etc.) (refer Table 42)
CAT- III lighting, apron flood
ii) lighting (Electrical) (refer 2027-28 2027-28 168.64 126.80 48.80 (78.00)
Table 43)
B2 Road, Bridges & Culverts
Consultation Paper No. 05/2024-25 Page 77 of 119CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE SECOND
CONTROL PERIOD
Year of Capitalisation Capitalisation
Revised
S. Initial estimates Propose
Description of the Project Proposed
No Submitted estimate of AAI (2) d by Difference
by the
by AAI of AAI Authorit (4)=(3)-(2)
Authority
(1) y (3)
i) Recarpeting of Perimeter road 2024-25 - 2.42 2.42 - (2.42)
Construction of Elevated
ii) 2027-28 2028-29 41.48 50.02 - (50.02)
Road*
Construction of National
iii) 2027-28 - 518.39 360.99 - (360.99)
Highway Under Pass
B3 Boundary Wall
Construction of Boundary
i) 2027-28 2027-28 27.12 27.12 20.00 (7.12)
Wall
B4 Other Buildings -
Box Culvert, Security Watch
i) Tower and relocation of LLZ, 2027-28 - 11.58 11.58 - (11.58)
GP, DVoR
ii) Sub Station* 2027-28 2028-29 32.76 34.75 - (34.75)
B5 Plant & Machinery
i) Body Scanner 2025-26 2025-26 7.50 7.50 2.50 (5.00)
B6 Office Furniture
Providing Baggage checking
i) cable stamping and frisking 2024-25 2024-25 1.39 1.39 1.00 (0.39)
stand
TOTAL(B) 1332.78 1,144.07 310.85 (833.22)
GRAND TOTAL (A+B) 2,709.44 2,546.33 1,625.89 (920.44)
Year-wise Capitalisation of Assets is as follows (₹ Crores)
FY FY FY FY FY
Total
2024-25 2025-26 2026-27 2027-28 2028-29
2.50 2.50 - 68.80 1,552.09 1,625.89
*Included as part of cost of Terminal Building
Note: The Authority proposes to consider capitalization schedule of Aeronautical expenditure for VIA for the
Second Control Period as ₹ 1,625.89 Crores, against CAPEX proposed by AAI amounting to ₹ 2,546.33 Crores
(exclusive of Financing Allowance). Major reasons for variance in CAPEX is due to the following factors:
i. Rationalization of Terminal Building based on Normative costs resulting in reduction of CAPEX by
₹ 87.22 Crores
ii. Shifting of Capitalization of projects such as Underpass, Extension of Runway to the Third Control Period
resulting in reduction of CAPEX by ₹ 643.94 Crores.
iii. Rationalization of cost of CAT-III lighting and apron flood lighting by ₹ 78.00 Crores.
iv. Shifting of Capitalisation amounting to ₹ 84.77 Crores in respect of sub-station and elevated road
(connecting to Terminal Building) to FY 2028-29.
v. Rationalization of cost of body scanners by ₹ 5 crores. Shifting of expenses relating to recarpeting of
Perimeter Road from CAPEX to O&M expenses amounting to ₹ 2.42 Crores.
The Authority proposes to consider capitalization of Aeronautical expenditure for VIA for the Second
Consultation Paper No. 05/2024-25 Page 78 of 119CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE SECOND
CONTROL PERIOD
Control Period as ₹ 1,625.89 Crores.
The Authority also proposes to consider some projects as illustrated in the earlier paras on actual incurrence
basis including works relating to Underpass, Runway extension & other allied works such as RESA, Turning
Pad, AGL works, etc. subject to efficiency and reasonableness at the time of tariff determination in the next
Control Period.
6.3 Depreciation for the Second Control Period
AAI’s Submission on Depreciation for the Second Control Period for VIA
6.3.1 VIA follows its approved rates of depreciation for different asset classes. While submitting the Multi-
Year Tariff proposal for the Second Control Period for VIA, AAI has taken cognizance of the rates of
depreciation approved by the Authority in previous tariff orders (Order No. 35 dated January 12, 2018,
and Amendment No. 01 to Order No. 35/ 2017-18 on ‘Determination of Useful Life on Airport Assets’).
Accordingly, the rates of depreciation approved by the Authority have been applied by VIA from FY
2017-18 onwards.
6.3.2 Depreciation has been computed separately on opening block of assets and on the proposed additions.
6.3.3 The depreciation amount proposed by VIA for the Second Control Period has been presented in the
table below:
Table 46: Depreciation proposed by AAI for VIA for the Second Control Period
(₹ Crores)
Particulars FY FY FY FY FY
Total
2024-25 2025-26 2026-27 2027-28 2028-29
Land 0.00 0.00 0.00 0.00 0.00 0.00
Leasehold Land 0.00 0.00 0.00 0.00 0.00 0.00
Runways 1.21 1.21 1.21 10.84 20.48 34.95
Taxiway 0.00 0.00 0.00 0.00 0.00 0.00
Aprons 0.00 0.00 0.00 3.12 6.23 9.35
Road, Bridges & Culverts 0.16 0.25 0.24 31.31 62.38 94.33
Building- Terminal 2.99 2.99 2.99 26.90 51.27 87.14
Building – Temporary 0.00 0.00 0.00 0.00 0.00 0.00
Building – Residential 0.08 0.08 0.08 0.08 0.08 0.40
Security Fencing - Temporary 0.00 0.00 0.00 0.00 0.00 0.00
Boundary Wall -Operational 0.22 0.22 0.22 1.73 3.23 5.62
Boundary Wall - Residential 0.00 0.00 0.00 0.00 0.00 0.00
Other Buildings-Unclassified 0.73 0.73 0.73 1.54 2.36 6.08
Computer & Peripherals: End
0.00 0.00 0.00 0.00 0.00 0.00
User Devices
Computer & Peripherals: Servers
0.00 0.00 0.00 0.00 0.00 0.00
& Networks
Intangible Assets- Software 0.01 0.01 0.01 0.01 0.00 0.04
Plant & Machinery 3.02 3.27 3.52 3.51 3.51 16.83
Tools & Equipment 0.93 0.88 0.88 0.88 0.88 4.44
Office Furniture 0.80 0.90 0.90 0.90 0.30 3.79
Furniture & Fixtures: Other Than
0.03 0.00 0.00 0.00 0.00 0.03
Trolly
Consultation Paper No. 05/2024-25 Page 79 of 119CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE SECOND
CONTROL PERIOD
Particulars FY FY FY FY FY
Total
2024-25 2025-26 2026-27 2027-28 2028-29
Furniture & Fixtures: Trolley 0.84 0.78 0.00 0.00 0.00 1.63
Other Vehicles 0.85 0.85 0.85 0.85 0.24 3.66
Vehicles- Car & Jeep 0.00 0.00 0.00 0.00 0.00 0.00
Electrical Installations 0.84 0.74 0.39 0.15 0.00 2.12
Other Office equipment 0.10 0.00 0.00 0.00 0.00 0.10
X Ray Baggage System 0.29 0.34 0.34 0.34 0.34 1.64
CFT/Fire Fighting Equipment 1.34 1.34 1.34 1.34 1.34 6.71
Total 14.44 14.58 13.70 83.50 152.65 278.87
Authority’s examination of Depreciation for the Second Control Period
6.3.4 The Authority notes that the VIA has calculated the depreciation for the Second Control Period based
on the useful life of the asset with the Order No. 35/ 2017-18 dated January 12, 2018. The Authority
has reviewed the depreciation submitted by AAI for the Second Control Period with the rates as per
the Order No.35/ 2017-18 dated January 12, 2018.
6.3.5 Based on changes in the allocation of opening gross block of assets and proposed capital expenditure,
the Authority proposes the following depreciation for the Second Control Period.
Table 47: Depreciation proposed by the Authority for the Second Control Period
(₹ Crores)
FY FY FY FY FY
Particulars Total
2024-25 2025-26 2026-27 2027-28 2028-29
Land - - - - - -
Leasehold Land - - - - - -
Runways 1.30 1.30 1.30 1.30 5.28 10.49
Taxiway - - - - - -
Aprons - - - 0.81 1.63 2.44
Road, Bridges & Culverts 0.26 0.23 0.22 0.22 0.22 1.15
Building- Terminal 2.99 2.99 2.99 1.49 21.90 32.35
Building – Temporary - - - - - -
Building – Residential 0.08 0.08 0.08 0.08 0.08 0.40
Security Fencing – Temporary - - - - - -
Boundary Wall -Operational 0.22 0.22 0.22 1.22 2.22 4.11
Boundary Wall – Residential - - - - - -
Other Buildings-Unclassified 0.73 0.73 0.73 0.73 0.73 3.63
Computer & Peripherals : End User Devices 0.12 0.07 0.01 - - 0.20
Computer Servers & networks 0.01 0.01 0.01 0.01 0.00 0.04
Intangible Assets- Software - - - - - -
Plant & Machinery 3.11 3.19 3.27 3.26 3.26 16.09
Tools & Equipment 0.93 0.88 0.88 0.88 0.88 4.44
Office Furniture 0.80 0.85 0.55 0.39 0.29 2.87
Furniture & Fixtures: Other Than Trolly - - - - - -
Furniture & Fixtures: Trolley 0.07 0.07 0.07 0.07 0.07 0.35
Environment management Works - - - - 0.51 0.51
Other Vehicles 0.85 0.84 0.80 0.76 0.39 3.64
Consultation Paper No. 05/2024-25 Page 80 of 119CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE SECOND
CONTROL PERIOD
FY FY FY FY FY
Particulars Total
2024-25 2025-26 2026-27 2027-28 2028-29
Vehicles- Car & Jeep - - - - - -
Electrical Installations 0.84 0.74 0.39 0.35 0.15 2.47
Other Office Equipment 0.04 0.01 0.01 0.00 - 0.06
X Ray Baggage System 0.29 0.27 0.27 0.27 0.27 1.38
CFT/Fire Fighting Equipment 1.34 1.34 1.34 1.34 1.34 6.71
Total 13.98 13.81 13.15 13.19 39.21 93.34
Note: The Authority proposes to consider depreciation for VIA for the Second Control Period as ₹ 93.34
Crores. The above depreciation is lesser than that proposed by AAI of ₹ 278.87 Crores, the difference is
mainly on account of the following factors:
i. Due to non-consideration of depreciation on Financing Allowance of ₹ 296.22 Crores.
ii. Impact on depreciation due to rationalization of CAPEX by ₹ 920.44 Crores by shifting of
Capitalisation in respect of certain capital projects to the subsequent tariff years within the Second
Control Period and to the Third Control Period.
6.4 Regulatory Asset Base (RAB) for the Second Control Period
AAI’s Submission on RAB for VIA for the Second Control Period
6.4.1 AAI’s Submission on RAB for the Second Control Period for VIA is as follows:
Table 48: RAB submitted by AAI for VIA for the Second Control Period
(₹ Crores)
Total
FY FY FY FY FY
Particulars
2024-25 2025-26 2026-27 2027-28 2028-29
Opening RAB 141.12 131.74 124.39 110.45 3,019.54
Additions 5.31 7.50 - 2,992.84 - 3,005.65
Disposal/Transfers - - - - -
Depreciation 14.69 14.84 13.95 83.75 152.91 280.15
Closing RAB 131.74 124.39 110.45 3,019.54 2,866.63
Average RAB 136.43 128.07 117.42 1,564.99 2,943.08
Authority’s examination of RAB for VIA for the Second Control Period
6.4.2 The Authority proposes to adopt the capitalization of Aeronautical Expenditure in accordance with
Table 45and the depreciation amounts in accordance with Table 47.
6.4.3 Based on the above factors, the RAB proposed to be considered by the Authority for determination of
Aeronautical tariff for the Second Control Period is as follows:
Consultation Paper No. 05/2024-25 Page 81 of 119CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE SECOND
CONTROL PERIOD
Table 49: RAB proposed to be considered by the Authority for the Second Control Period
(₹ Crores)
Particulars FY FY FY FY FY Total
2024-25 2025-26 2026-27 2027-28 2028-29
Opening RAB (A) (refer Table
141.18 129.70 118.39 105.24 160.86
12)
Additions (B) (Refer Table 45) 2.50 2.50 - 68.80 1,552.09 1,625.89
Disposal/Transfers (C) - - - - - -
Depreciation (D) (refer Table 47) 13.98 13.81 13.15 13.19 39.21 93.34
Closing RAB (E) = [(A) +(B) –
129.70 118.39 105.24 160.86 1,673.73
(C) – (D)]
Average RAB = [(A) + (E)]/2 135.44 124.05 111.82 133.05 917.29
The Authority proposes to consider Average RAB for the VIA for the Second Control Period
as detailed in Table 49.
6.5 Authority’s proposal regarding Capital Expenditure (CAPEX), Depreciation and
Regulatory Asset Base for the Second Control Period
Based on the material before it and based on its analysis, the Authority proposes the following with regard
to Capital Expenditure, Depreciation and Regulatory Asset Base for the Second Control Period.
6.5.1 To consider allocation of gross block of assets as on April 1, 2024, between Aeronautical and Non-
aeronautical assets as detailed in Table 30.
6.5.2 To adopt the capitalization of Aeronautical Capital Expenditure for the Second Control Period in
accordance with Table 45.
6.5.3 To true up the Capital expenditure based on actuals, cost efficiency and reasonableness, at the time of
determination of tariff for Third Control Period.
6.5.4 To reduce (adjust) 1% of the uncapitalized project cost from the ARR in case any particular capital
project is not completed/capitalized as per the approved capitalization schedule. Further, if the delay in
completion of the project is due to any reason beyond the control of AAI or its contracting agency and
is properly justified, the same would be considered by the Authority while truing up the actual cost at
the time of determination of tariff for the Third Control Period.
6.5.5 To consider depreciation as per Table 47 for the Second Control Period.
6.5.6 To true up Depreciation of the Second Control Period based on the actual asset additions and actual
date of capitalization during the tariff determination of the Third Control Period.
6.5.7 To consider average RAB for the Second Control Period for VIA as per Table 49.
6.5.8 To true up the RAB based on actuals at the time of tariff determination for the Third Control Period.
Consultation Paper No. 05/2024-25 Page 82 of 119FAIR RATE OF RETURN (FRoR) FOR THE SECOND CONTROL PERIOD
7 FAIR RATE OF RETURN (FRoR) FOR THE SECOND CONTROL PERIOD
7.1 AAI’s Submission on Fair Return of Return for the Second Control Period for VIA
7.1.1 AAI has submitted that Varanasi International Airport would primarily utilize internally accrued funds to
fund the capital expenditure that have been projected for the Second Control Period.
7.1.2 AAI has considered Fair rate of Return (FRoR) as 14% based on the Authority’s decision for the First
Control Period.
7.2 Authority’s examination of FRoR for the Second Control Period
7.2.1 The Authority notes that AAI has submitted that the capital expenditure proposed for the Second Control
Period will be funded through internal accruals and hence no debt component was projected by AAI in
its MYTP submission.
7.2.2 The Authority acknowledges the recommendations made by the Public Investment Board (PIB) in their
Minutes of Meeting dated February 20, 2024 (No. 27 (03)/ PFC-I/ 2024), wherein, the PIB has stated that
“the Authority would also consider other factors while assessing fair rate of return in cases where there
is a low level of gearing with the underlying objective of protecting the reasonable interests of Users”.
This recommendation emphasizes the need to balance financial considerations, with a view to protect the
Airport Users' interests.
7.2.3 The Authority in its past Tariff Orders of other similar Airports of AAI, has noted that the capital structure
of AAI is not is not efficient and has asked AAI to make its capital gearing efficient by raising debt funds.
Further, the Authority had also proposed to use the notional Debt-Equity ratio for AAI Airports in future,
in line with the PPP Airports.
7.2.4 Based on the above factors, the Authority has proposed FRoR, by adopting a notional gearing ratio of
48:52 (Debt : Equity), by taking inference from independent studies conducted in the past for PPP airports
(such as DIAL, MIAL, GHIAL, BIAL and CIAL) through a premier institute, namely IIM Bangalore and
the same is being followed by AERA for PPP airports uniformly. The Cost of Debt, Cost of Equity
considered by the Authority for determination of FRoR have been explained as follows:
Cost of Debt
7.2.5 The Authority has determined the Cost of Debt for the Second Control Period, based on one-year
Marginal Cost of Funds based Lending Rate (MCLR) of the State Bank of India (SBI) as on October 15,
2024, which stands at 8.95%. The Authority has also taken into consideration the increasing trend in the
MCLR rates (for one/ two/ three years) and based on the same, the Authority proposes to consider an
average 9% as the Cost of Debt for the Second Control Period.
Cost of Equity
7.2.6 The Authority had commissioned independent studies for the evaluation of cost of capital separately, in
case of each PPP Airport, namely DIAL, MIAL, GHIAL, BIAL and CIAL through a premier institute,
namely IIM Bangalore and proposes to use these study reports as a basis, to the extent applicable and
relevant, to ascertain the Cost of equity of Varanasi Airport for the Second Control Period.
7.2.7 The above referred independent study reports have drawn reference from the experience of international
airports, wherein the median and average Cost of Equity was determined as 15.16% and 15.18%,
respectively. Based on this analysis, the average Cost of Equity for these airports was determined to be
15.18%. This benchmark provides a useful reference point for evaluating airport financing strategies and
equity costs in the Indian context.
7.2.8 The above independent study reports have used the Capital Asset Pricing Model (CAPM) and a notional
Consultation Paper No. 05/ 2024-25 Page 83 of 119FAIR RATE OF RETURN (FRoR) FOR THE SECOND CONTROL PERIOD
gearing (Debt: Equity) ratio of 48:52 to determine the levered Equity beta and accordingly, derive the Cost
of Equity
7.2.9 The above study report applies a methodology that factors in sovereign and business risks through
components like the risk-free rate and business volatility, establishing a fair cost of equity within the
FRoR calculation. This provides a relevant benchmark for estimating Varanasi Airport’s cost of equity in
the Second Control Period, given the similar business environment, risk profile and policy framework.
7.2.10 Based on the above reports, the Authority proposes to consider the Cost of Equity as 15.18% for Varanasi
International Airport for the Second Control Period.
Fair Rate of Return (FRoR)
7.2.11 Based on the above, the Authority proposes to consider FRoR as per table below for Varanasi
International Airport for the Second Control Period:
Table 50: Fair Rate of Return proposed to be considered by the Authority for the Second Control Period
Parameter %
Weighted Average gearing of Equity (A) 52.00%
Weighted Average gearing of Debt (B) 48.00%
Cost of Equity (C) 15.18%
Cost of Debt (D) 9.00%
Fair Rate of Return for the Second
12.21%
Control Period (E= A*C+(1-A)*D)
7.3 Authority’s proposal regarding Fair Rate of Return (FRoR) for the Second Control
Period
Based on the material before it and based on its analysis, the Authority proposes the following with
regard to FRoR for the Second Control Period.
7.3.1 To consider FRoR of 12.21 % for VIA for the Second Control Period as per Table 50.
7.3.2 To true up the FRoR while determining tariff for the next Control Period considering all the relevant factors.
Consultation Paper No. 05/ 2024-25 Page 84 of 119INFLATION FOR THE SECOND CONTROL PERIOD
8 INFLATION FOR THE SECOND CONTROL PERIOD
8.1 AAI’s Submission on Inflation for the Second Control Period for VIA
8.1.1 AAI has not made any submission related to inflation as part of its MYTP submission for VIA for the
Second Control Period.
8.2 Authority’s examination on inflation for the Second Control Period
8.2.1 The Authority proposes to consider the recent “Results of the Survey of Professional Forecasters on
Macroeconomic Indicators – Round 89” released on August 08, 2024 published by the Reserve Bank of
India (RBI). Accordingly, the Authority proposes to consider the mean of WPI inflation forecasts (All
Commodities) for FY 2025 till FY 2029 as given in the 89th round of survey of professional forecasters
on macroeconomic indicators of RBI.
8.2.2 The Authority has assumed that the inflation rate would be stable and has considered WPI Forecast for
FY 2026-27 onwards based on forecast for FY 2025-26. Accordingly, the following table shows the
inflation rates as proposed by the Authority for the Second Control Period.
Table 51: Inflation rates proposed by the Authority for the Second Control Period for VIA
Particulars FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
WPI inflation 3.00% 3.20% 3.20% 3.20% 3.20%
8.3 Authority’s proposal regarding inflation For the Second Control Period
Based on the material before it and its analysis, the Authority proposes the following with regard to
Inflation for the Second Control Period:
8.3.1 To consider Inflation for the Second Control Period for VIA as detailed in Table 51.
Consultation Paper No. 05/ 2024-25 Page 85 of 119OPERATION AND MAINTENANCE EXPENSES FOR THE SECOND CONTROL PERIOD
9 OPERATION AND MAINTENANCE EXPENSES FOR THE SECOND CONTROL
PERIOD
9.1 AAI’s Submission on Operation and Maintenance expenses for the Second Control
Period for VIA
9.1.1 Operation and Maintenance (O&M) expenses submitted by AAI is segregated into the following:
Payroll Expenses,
Admin and General Expenditure,
Repair and Maintenance Expenditure,
Utilities and Outsourcing Expenditure, and
Other outflows, i.e., Collection Charges on UDF
9.1.2 The expenses related to AAICLAS, ANS, and CISF Security, have not been considered by AAI.
9.1.3 AAI has segregated the expenses into Aeronautical expenses, Non-aeronautical expenses, and Common
Expenses. The Common Expenses have been further segregated into Aeronautical and Non-aeronautical
based on the relevant Ratios.
9.1.4 AAI submitted that the allocation of CHQ/RHQ expenses among individual airports has been done based
on the revenue of each Airport.
9.1.5 The summary of Aeronautical O&M expenses proposed by VIA for the Second Control Period has been
presented in the table below:
Table 52: Operation and Maintenance (O&M) expenditure submitted by AAI for VIA
(₹ Crores)
FY FY FY FY FY
Particulars Total
2024-25 2025-26 2026-27 2027-28 2028-29
Payroll Costs 23.10 24.72 26.45 35.32 37.79 147.38
Retirement benefits of employees at VIA 3.18 3.41 3.65 4.81 5.15 20.20
Repair & Maintenance 13.35 14.68 16.15 20.24 22.26 86.68
Utilities & Outsourcing Expenses 6.81 7.09 7.39 8.92 9.28 39.49
Admin. & Other Expenses - Excluding
12.28 13.33 14.49 16.59 18.03 74.72
CHQ/RHQ
Admin. & Other Expenses - CHQ/RHQ 41.36 43.43 45.60 47.88 50.28 228.55
Other Outflows 0.38 0.44 0.51 0.56 0.62 2.52
Total O&M Expenditure 100.47 107.09 114.23 134.33 143.42 599.54
9.1.6 The summary of growth rates assumed by AAI for the O&M expenses have been presented in the table
below:
Table 53: Growth rates in O&M expenditure submitted by VIA
FY FY FY FY FY
Particulars
2024-25 2025-26 2026-27 2027-28 2028-29
Payroll Costs 7% 7% 7% 34% 7%
Retirement Benefits of employees at VIA 7% 7% 7% 32% 7%
Utilities & Outsourcing Expenses 4% 4% 4% 21% 4%
Consultation Paper No. 05/ 2024-25 Page 86 of 119OPERATION AND MAINTENANCE EXPENSES FOR THE SECOND CONTROL PERIOD
FY FY FY FY FY
Particulars
2024-25 2025-26 2026-27 2027-28 2028-29
Admin. & Other Expenses - Excluding
9% 9% 9% 14% 9%
CHQ/RHQ
Admin. & Other Expenses - CHQ/RHQ 5% 5% 5% 5% 5%
9.1.7 Further, the summary of allocation of expenses between Aeronautical and Non-aeronautical as proposed
by AAI is given in the table below:
Table 54: Allocation of O&M expenses submitted by AAI for VIA for FY 2023-24
Particulars Aeronautical Non-aeronautical
Payroll Costs 97.20% 2.80%
Retirement Benefits of employees at VIA 97.20% 2.80%
Repair & Maintenance – Civil 100% 0%
Repair & Maintenance – Electrical works 96.41% 3.59%
Repair & Maintenance – Electronics 97.39% 2.61%
Utilities 100% 0%
Upkeep Expenses 96.41% 3.59%
Admin. & Other Expenses - Excluding CHQ/RHQ 97.39% 2.61%
Admin. & Other Expenses - CHQ/RHQ 95% 5%
Other Outflows 100% 0%
9.2 Authority’s examination of Operation and Maintenance expenses for the Second
Control Period
9.2.1 AAI has proposed ₹ 599.54 Crores towards Operation and Maintenance expenses for the Second Control
Period.
9.2.2 The Authority observes that the O&M expenses approved in the Tariff Order for the First Control
Period for VIA was for ₹ 313.26 Crores (refer Table 16), against which actual expenses of ₹ 410.87
Crores (refer Table 15) was submitted by AAI for VIA for true up of the First Control Period. The
Authority examined the above actual O&M expenses and has proposed ₹ 358.48 Crores (refer Table 19)
to be trued up for the First Control Period. However, AAI has submitted its projected O&M expenses for
VIA for the Second Control Period as ₹ 599.54 Crores, which is 67% higher than the O&M expenses
approved by the Authority for true up of the First Control Period (which is for ₹ 358.48 Crores).
Allocation of O&M expenses to Aeronautical and Non-aeronautical activities
9.2.3 The Authority examined the allocation of Operational and Maintenance expenses by AAI between
Aeronautical and Non-aeronautical activities for VIA. The same is explained in the following
paragraphs.
9.2.4 AAI has segregated the payroll expenses excluding CHQ/RHQ between Aeronautical and Non-
Aeronautical in the employee ratio of 97.20%: 2.80% for FY 2022-23, which was derived based on
the headcount of Aeronautical and Non-Aeronautical employees within the Airport. Based on the
review of the above assumptions, the Authority considers the basis of apportionment by AAI for
Consultation Paper No. 05/ 2024-25 Page 87 of 119OPERATION AND MAINTENANCE EXPENSES FOR THE SECOND CONTROL PERIOD
allocation of expenses into Aeronautical and Non-Aeronautical as appropriate.
9.2.5 AAI has segregated the expenses towards utilities between Aeronautical and Non-aeronautical after
considering the recoveries made from the Concessionaires. Based on the review of the above
assumptions, the Authority considers the basis of apportionment by AAI to be appropriate.
9.2.6 Upkeep expenses (included under Administrative and General Expenses) and Repairs &
Maintenance (Electrical) have been apportioned in the ratio of Terminal Building by AAI which is
93.16%: 6.84%. However, the Authority proposes to re-allocate the above expenses in the Terminal
Building ratio of 90%:10%, as detailed in para 6.2.10.
9.2.7 Repairs & Maintenance (Civil) have been considered as 100% Aero by AAI. However, the
Authority proposes to re-allocate the above expenses in the Terminal Building ratio of 90%:10%, as
followed in other similar airports.
9.2.8 Repair and Maintenance expenses – Electronics includes Surveillance equipment, security
equipment has been apportioned in the Employee ratio of 97.39%: 2.61% as per AAI. The
Authority’s analysis shows that these expenses pertain to passenger facilitation. Further, the
Authority notes that it also includes hardware maintenance expenses of computers and other
electronic items, which has been apportioned based on the headcount of IT Department engaged for
Aeronautical purposes. As most of these equipment are located in the Terminal Building, the
Authority proposes to re-allocate the above expenses in the Terminal Building ratio of 90%:10%.
9.2.9 Administration expenses of CHQ/ RHQ have been allocated based on methodology defined in para 4.7.2
(a) and (b).
9.2.10 Based on the above factors, the Authority has considered the following basis for allocation of expenses,
which is as follows:
Table 55: Allocation of O&M expenses proposed to be considered by Authority for VIA for FY 2023-24
Particulars Aeronautical Non-aeronautical
Payroll Costs 97.20% 2.80%
Retirement Benefits of employees at VIA 97.20% 2.80%
Repair & Maintenance – Civil 90.00% 10.00%
Repair & Maintenance – Electrical Works 90.00% 10.00%
Repair & Maintenance – Electronics 90.00% 10.00%
Utilities 100% 0%
Upkeep Expenses 90.00% 10.00%
Admin. & Other Expenses – Excluding CHQ/RHQ 95% 5%
Other Outflows 100% 0%
Payroll expenses (Other than CHQ/RHQ)
9.2.11 AAI considered a growth rate of 7% in payroll expenses for the period 2024-25 to 2028-29. Further,
an additional 5% increase (half year) has been proposed by AAI due to additional Staff Cost in FY
2027-28 as the New Terminal Building is proposed to be operationalized w.e.f. October 2027 as per
AAI. Furthermore, AAI has proposed an additional growth rate 20% in FY 2027-28 taking into
Consultation Paper No. 05/ 2024-25 Page 88 of 119OPERATION AND MAINTENANCE EXPENSES FOR THE SECOND CONTROL PERIOD
consideration, the implementation of increase in payroll on account of recommendations of the 8th
Pay Commission. However, the Authority proposes to consider a growth rate of 6% year on year
from FY 2024-25 to FY 2028-29 in the payroll expenses (other than CHQ and RHQ), Growth rate
of 6% Y-o-Y growth rates in payroll expenses is uniformly followed by the Authority in all AAI
airports. The Authority upon taking cognizance of its proposal to shift the capitalization of the new
terminal building to FY 2028-29, proposes to consider the additional increase of 10% in payroll (for
full year) in FY 2028-29.
Further, the Authority proposes not to consider the additional increase 20% in payroll expenses
submitted by AAI for FY 2027-28 on account of 8th pay commission for determining tariff for the
Second Control Period for VIA and proposes to consider the same on actual incurrence basis.
CHQ/ RHQ Administration and General expenses
9.2.12 The Authority reviewed the basis for allocation of CHQ and RHQ expenses to Varanasi Airport for
the Second Control Period. Based on the methodology and justification explained under para 4.7.6
(a) and (b) of this Consultation Paper, the Authority has rationalized the CHQ and RHQ-
Administration and General Expenses, projected by AAI for VIA for the Second Control Period,
considering 5% Y-o-Y increase, based on the amount considered for true-up of FY 2023-24. The
same is presented in Table 57.
.Repairs and Maintenance expenses
9.2.13 The Authority notes that VIA has incurred cost of ₹ 2.42 Crores towards Perimeter Road Recarpeting
in FY 2024-25 and same has been considered as CAPEX by AAI in its MYTP submission. However,
the Authority has considered it as Repair & Maintenance Expenses, as it does not lead to increase in
the useful life of the Perimeter Road.
9.2.14 The Authority notes that AAI has proposed an increase of 10% year- on- year on repair and
maintenance expenditure for the Second Control Period and an additional increase of 40% is
proposed during FY 2027-28 for R&M -Electrical and Electronics. The Authority notes that AAI
has claimed the total Repairs & Maintenance expenses of ₹ 86.68 Crores for the Second Control
Period.
9.2.15 The Authority notes that the additional increase of 40% is due to commissioning of New Terminal
Building in FY 2027-28. The Authority based on its analysis done by its Independent Consultant,
has shifted the capitalization of new Terminal Building to FY 2028-29 and most of the assets are
expected to be newly constructed/ installed and are also covered under warranty clauses, and may
need only minimum maintenance in FY 2028-29. Hence, the Authority proposes not to consider the
additional increase of 40% in R&M expenses during the Second Control Period.
9.2.16 The Authority notes that R&M expenses proposed by AAI for the Second Control Period, are higher
than the cap of 6% of the Opening RAB (net block of that year) generally considered by the
Authority, for capping of R&M Expenses to the ceiling limit. Accordingly, the Authority, at this
stage proposes to cap R&M Expenses at 6% of opening RAB (Net Block) as per Table 56.
9.2.17 However, the Authority on the aspect of capping of R&M Expenses of the airport at 6% of Opening
RAB (Net Block) of the related tariff years, notes the submission of AAI, during the tariff
determination process of other airports, wherein AO submitted that capping of R&M Expenses to
6% of Opening RAB (Net Block) needs review. As per the stakeholders, considering that the RAB
(Net Block) of the airports, particularly smaller airports, with no major CAPEX additions, gradually
decrease due to depreciation, whereas, due to normal wear & tear & aging of Assets, R&M Expenses
tend to increase over a period of time. The stakeholder (AAI) has requested the Authority to review
Consultation Paper No. 05/ 2024-25 Page 89 of 119OPERATION AND MAINTENANCE EXPENSES FOR THE SECOND CONTROL PERIOD
the capping of R&M Expenses at 6% of Opening RAB (Net Block) appropriately, as capping of
R&M Expenses as per present mechanism impacts adversely the AO due to lower ARR being
considered (airports with low Regulatory Asset Base).
The Authority, taking note of the above submission, is of the view that existing approach across all
the airports towards capping of R&M expenses to 6% of opening RAB (Net Block) of respective
tariff years needs to be revisited and the Authority would look into alternative methodology/
benchmarks for evaluation of reasonableness of R&M expenses proposed by Airport Operators.
The Authority seeks the specific views of the stakeholders on the capping of R&M Expenses at 6%
of opening RAB (Net Block). The Authority will take a final view in the matter considering the
views/ inputs from the stakeholders.
Table 56: Repairs and Maintenance on Opening Net block of Assets claimed by AAI and Proposed
by the Authority for the Second Control Period
(in Crores)
FY FY FY FY FY
Particulars 2024-25 2025-26 2026-27 2027-28 2028-29 TOTAL
Expenses Claimed by AAI (Other than
13.35 14.68 16.15 20.24 22.26 86.68
Perimeter Road Recarpeting) (A)
Perimeter Road Recarpeting (B) 2.42 0 0 0 0 2.42
Total (C= A+B) 15.77 14.68 16.15 20.24 22.26 89.10
Opening RAB (D) (refer Table 49) 141.18 129.70 118.39 105.24 160.86
6% of Opening RAB (E= D*6%) 8.47 7.78 7.10 6.31 9.65
Allowable expenses
(F= 6% of Opening RAB or A, 8.47 7.78 7.10 6.31 9.65 39.32
whichever is lesser)
Total R&M Expenses allowed by the
10.89 7.78 7.10 6.31 9.65 41.74
Authority (G= F + B)
Difference (H= A-G) 2.46 6.90 9.05 13.93 12.61 44.94
Administration and General expenses (other than CHQ/ RHQ and upkeep expenses)
9.2.18 The Authority notes that AAI has projected a 10% increase year-on-year in Administration and
General expenses (other than CHQ/ RHQ and upkeep expenses) for FY 2024-25 to FY 2026-27 and
FY 2028-29. An additional 10% increase has been submitted by AAI for FY 2027-28 on account of
construction of New Terminal Building. The Authority proposes to shift the additional 10% increase
from FY 2027-28 to FY 2028-29, in line with its proposal of shifting the capitalization of Terminal
Building to FY 2028-29.
Interest on Loan
Administration and General expenses (other than CHQ/ RHQ and upkeep expenses), includes
Interest on Loan amounting to ₹ 4.04 crores, apportioned to Varanasi Airport, from the total interest
on loan incurred by AAI on the debts availed by AAI as a whole, for all airports. The Authority notes
that AAI has not availed any debts for Varanasi Airport. Therefore, the Authority proposes not to
consider the above interest on loan apportioned to Varanasi Airport by AAI
CSR Expenses
9.2.19 The Authority notes that AAI has claimed ₹ 3.65 Crores towards CSR expenses for the Second
Control Period. The Authority has examined the AAI’s claim towards CSR and the views of the
Authority in this regard may be referred to in para 4.7.9 Accordingly, the CSR expense has not been
Consultation Paper No. 05/ 2024-25 Page 90 of 119OPERATION AND MAINTENANCE EXPENSES FOR THE SECOND CONTROL PERIOD
considered by the Authority for the Second Control Period.
Expenses towards Utilities and Outsourcing Expenses
9.2.20 The Authority examined the expenses towards utilities and noted the following:
Power expenses: AAI has projected an increase of 3% per year after, netting off the recoveries
made from the Concessionaires (which is assumed to be 3% of the total power costs). AAI has also
claimed additional 20% increase in power expenses for FY 2027-28 due to operationalization of
new Terminal Building. The Authority notes that the power recovery percentage is reasonably
higher than that of comparable airports (recovery from Concessionaires was 17% in FY 2022-23).
The Authority notes that AAI has increased the net power costs of FY 2023-24 by 3% year-on-
year for the Second Control Period, which the Authority considers reasonable. Hence, the Authority
proposes to consider increase of 3% y-o-y for FY 2024-25 to FY 2027-28 and shift the increase of
20% to FY 2028-29, in line with its decision on capitalization New Terminal Building in FY 2028-
29.
Outsourcing expenses: The Authority observes the outsourcing expenses have been projected by
AAI towards consultancy charges (which includes consultation and professional service charges for
Airport Council for ACI- Asia, ASQ Rating Survey Fees and other associated services. The Authority
notes that the above projections are based on actual expenses incurred by AAI in FY 2023-24. The
Authority is of the view all outsourcing expenses may not increase by 10%, as proposed by AAI Y-o-
Y. Therefore, the Authority proposes to consider a 5% increase Y-o-Y as done in other similar airports.
Upkeep expenses
9.2.21 The Authority observes that for upkeep expenses, AAI has proposed 10% increase year-on-year
for the Second Control Period. The Authority notes that these are contractual expenses, wherein
the rates have been finalized for the entire contract period (which is 3 years), and it includes the
cost of materials, equipment and labour (including statutory benefits such as PF, ESI, Bonus etc)
and increase in minimum wages is being reimbursed to the contractors on actual basis. As
manpower expense is a significant component and the revision of Minimum wages is based on
statutory requirements, the Authority proposes to consider a 5% year-on-year increase towards
Upkeep expenses across the Second Control Period, for Varanasi International Airport.
Other Outflows- Collection charges on UDF
9.2.22 For other outflows, i.e., Collection Charges on UDF, AAI has considered the growth rate to be the
same as that of passenger traffic. The Authority proposes to use the same fundamental approach,
as it finds the same to be a reasonable driver.
9.2.23 Based on the above observations, the Authority has determined the O&M expenses, which it
proposes to consider in the Second Control Period. The same has been presented as follows:
Table 57: Operation and Maintenance (O&M) expenses proposed to be considered by the Authority for the
Second Control Period
(₹ Crores)
FY FY FY FY FY
Particulars Total
2024-25 2025-26 2026-27 2027-28 2028-29
Payroll Costs 23.01 24.39 25.85 27.70 32.13 133.08
Retirement Benefits of Employees
1.79 1.90 2.02 2.14 2.48 10.33
at VIA
Repair & Maintenance 10.89 7.78 7.10 6.31 9.65 41.74
Consultation Paper No. 05/ 2024-25 Page 91 of 119OPERATION AND MAINTENANCE EXPENSES FOR THE SECOND CONTROL PERIOD
FY FY FY FY FY
Particulars Total
2024-25 2025-26 2026-27 2027-28 2028-29
Utilities & Outsourcing Expenses 6.80 7.07 7.35 7.66 9.22 38.10
Upkeep Expenses 4.65 4.89 5.13 5.39 5.66 25.71
Admin. & Other Expenses -
Excluding CHQ/RHQ and Upkeep 5.41 5.95 6.54 7.04 7.92 32.86
expenses
Admin. & Other Expenses -
28.86 30.31 31.82 33.41 35.08 159.48
CHQ/RHQ
Other Outflows 1.26 1.46 1.69 1.87 2.06 8.35
Total O&M Expenditure 82.69 83.75 87.51 91.52 104.20 449.67
Note: The variance between O&M expenses proposed by the Authority for the Second Control Period
(₹ 449.67 Cr. ) and that claimed by AAI (₹ 599.54 Cr.) is on account of the following:
i. Rationalization of payroll expenses by ₹ 14.30 Crores.
ii. Rationalization of allocation of Admin CHQ/ RHQ expenses by ₹ 69.07 Crores and Retirement benefits of
employees by ₹ 9.87 Crores.
iii. Rationalization of Repair and Maintenance expenses amounting to ₹ 44.94 Crores.
The Authority expects AAI to bring in efficiencies in the incurrence of O&M expenses for the benefit
of airport users and in line with AERA Act, AERA Guidelines and ICAO Principles
9.2.24 Based on above considerations, the Authority proposes the following growth rates in Operation
and Maintenance expenses, as compared to the previous year’s actuals/ projections.
Table 58: Growth rates in O&M expenses considered by the Authority for the Second Control Period
FY FY FY FY FY
Particulars
2024-25 2025-26 2026-27 2027-28 2028-29
Payroll Costs 6% 6% 6% 6% 16%
Retirement Benefits of Employees at VIA 6% 6% 6% 6% 16%
Utilities Expenses (Power expenses) 3% 3% 3% 3% 23%
Upkeep Expenses 5% 5% 5% 5% 5%
Other Outsourcing Expenses 5% 5% 5% 5% 5%
Admin. & Other Expenses - Excluding
10% 10% 10% 10% 20%
CHQ/RHQ and Upkeep expenses
Admin. & Other Expenses - CHQ/RHQ 5% 5% 5% 5% 5%
Other Outflows 22% 16% 16% 10% 10%
9.3 Authority’s proposal regarding Operation and Maintenance expenses for the Second
Control Period
Based on the material before it and based on its analysis, the Authority proposes the following with regard
to O&M expenses for the Second Control Period.
9.3.1 To consider O&M expenses for the Second Control Period for VIA as per Table 57.
9.3.2 To consider the O&M expenses incurred by AAI for VIA during the Second Control Period subject to
reasonableness and efficiency, at the time of tariff determination for the next Control Period.
Consultation Paper No. 05/ 2024-25 Page 92 of 119NON-AERONAUTICAL REVENUE FOR THE SECOND CONTROL PERIOD
10 NON-AERONAUTICAL REVENUE FOR THE SECOND CONTROL PERIOD
10.1 AAI’s Submission on Non-Aeronautical Revenue for the Second Control Period for
VIA
10.1.1 AAI has forecasted revenue from services other than Aeronautical services for VIA as per table given
below:
Table 59: Non-aeronautical revenue projections for the Second Control Period submitted by AAI for VIA
(₹ Crores)
FY FY FY FY FY
Particulars Total
2024-25 2025-26 2026-27 2027-28 2028-29
1. Passenger related revenue
Restaurant / snack bars 4.45 4.90 5.39 6.46 7.11 28.31
T.R. stall 6.67 7.34 8.08 9.69 10.66 42.44
Hoarding & display 4.94 5.43 5.97 7.17 7.88 31.39
Car rentals 0.92 1.01 1.11 1.33 1.47 5.83
Car parking 3.32 3.65 4.02 4.82 5.30 21.11
Admission tickets 0.06 0.06 0.07 0.07 0.08 0.34
2. Other Revenue
Land leases 0.30 0.35 0.35 0.35 0.35 1.71
Building (residential) 0.02 0.02 0.02 0.02 0.02 0.10
Building (non-residential) 2.04 2.19 2.36 2.77 2.98 12.34
Other Misc. Income 4.02 4.22 4.43 4.66 4.89 22.22
Total 26.74 29.17 31.79 37.34 40.74 165.78
10.1.2 The growth rates assumed by AAI have been presented in the table below.
Table 60: Growth rates assumed by AAI for VIA for Non-aeronautical revenue
FY FY FY FY FY
Particulars
2024-25 2025-26 2026-27 2027-28 2028-29
1. Passenger related revenue
Restaurant / snack bars 10.00% 10.00% 10.00% 20.00% 10.00%
T.R. stall 10.00% 10.00% 10.00% 20.00% 10.00%
Hoarding & display 10.00% 10.00% 10.00% 20.00% 10.00%
Car rentals 10.00% 10.00% 10.00% 20.00% 10.00%
Car parking 10.00% 10.00% 10.00% 20.00% 10.00%
Admission tickets 10.00% 10.00% 10.00% 10.00% 10.00%
2. Other Revenue
Land leases 0.00% 15.00% 0.00% 0.00% 0.00%
Building (residential) 0.00% 0.00% 0.00% 0.00% 0.00%
Building (non-residential) 7.50% 7.50% 7.50% 17.50% 7.50%
Other Misc. Income 5.00% 5.00% 5.00% 5.00% 5.00%
10.2 Authority’s examination of non-aeronautical revenue for the Second Control Period
10.2.1 The Authority reviewed sample contracts executed with the Concessionaires by AAI during FY 2023-
24 and considered the NAR for FY 2023-24 as the basis, to assess the non-aeronautical revenue
Consultation Paper No. 05/ 2024-25 Page 93 of 119NON-AERONAUTICAL REVENUE FOR THE SECOND CONTROL PERIOD
projected by AAI for the Second Control Period.
Revenue from Passenger related services
10.2.2 The Authority notes that the total NAR projected by AAI for the Second Control Period, that is ₹ 165.78
Crores is 83% higher than NAR of ₹90.63 Crores achieved in the First Control Period by AAI for
Varanasi Airport. Further, the revenue from Passenger services (other than Rent and Services) projected
for the Second Control Period amounts to ₹ 129.42 Crores, which is 79% higher than ₹ 72.17 Crores
achieved by AAI in the First Control Period.
10.2.3 The Authority takes cognizance of the fact that the New Terminal Building is proposed to be
commissioned only by the end of the current Control Period. Therefore, the Authority is of the view
that the projected NAR submitted by AAI for the Second Control Period is commensurate with the
traffic growth projected for the Second Control Period. Further, the Authority notes that AAI has
projected a growth of 10%Y-o-Y in the passenger related revenues and an additional 10% increase in
FY 2027-28, due to operationalization of the Terminal Building. The Authority, based on the above
factors, proposes to consider the 10% Y-o-Y increase projected by AAI for the FY 2024-25 to FY 2027-
28 and shift the additional increase of 10% to FY 2028-29, in line with its proposal to consider
capitalization of the New Terminal Building in FY 2028-29.
10.2.4 Varanasi being a tourist destination and with the commissioning of new Terminal Building during the
Second Control Period, the Authority is of the view that passenger traffic will grow substantially leading
to the growth in non-aeronautical revenue also.
Other revenue – Rent and Services
10.2.5 The Authority has examined the Revenue from other services proposed by AAI as follows: -
i Revenue from Building (residential): The Authority notes that AAI has assumed revenue from
Building (residential) to be constant for the Second Control Period and the Authority proposes to
consider the same.
ii Land Lease: AAI has proposed nil growth for FY 2024-25 as the land rental rates are revised after the
period of 3 years. The last revision was done in FY 2022-23 as per the land management Circular No.
166 dated June 4, 2022. Further, the Authority proposes to consider the land lease rate growth of 15%
in FY 2025-26 as projected by AAI.
iii Building (Non-Residential): AAI has projected increase of 7.50% increase from FY 2024-25 to FY
2026-27 and FY 2028-29. Further, AAI has projected an additional increase of 10% for FY 2027-28
for Building (Non- Residential) due to operationalization of the New Terminal Building. The
Authority proposes to consider the increase of 7.5% Y-O-Y from FY 2024-25 to FY 2027-28 and shift
the additional increase of 10% to FY 2028-29, in line with its proposal to consider capitalization of the
New Terminal Building in FY2028-29.
10.2.6 Based on the Authority’s examination of NAR proposed to be considered for VIA for the Second Control
Period have been presented in the table below:
Table 61: Non-aeronautical revenues proposed by the Authority for VIA for the Second Control Period
(₹ Crores)
FY FY FY FY FY
Particulars Total
2024-25 2025-26 2026-27 2027-28 2028-29
1. Passenger related revenue
Restaurant / snack bars 4.45 4.90 5.39 5.93 7.11 27.78
Consultation Paper No. 05/ 2024-25 Page 94 of 119NON-AERONAUTICAL REVENUE FOR THE SECOND CONTROL PERIOD
FY FY FY FY FY
Particulars Total
2024-25 2025-26 2026-27 2027-28 2028-29
T.R. stall 6.67 7.34 8.08 8.88 10.66 41.63
Hoarding & display 4.94 5.43 5.97 6.57 7.88 30.79
Car Rentals 0.92 1.01 1.11 1.22 1.47 5.72
Car parking 3.32 3.65 4.02 4.42 5.30 20.70
Admission tickets 0.06 0.06 0.07 0.07 0.08 0.34
Other Misc. Income 4.02 4.22 4.43 4.66 4.89 22.22
2. Other Revenue
Land Leases 0.30 0.35 0.35 0.35 0.35 1.71
Building (residential) 0.02 0.02 0.02 0.02 0.02 0.10
Building (non-
2.04 2.19 2.36 2.53 2.98 12.10
residential)
Total (1+2) 26.74 29.17 31.79 34.65 40.74 163.09
Note: The NAR derived by the Authority ₹ 163.09 Cr (as per above table) is lesser than that projected by AAI
which is ₹ 165.78 Cr, due to shifting of one-time increase in some revenue components from FY 2027-28 to FY
2028-29, on account of operationalization of the Terminal Building in FY 2028-29
10.2.7 The revised growth rates as per Authority’s examination have been presented in the table below:
Table 62:Growth rates in non-aeronautical revenue proposed by the Authority
FY FY FY FY FY
Particulars
2024-25 2025-26 2026-27 2027-28 2028-29
1. Passenger related revenue
Restaurant / snack bars 10.00% 10.00% 10.00% 10.00% 20.00%
T.R. stall 10.00% 10.00% 10.00% 10.00% 20.00%
Hoarding & display 10.00% 10.00% 10.00% 10.00% 20.00%
Car Rentals 10.00% 10.00% 10.00% 10.00% 20.00%
Car parking 10.00% 10.00% 10.00% 10.00% 20.00%
Admission tickets 10.00% 10.00% 10.00% 10.00% 10.00%
Other Misc. Income 5.00% 5.00% 5.00% 5.00% 5.00%
2. Other Revenue
Land Leases 0.00% 15.00% 0.00% 0.00% 0.00%
Building (residential) 0.00% 0.00% 0.00% 0.00% 0.00%
Building (non-residential) 7.50% 7.50% 7.50% 7.50% 17.50%
10.3 Authority’s proposal regarding non-aeronautical revenues for the Second Control
Period
Based on the material before it and based on its analysis, the Authority proposes the following with regard
to non-aeronautical revenue for the Second Control Period.
10.3.1 To consider non-aeronautical revenues for the Second Control Period for VIA in accordance with
Table 61.
10.3.2 To consider actual non-aeronautical revenue achieved by AAI for VIA for the Second Control Period,
while determining tariff for the next Control Period.
Consultation Paper No. 05/ 2024-25 Page 95 of 119TAXATION FOR THE SECOND CONTROL PERIOD
11 TAXATION FOR THE SECOND CONTROL PERIOD
11.1 AAI’s Submission on Taxation for the Second Control Period for VIA
11.1.1 AAI has calculated the revenue generated from regulated services, Aeronautical operating expenses,
interest and financing charges, and depreciation on written down value (WDV) of assets as per income
tax. After calculating the Profit Before Tax (PBT), a tax rate of 25.17% was applied, after setting off
prior losses. The Aeronautical taxes submitted by VIA are shown in the table below:
Table 63: Tax Expense submitted by AAI for VIA for the Second Control Period
(₹ Crores)
FY FY FY FY FY
Particulars Total
2024-25 2025-26 2026-27 2027-28 2028-29
Aeronautical Revenue with Revised
200.46 327.14 380.99 424.73 473.94 1,807.26
Rates
O&M expenses 100.47 107.09 114.23 134.33 143.42 599.54
Interest on working capital - - - - - -
Depreciation 16.35 15.20 13.89 161.83 295.02 502.30
Profit Before Tax 83.64 204.85 252.87 128.57 35.50 705.42
Set-off of prior period tax losses (83.64) (74.66) 0.00 0.00 0.00 (158.30)
PBT after set-off of prior period losses 0.00 130.19 252.87 128.57 35.50 547.12
Tax rate (%) 25.17% 25.17% 25.17% 25.17% 25.17%
Tax 0.00 32.77 63.65 32.36 8.93 137.71
11.2 Authority’s examination of Taxation for the Second Control Period
11.2.1 The Authority notes that VIA has calculated income tax based on the projected Aeronautical revenues.
The Authority has re-computed the taxes based on the revised regulatory blocks for the Second Control
Period proposed in the previous chapters. The following table summarizes the Aeronautical taxes
proposed by the Authority for the Second Control Period.
Table 64: Taxation proposed to be considered by the Authority for the Second Control Period
(₹ Crores)
FY FY FY FY FY
Particulars Total
2024-25 2025-26 2026-27 2027-28 2028-29
Aeronautical Revenue (refer
128.66 174.37 209.60 240.98 276.94 1,030.56
Table 71)
Less: O&M expenses (refer
82.69 83.75 87.51 91.52 104.20 449.67
Table 57)
Less: Depreciation (as per
16.21 14.56 12.96 14.82 92.87 151.42
Income Tax Act, 1961)
Less: Interest on Loan 1.05 0.97 0.82 0.67 0.52 4.05
Profit Before Tax 29.77 76.07 109.13 134.64 79.87 429.47
Set-off of prior period tax
28.72 75.09 2.05 0.00 0.00 105.87
losses*
PBT after set-off of prior period
0.00 0.00 106.25 133.96 79.34 319.56
tax losses
Tax rate (%) 25.17% 25.17% 25.17% 25.17% 25.17%
Tax 0.00 0.00 26.74 33.72 19.97 80.43
*Prior period losses pertain to those incurred during FY 2019-20 to FY 2022-23.
Consultation Paper No. 05/ 2024-25 Page 96 of 119TAXATION FOR THE SECOND CONTROL PERIOD
11.3 Authority’s proposal regarding Taxation for the Second Control Period
Based on the material before it and based on its analysis, the Authority proposes the following with regard
to Tax Expense for the Second Control Period.
11.3.1 To consider the Taxation for the Second Control Period for VIA as per Table 64.
11.3.2 To true up the aeronautical tax amount appropriately, taking into consideration all relevant facts at
the time of tariff determination for the Third Control Period.
Consultation Paper No. 05/ 2024-25 Page 97 of 119QUALITY OF SERVICE FOR THE SECOND CONTROL PERIOD
12 QUALITY OF SERVICE FOR THE SECOND CONTROL PERIOD
12.1 AAI’s Submission on Quality of Service for the Second Control Period for VIA
12.1.1 VIA has not made any submission related to Quality of Service as part of its MYTP submission. The
Authority was informed that the same is available in AAI’s website (station-wise).
12.2 Authority’s examination regarding Quality of Service for the Second Control Period
12.2.1 The Authority notes that:
As per section 13 (1) (d) of the AERA Act, 2008, the Authority shall “monitor the set performance
standards relating to quality, continuity and reliability of service as may be specified by the Central
Government or any Authority authorized by it in this behalf.”
As per section 13(1)(a)(ii), the Authority is required to determine the tariff for Aeronautical
services taking into consideration “the service provided, its quality and other relevant factors.”
12.2.2 The Authority noted from AAI’s website that the ACI ASQ survey results for VIA for the years 2018
to 2024(Q1) have been in the range of 4.77 to 4.95 (overall score), as against the average score of AAI
Airports which ranges from 4.57 to 4.81
Table 65: ASQ rating for VIA for the years 2018-2024
ASQ rating
Calendar Year (CY)
4.77
2018
4.80
2019
4.94
2020
-
2021
4.95
2022
4.90
2023
4.88
2024 (Q1)
12.2.3 The Authority notes that the ASQ ratings achieved by VIA is by and large higher than the average rating
of the AAI airports.
12.2.4 Also, the Authority reviewed the MoU between AAI and MoCA for the year 2019-20 and noted that
the ASQ rating target for the year 2019-20 was 4.68. The actual ASQ rating achieved by Varanasi
International Airport for CY 2019 was 4.80 which is higher than the target rating. The ASQ rating for
CY 2021 is not available as the survey was not conducted to COVID 19 pandemic. Further, the
Authority notes that now MoU between AAI and MoCA does not contain parameter on ASQ ratings.
12.2.5 The Authority does not propose any adjustment towards tariff determination for the Second Control
Period on account of quality of service maintained by VIA, as the Airport has already achieved 4.95
rating.
12.3 Authority’s proposal regarding Quality of Service for the Second Control Period
Based on the material before it and its analysis, the Authority proposes the following with regard to
Quality of Service for the Second Control Period:
12.3.1 Not to consider any adjustment towards tariff determination for the Second Control Period with regard
to Quality of Service.
Consultation Paper No. 05/ 2024-25 Page 98 of 119AGGREGATE REVENUE REQUIREMENT (ARR) FOR THE SECOND CONTROL PERIOD
13 AGGREGATE REVENUE REQUIREMENT (ARR) FOR THE SECOND CONTROL
PERIOD
13.1 AAI’s Submission on Aggregate Revenue Requirement for the Second Control Period for
VIA
13.1.1 AAI has submitted ARR and Yield per Passenger (YPP) for the Second Control Period as per the
regulatory building blocks discussed.
13.1.2 The summary of ARR and YPP has been presented in the table below.
Table 66: ARR submitted by AAI for VIA for the Second Control Period
(₹ Crores)
FY FY FY FY FY
Particulars Total
2024-25 2025-26 2026-27 2027-28 2028-29
Average RAB 136.43 128.07 117.42 1564.99 2943.08 4890.00
Fair Rate of Return 14% 14% 14% 14% 14%
Return on average RAB 19.10 17.93 16.44 219.10 412.03 684.60
O&M expenses 100.47 107.09 114.23 134.33 143.42 599.54
Depreciation 14.69 14.84 13.95 83.75 152.91 280.15
Tax expense 0.00 32.77 63.65 32.36 8.93 137.71
True up shortfall of First
Control Period claimed by 305.36 - - - - 305.36
AAI
Less: 30% NAR 8.02 8.75 9.54 11.20 12.22 49.73
ARR per year (₹ Crores) 431.60 163.88 198.73 458.34 705.07 1957.62
Discount factor (@ 14%) 1.00 0.88 0.77 0.67 0.59
PV of ARR 431.60 143.75 152.92 309.37 417.46 1455.10
Sum Present value of ARR
1,455.10 1,455.10
(₹ Crores)
Total Traffic (million
12.06 12.06
passengers)
Yield per passenger (YPP)
1,206.55 1,206.55
(₹)
13.2 Authority’s examination of Aggregate Revenue Requirement (ARR) for the Second
Control Period
13.2.1 The observations and proposals of the Authority across the regulatory building blocks impact the
computation of ARR and Yield. Consequent to detailed examination of each regulatory building block,
the Authority proposes the following ARR and YPP, as presented in the table below.
Table 67: ARR proposed to be considered by the Authority for the Second Control Period
(₹ Crores)
FY FY FY FY FY
Particulars Table Total
2024-25 2025-26 2026-27 2027-28 2028-29
Average RAB (A) 49 135.44 124.05 111.82 133.05 917.29
Fair Rate of Return ( B) 50 12.21% 12.21% 12.21% 12.21% 12.21%
Return on average RAB (C)=
16.54 15.15 13.65 16.25 112.00 173.58
(A)*(B)
Depreciation (D) 47 13.98 13.81 13.15 13.19 39.21 93.34
O&M expenses (E) 57 82.69 83.75 87.51 91.52 104.20 449.67
Tax expense (F) 64 - - 26.74 33.72 19.97 80.43
Consultation Paper No. 05/ 2024-25 Page 99 of 119AGGREGATE REVENUE REQUIREMENT (ARR) FOR THE SECOND CONTROL PERIOD
FY FY FY FY FY
Particulars Table Total
2024-25 2025-26 2026-27 2027-28 2028-29
Shortfall carried forward from 24
225.41 225.41
First Control Period (G)
Gross ARR (H)= SUM (C:G) 338.61 112.71 141.05 154.68 275.38 1,022.43
NAR (I) 61 26.74 29.17 31.79 34.65 40.74 163.09
Less: 30% NAR (J= I*30%) 8.02 8.75 9.54 10.40 12.22 48.93
Net ARR = (K= H - J) 330.59 103.96 131.51 144.28 263.16 973.50
Discount factor (@ 12.21%) 1.00 0.89 0.79 0.71 0.63 4.02
PV of ARR (₹ Crores) 330.59 92.64 104.45 102.12 166.00 795.80
Sum Present value of ARR (₹
795.80 795.80
Crores)
Total Traffic (MPPA) 28 24.12 24.12
Yield per passenger on Total
329.92 329.92
Traffic (YPP) (₹)
Departing passenger (MPPA) 12.06 12.06
Yield per Departing Passenger (₹) 659.84 659.84
13.2.2 AERA has determined Net Present Value (NPV) of ARR as ₹ 795.80 Crores, as against the NPV of
ARR of ₹ 1,455.10 Crores proposed by AAI. The variation of ₹ 659.30 Crores between the ARR
proposed by the Authority and that claimed by AAI are attributable to following factors:
i Rationalization of CAPEX (refer Table 45) amounting to ₹ 920.44 Crores, resulting in reduction of
depreciation and Return on RAB.
ii Determination of FRoR by the Authority as 12.21% as against 14% claimed by AAI.
iii Rationalization of O&M expenses like Payroll expenses, CHQ/ RHQ expenses, Administration
expenses, R&M Expenses etc. amounting to ₹ 149.87 Crores.
iv Reduction in taxation, due to rationalization of other building blocks such O&M expenses,
depreciation and the Aeronautical revenue determined by the Authority (based on the proposed
Tariff Rate card of the Authority) amounting to ₹ 57.28 Crores.
13.3 Authority’s proposal regarding Aggregate Revenue Requirement (ARR) for the Second
Control Period
Based on the material before it and based on its analysis, the Authority proposes the following with regard to
ARR for the Second Control Period.
13.3.1 To consider the ARR and Yield for the Second Control Period for VIA in accordance with Table 67.
13.3.2 To true up the ARR of Second Control Period at the time of tariff determination of Third Control Period.
Consultation Paper No. 05/ 2024-25 Page 100 of 119AERONAUTICAL REVENUE FOR THE SECOND CONTROL PERIOD
14 AERONAUTICAL REVENUE FOR THE SECOND CONTROL PERIOD
14.1 AAI’s Submission on Aeronautical Revenue for the Second Control Period for VIA
14.1.1 AAI has proposed to increase the Aeronautical tariffs with effect from October 1, 2024 as per the
schedule below:
Landing charges – For domestic and international ATM, AAI has proposed a one-time increase of
60% from the existing charges w.e.f. October 1,2024 and thereafter by 6% year on year
Parking charges - For domestic and international ATM, AAI has proposed a one-time increase of
110% from the existing charges w.e.f. October 1, 2024 and thereafter by 6% year on year.
User Development Fee (UDF) – AAI has proposed the one time increase in UDF rates from the
existing rates of ₹ 400 (Domestic) and ₹ 1,300 (International) for the Second Control Period as per the
Table given below:
Table 68: Increase in UDF rates proposed by AAI
FY 2024-25 FY FY FY FY
Particulars (October 1, 2024 to 2025-26 2026-27 2027-28 2028-29
March 31, 2025)
Domestic UDF (in ₹) 1,223 1,223 1,223 1,223 1,223
Domestic UDF (%) 205.75% 0.00% 0.00% 0.00% 0.04%
International UDF (in ₹) 1,620 1,620 1,620 1,620 1,620
International UDF (%) 24.62% 0.00% 0.00% 0.00% 0.00%
Table 69: Aeronautical revenue submitted by AAI for VIA for the Second Control Period
(₹ Crores)
FY FY FY FY FY
Particulars Total
2024-25 2025-26 2026-27 2027-28 2028-29
Parking charges 0.53 0.61 0.71 0.79 0.89 3.54
Landing 27.01 30.53 34.53 38.00 41.82 171.90
UDF charges 80.95 94.54 110.54 122.73 136.31 545.08
Land Lease 0.80 0.92 0.92 0.92 0.92 4.47
Ground Handling charges 2.48 2.80 3.16 3.47 3.82 15.73
CUTE charges 4.24 4.90 5.67 6.26 6.91 27.98
Revenue Share from
1.04 1.10 1.15 1.21 1.27 5.77
AAICLAS
Space rent from Airlines 0.82 0.88 0.94 0.69 0.74 4.07
Total Revenue 117.87 136.28 157.63 174.08 192.68 778.55
14.1.2 For revenues based on agreements i.e., Land lease from oil companies and Ground handling companies,
AAI has proposed to consider the same revenue of FY 2025-26 for FY 2026-27 to FY 2028-29.
14.2 Authority’s examination of Aeronautical Revenue for the Second Control Period
14.2.1 The Authority notes that domestic traffic of VIA had surpassed the pre-COVID levels of FY 2019-20
and there has been a reasonable growth in passenger traffic (domestic and international) in the current
Financial Year.
14.2.2 Based on the above, the Authority proposes to increase the Landing and Parking charges in a staggered
Consultation Paper No. 05/ 2024-25 Page 101 of 119AERONAUTICAL REVENUE FOR THE SECOND CONTROL PERIOD
manner from FY 2024-25 (w.e.f December 1, 2024) on the following basis:
i. One time increase of 40% in Domestic and International Landing charges and 6% increase Y-o-Y
for the remaining tariff years in the Second Control Period.
ii. One time increase of 40% in Domestic and International Parking charges and 6% increase Y-o-Y
for the remaining tariff years in the Second Control Period.
14.2.3 The Authority proposes to rationalize the increase in UDF considered by AAI. Accordingly, UDF
proposed by Authority for the Second Control Period for VIA is as follows:
Table 70: UDF charges proposed by the Authority for VIA for the Second Control Period
FY FY FY FY FY FY
2024-25 2024-25 2025-26 2026-27 2027-28 2028-29
(April 1, 2024 to (December 1,
Passenger
November 30, 2024 to
2024) March 31, 2025)
(existing rates)
Domestic (in ₹) 400 440 480 500 520 540
% increase proposed 10% 9% 4% 4% 4%
International (in ₹) 1,300 1,350 1,360 1,370 1,380 1,390
% increase proposed 4% 1% 1% 1% 1%
14.2.4 The Authority has determined the Aeronautical revenue based on the proposed Aeronautical charges as
follows:
Table 71: Aeronautical revenues proposed to be considered by the Authority for the Second Control Period
(₹ Crores)
FY FY FY FY FY
Particulars Total
2024 -25 2025 -26 2026-27 2027-28 2028-29
Total PV of ARR including true up (₹ in Crores) 795.80 795.80
(a) (as per Table 67)
Aeronautical Revenue
Parking and Housing Charges (₹ in Crores) 0.70 1.07 1.32 1.56 1.85 6.50
UDF Domestic (₹ in Crores) 86.25 114.49 138.39 158.69 181.75 679.58
Landing Charges (₹ in Crores) 32.92 48.83 58.69 68.54 80.06 289.05
CUTE charges (₹ in Crores) 4.33 5.00 5.79 6.39 7.05 28.56
Ground handling charges (₹ in Crores) 2.63 2.96 3.34 3.68 4.04 16.65
Royalty from AAICLAS (₹ in Crores) 1.04 1.10 1.15 1.21 1.27 5.77
Land Lease – Oil Companies / Ground Handling
0.80 0.92 0.92 0.92 0.92 4.47
Companies (₹ in Crores)
Total Revenue (b) 128.67 174.38 209.61 240.99 276.94 1,030.58
PV factor 1.00 0.89 0.79 0.71 0.63
PV of Aero Revenue (c) 128.67 155.40 166.47 170.57 174.69 795.80
∑ PV Projected Aero Revenue (d) 795.80 795.80
Surplus/ (Shortfall) proposed to be carried
forward for Next Control Period (d) – (a) 0.00 0.00
(as on March 31, 2024)
14.2.5 As can be observed from the above table, as per the Authority’s proposals, AAI is entitled to recover an
ARR of ₹ 795.80 Crores (in NPV terms). The present value of total projected Aeronautical revenues
based on the Authority’s proposed Landing, Parking and UDF charges is ₹ 795.80 Crores (in NPV
Consultation Paper No. 05/ 2024-25 Page 102 of 119AERONAUTICAL REVENUE FOR THE SECOND CONTROL PERIOD
terms), which is equivalent to Target Revenue/ ARR determined by the Authority for the Second Control
Period.
14.3 Authority’s proposal regarding Aeronautical Revenue for the Second Control Period
Based on the material before it and based on its analysis, the Authority proposes the following with
regard to Aeronautical Revenue for the Second Control Period.
14.3.1 To consider Aeronautical revenue for the Second Control Period for VIA as per Table 71.
14.3.2 To true up Aeronautical revenue based on actual numbers for the Second Control Period at the time of
determination of tariff for the Third Control Period.
Consultation Paper No. 05/ 2024-25 Page 103 of 119SUMMARY OF AUTHORITY’S PROPOSALS
15 SUMMARY OF AUTHORITY’S PROPOSALS
Chapter 4: True Up of the First Control Period
4.11.1 To consider capital additions as detailed in Table 10 for true up of the First Control Period.
4.11.2 To consider Aeronautical depreciation as mentioned in Table 11 for true up of the First Control
Period.
4.11.3 To consider RAB as per Table 12 for true up for the First Control Period.
4.11.4 To consider FRoR as 14% for the purpose of true up of the First Control Period.
4.11.5 To consider the non-aeronautical revenues as presented in Table 13 for the purpose of true up of the
First Control Period.
4.11.6 To consider O&M expenses as detailed in Table 19 for the purpose of true up of the First Control
Period.
4.11.7 To consider actual Aeronautical revenue as per Table 22 for true up of the First Control Period for
VIA.
4.11.8 To consider ARR and Under-recovery as detailed in Table 24 for true up of the First Control Period
for VIA and readjust the shortfall for the Second Control Period.
Chapter 5: Traffic for the Second Control Period
5.3.1 To consider the ATM and passenger traffic for the Second Control Period for VIA as per Table 28.
5.3.2 To true up the traffic volume (ATM and passengers) on the basis of actual traffic in the Second
Control Period while determining tariff for the Third Control Period.
Chapter 6: Capital Expenditure (CAPEX), Depreciation and Regulatory Asset Base
for the Second Control Period
6.5.1 To consider allocation of gross block of assets as on April 1, 2024, between Aeronautical and Non-
aeronautical assets as detailed in Table 30.
6.5.2 To adopt the capitalization of Aeronautical Capital Expenditure for the Second Control Period in
accordance with Table 45.
6.5.3 To true up the Capital expenditure based on actuals, cost efficiency and reasonableness, at the time of
determination of tariff for Third Control Period.
6.5.4 To reduce (adjust) 1% of the uncapitalized project cost from the ARR in case any particular capital
project is not completed/capitalized as per the approved capitalization schedule. Further, if the delay in
completion of the project is due to any reason beyond the control of AAI or its contracting agency and
is properly justified, the same would be considered by the Authority while truing up the actual cost at
the time of determination of tariff for the Third Control Period.
6.5.5 To consider depreciation as per Table 47 for the Second Control Period.
6.5.6 To true up Depreciation of the Second Control Period based on the actual asset additions and actual date
of capitalization during the tariff determination of the Third Control Period.
6.5.7 To consider average RAB for the Second Control Period for VIA as per Table 49.
6.5.8 To true up the RAB based on actuals at the time of tariff determination for the Third Control Period.
Consultation Paper No. 05/ 2024-25 Page 104 of 119SUMMARY OF AUTHORITY’S PROPOSALS
Chapter 7: Fair Rate of Return for the Second Control Period
7.3.1 To consider FRoR of 12.21 % for VIA for the Second Control Period as per Table 50.
7.3.2 To true up the FRoR while determining tariff for the next Control Period considering all the relevant
factors.
Chapter 8: Inflation for the Second Control Period
8.3.1 To consider Inflation for the Second Control Period for VIA as detailed in Table 51.
Chapter 9: Operation and Maintenance expenses for the Second Control Period
9.3.1 To consider O&M expenses for the Second Control Period for VIA as per Table 57
9.3.2 To consider the O&M expenses incurred by AAI for VIA during the Second Control Period subject to
reasonableness and efficiency, at the time of tariff determination for the next Control Period.
Chapter 10: Non-aeronautical revenue for the Second Control Period
10.3.1 To consider non-aeronautical revenues for the Second Control Period for VIA in accordance with
Table 61.
10.3.2 To consider actual non-aeronautical revenue achieved by AAI for VIA for the Second Control
Period, while determining tariff for the next Control Period.
Chapter 11: Taxation for the Second Control Period
11.3.1 To consider the Taxation for the Second Control Period for VIA as per Table 64.
11.3.2 To true up the aeronautical tax amount appropriately, taking into consideration all relevant facts at the
time of tariff determination for the Third Control Period.
Chapter 12: Quality of Service for the Second Control Period
12.3.1 Not to consider any adjustment towards tariff determination for the Second Control Period with regard
to Quality of Service.
Chapter 13: Aggregate Revenue Requirement (ARR) for the Second Control Period
13.3.1 To consider the ARR and Yield for the Second Control Period for VIA in accordance with Table 67.
13.3.2 To true up the ARR of Second Control Period at the time of tariff determination of Third Control
Period
Chapter 14: Aeronautical revenue for the Second Control Period
14.3.1 To consider Aeronautical revenue for the Second Control Period for VIA as per Table 71.
14.3.2 To true up Aeronautical revenue based on actual numbers for the Second Control Period at the
time of determination of tariff for the Third Control Period.
Consultation Paper No. 05/ 2024-25 Page 105 of 119STAKEHOLDERS’ CONSULTATION TIMELINE
16 STAKEHOLDERS’ CONSULTATION TIMELINE
16.1 In accordance with the provision of Section 13(4) of the AERA Act, 2008, the proposals contained in the
Chapter 15 – Summary of the Authority’s proposals read with the relevant discussion in the various
chapters of the Paper is hereby put forth for Stakeholders’ Consultation.
16.2 For removal of doubts, it is clarified and explained that the contents of this Consultation Paper may not
be construed as any Order or Direction by the Authority. The Authority shall pass an order, in the matter,
only after considering the submissions of the stakeholders in response hereto and by making such
decisions fully documented and explained in terms of the provisions of the Act.
16.3 The Authority welcomes written evidence-based feedback, comments and suggestions from stakeholders
on the proposal made in this Consultation Paper, latest by 25.11.2024.
Secretary,
Airports Economic Regulatory Authority of India
3rd Floor, Udaan Bhawan
Safdarjung Airport New Delhi -110003
Tel: 011-24695044-47, Fax: 011-24695048
(Chairperson)
Consultation Paper No. 05/ 2024-25 Page 106 of 119LIST OF ANNEXURES
17 LIST OF ANNEXURES
17.1 Annexure I: Annual Tariff proposal submitted by AAI for VIA for the Second
Control Period
17.1.1 As part of the Multi-year Tariff proposal, AAI submitted a Tariff Card for all five years of the
Second Control Period. The Authority examined AAI’s Multi-year Tariff Proposal, along with all
regulatory building blocks. The Authority’s examination has been discussed in this Consultation
Paper in the previous Chapters.
17.1.2 The tariff card proposed by AAI for the Second Control Period has been reproduced here. For
purposes of comparison, the existing Aeronautical charges have been provided along with the
charges proposed by AAI.
i. Landing charges (Domestic)
Table 72: Existing Landing charges
Weight of the Aircraft Domestic (₹) International (₹)
Up to 25 MT 211.20 per MT 355.10 per MT
5,280.00 + 380.10 per MT in excess of
Above 25 MT to 50 MT 25 MT 8,877.50 + 719.20 per MT in excess of 25 MT
14.782.50 + 391.90 per MT in excess of
Above 50 MT to 100 MT 50 MT 26,857.50 + 804.30 per MT in excess of 50 MT
34,377.50 + 396.40 per MT in excess of 67,072.50 + 915.30 per MT in excess of 100
Above 100 MT to 200 MT 100 MT MT
74,017.50 + 382.60 per MT in excess of 1,58,602.50 + 944.60 per MT in excess of 200
Above 200 MT 200 MT MT
Table 73: Landing charges (domestic) proposed by AAI for the Second Control Period
Weight of the Rates per Hour Rates per Hour Rates per Hour Rates per Hour Rates per Hour
Aircraft (₹) (₹) (₹) (₹) (₹)
(01.04.2024 to (01.04.2025 to (01.04.2026 to (01.04.2027 to (01.04.2028 to
31.03.2025) 31.03.2026) 31.03.2027) 31.03.2028) 31.03.2029)
Up to 25 MT 338 per MT 358 per MT 380 per MT 402 per MT 427 per MT
Above 25 MT up
8,448 + 608 in 89,55 + 645 in 9,492 + 683 in 10,062 + 724 in 10,665 + 768 in
to 50 MT
excess of 25 MT excess of 25 MT excess of 25 MT excess of 25 MT excess of 25 MT
Above 50 MT up 23,652 + 627 in 25,071 + 665 in 26,575 + 705 in 28,170 + 747 in 29,860 + 792 in
to 100 MT excess of 50 MT excess of 50 MT excess of 50 MT excess of 50 MT excess of 50 MT
61,802 + 713 in
Above 100 MT 55,004 + 634 in 58,304 + 672 in 65,511 + 755 in 69,441 + 801 in
excess of 100
to 200 MT excess of 100 MT excess of 100 MT excess of 100 MT excess of 100 MT
MT
1,33,066 + 688
1,18,428 + 612 in 1,25,534 + 649 in 1,41,050 + 729 in 1,49,513 + 773 in
Above 200 MT in excess of 200
excess of 200 MT excess of 200 MT excess of 200 MT excess of 200 MT
MT
Consultation Paper No. 05/ 2024-25 Page 107 of 119LIST OF ANNEXURES
Table 74: Landing charges (international) proposed by AAI for the Second Control Period
Weight of the Rates per Hour Rates per Hour Rates per Hour Rates per Hour Rates per Hour
Aircraft (₹) (₹) (₹) (₹) (₹)
(01.04.2024 to (01.04.2025 to (01.04.2026 to (01.04.2027 to (01.04.2028 to
31.03.2025) 31.03.2026) 31.03.2027) 31.03.2028) 31.03.2029)
Up to 25 MT 568 per MT 602 per MT 638 per MT 677 per MT 717 per MT
Above 25 MT up
14204 + 1151 in 15056 + 1220 in 15960 + 1293 in 16917 + 1371 in 17932 + 1453 in
to 50 MT
excess of 25 MT excess of 25 MT excess of 25 MT excess of 25 MT excess of 25 MT
Above 50 MT up 42972 + 1287 in 45550 + 1364 in 48283 + 1446 in 51180 + 1533 in 54251 + 1625 in
to 100 MT excess of 50 MT excess of 50 MT excess of 50 MT excess of 50 MT excess of 50 MT
120580 + 1645
Above 100 MT 107316 + 1464 in 113755 + 1552 in 127815 + 1744 in 135484 + 1849 in
in excess of 100
to 200 MT excess of 100 MT excess of 100 MT excess of 100 MT excess of 100 MT
MT
285129 + 1698
253764 + 1511 in 268990 + 1602 in 302237 + 1800 in 320371 + 1908 in
Above 200 MT in excess of 200
excess of 200 MT excess of 200 MT excess of 200 MT excess of 200 MT
MT
Notes:
1. No Landing Charges shall be payable in respect of a) aircraft with a maximum certified capacity of less
than 80 seats, being operated by domestic schedule operators at airport, b) helicopters of all types, and c)
DGCA approved Flying school/flying training institute aircrafts.
2. All domestic legs of international routes flown by Indian operators will be treated as domestic flights as
far as landing charges concerned irrespective of flight number assigned to such flights.
3. Domestic leg of international routes of foreign carriers shall be treated as international flights.
4. Charges shall be calculated on the basis of nearest MT (i.e. 1000 kg).
5. “A minimum Landing charge of Rs.4000/- per Flight in respect of Domestic Non-Scheduled
Operators/GA operators or the applicable landing charges whichever is higher will be applicable”.
6. Flight operating under regional connectivity scheme will be completely exempted from Landing charges
from the date of the scheme is operationalized by GOI.
ii. Parking Charges
Table 75: Existing Parking charges (domestic ATM)
Weight of Aircraft Parking Charges Rates per Hour Parking Charges Rates per
(₹) (up to four hours after first two Hour (₹) (beyond first
free hours) four hours)
Up to 25 MT 3.00 Per Hour per MT 6.00 Per Hour per MT
Above 25 MT up to 50 MT 75.00 + 4.60 per Hour per MT in 150.00 + 9.20 per Hour per MT in
excess of 25 MT excess of 25 MT
Consultation Paper No. 05/ 2024-25 Page 108 of 119LIST OF ANNEXURES
Weight of Aircraft Parking Charges Rates per Hour Parking Charges Rates per
(₹) (up to four hours after first two Hour (₹) (beyond first
free hours) four hours)
190.00 + 5.50 per Hour per MT in 380.00 + 11.00 per Hour per MT in
Above 50 MT up to 100 MT
excess of 50 MT excess of 50 MT
465.00 + 8.80 per Hour per MT in
Above 100 MT to 200 MT 930.00 + 17.60 per Hour per MT in
excess of 100 MT
excess of 100 MT
1,345.00 + 9.00 per Hour per MT in
Above 200 MT 2,690.00 + 18.00 per Hour per MT
excess of 200 MT
in excess of 200 MT
Table 76: Parking charges (domestic ATM) proposed by AAI for the Second Control Period (up to four hours
after first two free hours)
Weight of the Rates per Hour Rates per Hour Rates per Hour Rates per Hour Rates per Hour
Aircraft (₹) (₹) (₹) (₹) (₹)
(01.04.2024 to (01.04.2025 to (01.04.2026 to (01.04.2027 to (01.04.2028 to
31.03.2025) 31.03.2026) 31.03.2027) 31.03.2028) 31.03.2029)
12.6 Per Hour 13.36 Per Hour 14.16 Per Hour 15.01 Per Hour 15.91 Per Hour
Up to 25 MT
Per MT Per MT Per MT Per MT Per MT
333.9 + 20.48 353.93 + 21.71 375.17 + 23.01 397.68 + 24.39
Above 25 MT up to 315 + 19.32 per
per MT per hour per MT per hour per MT per hour per MT per hour
50 MT MT per hour in
in excess of 25 in excess of 25 in excess of 25 in excess of 25
excess of 25 MT
MT MT MT MT
845.88 + 24.49 896.63 + 25.96 950.43 + 27.51 1007.46 + 29.16
798 + 23.1 per
Above 50 MT up to per MT per hour per MT per hour per MT per hour per MT per hour
MT per hour in
100 MT in excess of 50 in excess of 50 in excess of 50 in excess of 50
excess of 50 MT
MT MT MT MT
1953 + 36.96 per 2070.18 + 39.18 2194.39 + 41.53 2326.05 + 44.02 2465.62 + 46.66
Above 100 MT to MT per hour in per MT per hour per MT per hour per MT per hour per MT per hour
200 MT excess of 100 in excess of 100 in excess of 100 in excess of 100 in excess of 100
MT MT MT MT MT
5649 + 37.8 per 5987.94 + 40.07 6347.22 + 42.47 6728.05 + 45.02 7131.73 + 47.72
MT per hour in per MT per hour per MT per hour per MT per hour per MT per hour
Above 200 MT
excess of 200 in excess of 200 in excess of 200 in excess of 200 in excess of 200
MT MT MT MT MT
Consultation Paper No. 05/ 2024-25 Page 109 of 119LIST OF ANNEXURES
Table 77: Parking charges (domestic ATM) proposed by AAI for the Second Control Period (beyond
first four hours)
Weight of the Rates per Hour Rates per Hour Rates per Hour Rates per Hour Rates per Hour
Aircraft (₹) (₹) (₹) (₹) (₹)
(01.04.2024 to (01.04.2025 to (01.04.2026 to (01.04.2027 to (01.04.2028 to
31.03.2025) 31.03.2026) 31.03.2027) 31.03.2028) 31.03.2029)
25.2 Per Hour 26.71 Per Hour 28.31 Per Hour 30.01 Per Hour 31.81 Per Hour
Up to 25 MT
Per MT Per MT Per MT Per MT Per MT
667.8 + 40.96 707.87 + 43.42 750.34 + 46.02 795.36 + 48.78
Above 25 MT up to 630 + 38.64 per
per MT per hour per MT per hour per MT per hour per MT per hour
50 MT MT per hour in
in excess of 25 in excess of 25 in excess of 25 in excess of 25
excess of 25 MT
MT MT MT MT
1691.76 + 48.97 1793.27 + 51.91 1900.86 + 55.02 2014.91 + 58.33
1596 + 46.2 per
Above 50 MT up to per MT per hour per MT per hour per MT per hour per MT per hour
MT per hour in
100 MT in excess of 50 in excess of 50 in excess of 50 in excess of 50
excess of 50 MT
MT MT MT MT
3906 + 73.92 per 4140.36 + 78.36 4388.78 + 83.06 4652.11 + 88.04 4931.24 + 93.32
Above 100 MT to MT per hour in per MT per hour per MT per hour per MT per hour per MT per hour
200 MT excess of 100 in excess of 100 in excess of 100 in excess of 100 in excess of 100
MT MT MT MT MT
11298 + 75.6 per 11975.88 + 80.14 12694.43 + 84.94 13456.1 + 90.04 14263.46 +
MT per hour in per MT per hour per MT per hour per MT per hour 95.44 per MT
Above 200 MT
excess of 200 in excess of 200 in excess of 200 in excess of 200 per hour in
MT MT MT MT excess of 200
MT
Table 78: Existing Parking charges (international ATM)
Weight of Aircraft Parking Charges Rates per Hour Parking Charges Rates per
(₹) (up to four hours after first two Hour (₹) (beyond first
free hours) four hours)
Up to 25 MT 3.00 Per Hour per MT 6.00 Per Hour per MT
Above 25 MT up to 50 MT 75.00 + 4.60 per Hour per MT in 150.00 + 9.20 per Hour per MT in
excess of 25 MT excess of 25 MT
190.00 + 5.50 per Hour per MT in 380.00 + 11.00 per Hour per MT in
Above 50 MT up to 100 MT
excess of 50 MT excess of 50 MT
465.00 + 8.80 per Hour per MT in
Above 100 MT to 200 MT 930.00 + 17.60 per Hour per MT in
excess of 100 MT
excess of 100 MT
1,345.00 + 9.00 per Hour per MT in
Above 200 MT 2,690.00 + 18.00 per Hour per MT
excess of 200 MT
in excess of 200 MT
Consultation Paper No. 05/ 2024-25 Page 110 of 119LIST OF ANNEXURES
Table 79: Parking charges (international ATM) proposed by AAI for the Second Control Period (up to four
hours after first two free hours)
Weight of the Rates per Hour Rates per Hour Rates per Hour Rates per Hour Rates per Hour
Aircraft (₹) (₹) (₹) (₹) (₹)
(01.04.2024 to (01.04.2025 to (01.04.2026 to (01.04.2027 to (01.04.2028 to
31.03.2025) 31.03.2026) 31.03.2027) 31.03.2028) 31.03.2029)
13.02 Per Hour 13.8 Per Hour 14.63 Per Hour 15.51 Per Hour 16.44 Per Hour
Up to 25 MT
Per MT Per MT Per MT Per MT Per MT
325.5 + 22.26 345.03 + 23.6 365.73 + 25.01 387.68 + 26.51 410.94 + 28.1
Above 25 MT up to
per MT per hour per MT per hour per MT per hour per MT per hour per MT per hour
50 MT
in excess of 25 in excess of 25 in excess of 25 in excess of 25 in excess of 25
MT MT MT MT MT
934.92 + 29.83 991.02 + 31.62 1050.48 + 33.52 1113.5 + 35.53
882 + 28.14 per
Above 50 MT up to per MT per hour per MT per hour per MT per hour per MT per hour
MT per hour in
100 MT in excess of 50 in excess of 50 in excess of 50 in excess of 50
excess of 50 MT
MT MT MT MT
2289 + 42.84 per 2426.34 + 45.41 2571.92 + 48.14 2726.24 + 51.02 2889.81 + 54.08
Above 100 MT to MT per hour in per MT per hour per MT per hour per MT per hour per MT per hour
200 MT excess of 100 in excess of 100 in excess of 100 in excess of 100 in excess of 100
MT MT MT MT MT
6573 + 43.26 per 6967.38 + 45.86 7385.42 + 48.61 7828.55 + 51.52 8298.26 + 54.61
MT per hour in per MT per hour per MT per hour per MT per hour per MT per hour
Above 200 MT
excess of 200 in excess of 200 in excess of 200 in excess of 200 in excess of 200
MT MT MT MT MT
Table 80: Parking charges (international ATM) proposed by AAI for the Second Control Period (beyond first
four hours)
Weight of the Rates per Hour Rates per Hour Rates per Hour Rates per Hour Rates per Hour
Aircraft (₹) (₹) (₹) (₹) (₹)
(01.04.2024 to (01.04.2025 to (01.04.2026 to (01.04.2027 to (01.04.2028 to
31.03.2025) 31.03.2026) 31.03.2027) 31.03.2028) 31.03.2029)
26.04 Per Hour 27.6 Per Hour 29.26 Per Hour 31.01 Per Hour 32.87 Per Hour
Up to 25 MT
Per MT Per MT Per MT Per MT Per MT
690.06 + 47.19 731.46 + 50.02 775.35 + 53.02 821.87 + 56.21
Above 25 MT up to 651 + 44.52 per
per MT per hour per MT per hour per MT per hour per MT per hour
50 MT MT per hour in
in excess of 25 in excess of 25 in excess of 25 in excess of 25
excess of 25 MT
MT MT MT MT
1869.84 + 59.66 1982.03 + 63.24 2100.95 + 67.03 2227.01 + 71.05
1764 + 56.28 per
Above 50 MT up to per MT per hour per MT per hour per MT per hour per MT per hour
MT per hour in
100 MT in excess of 50 in excess of 50 in excess of 50 in excess of 50
excess of 50 MT
MT MT MT MT
4578 + 85.68 per 4852.68 + 90.82 5143.84 + 96.27 5452.47 + 5779.62 +
Above 100 MT to MT per hour in per MT per hour per MT per hour 102.05 per MT 108.17 per MT
200 MT excess of 100 in excess of 100 in excess of 100 per hour in per hour in
MT MT MT excess of 100 excess of 100
MT MT
Consultation Paper No. 05/ 2024-25 Page 111 of 119LIST OF ANNEXURES
Weight of the Rates per Hour Rates per Hour Rates per Hour Rates per Hour Rates per Hour
Aircraft (₹) (₹) (₹) (₹) (₹)
(01.04.2024 to (01.04.2025 to (01.04.2026 to (01.04.2027 to (01.04.2028 to
31.03.2025) 31.03.2026) 31.03.2027) 31.03.2028) 31.03.2029)
15657.1 + 16596.52 +
13146 + 86.52 13934.76 + 91.71 14770.85 + 97.21
103.05 per MT 109.23 per MT
per MT per hour per MT per hour per MT per hour
Above 200 MT per hour in per hour in
in excess of 200 in excess of 200 in excess of 200
excess of 200 excess of 200
MT MT MT
MT MT
Notes-
1 No Parking Charges shall be levied for the first two hours. While calculating free parking period,
standard time of 15 minutes shall be added on account of time taken between touch down time and
actual parking time on the parking stand. Another standard time of 15 minutes shall be added on
account of taxing time of aircraft from parking stand to take off point. These periods shall be
applicable for each aircraft irrespective of actual time taken in the movement of aircraft after landing
and before take-off.
2 For calculating chargeable parking time, part of an hour shall be rounded off to the nearest hour.
3 Charges shall be calculated on the basis of nearest MT.
4 Charges for each parking period shall be rounded off to nearest rupee.
5 At the in-contact stands and open stands, after free parking, for the next two hours normal parking
charges shall be levied. After this period, the charges shall be double the normal parking charges.
6 It is proposed to waive off the night parking charges in principle for all domestic scheduled operators
at VIA if the State Government has brought the rate of tax (VAT) on ATF < 5%. The above waiver
of night parking charges will be made applicable from the date of implementation of <5% tax on
ATF by the State Govt. In the event of upward revision in the tax rate of ATF by the State Govt.,
the relief of free night parking charges will also be deemed to be withdrawn for all the airports within
the jurisdiction of the said State.
7 Flights operating under Regional Connectivity Scheme shall be completely governed by AIC issued
on this subject by DGCA.
8 For unauthorized overstay of Aircraft on Ground, an additional charge of ₹ 20.00 per hour per MT
beyond 24 hours is to be payable or as per revised rates as approved by the Authority.
iii. User Development Fees (UDF)
Table 81: UDF Proposed by AAI (per embarking passenger)
Rate in (₹)
Existing FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
UDF
(01.10.2024 (01.04.2025 (01.04.2026 (01.04.2027 (01.04.2028
Passenger
to to to to to
31.03.2028)
31.03.2025) 31.03.2026) 31.03.2027) 31.03.2029)
Domestic 400.00 1,223.00 1,223.00 1,223.00 1,223.00 1,223.00
International 1,300.00 1,620.00 1,620.00 1,620.00 1,620.00 1,620.00
Consultation Paper No. 05/ 2024-25 Page 112 of 119LIST OF ANNEXURES
Notes:
a) Collection charges: if the payment is made in accordance within period prescribed under credit
policy of AAI, then collection charges at Rs 5 per departing pax is payable by AAI to Airline
operators. No collection charges shall be payable if the operator fails to pay the UDF to AAI
within the prescribed credit period or in case of part payment.
b) No collection charges are payable to casual operator/non-scheduled operators.
c) For conversion of US$ into INR the rate as on the 1st day of the month for 1st fortnightly billing
period and rate as on 16th of the month for the 2nd fortnightly billing period shall be adopted
d) Revised UDF charges will be applicable on tickets issued on or after 01/12/2024 for FY 2024-25
and thereafter applicable on date of travel from 1st April 2025 to 31st March 2028.
iv. Aviation Security Fee:
a) Aviation Security Fee (ASF) shall be levied as per GOI Order issued from time to time.
v. Exemption from levy and collection from UDF/ASF at the Airports:
The Ministry of Civil Aviation, Govt. of India vide order no. AV.16011/002/2008-AAI and vide
Letter no. AV.13024/659/2015-AS dated November 30, 2011 and June 13, 2019 respectively
has directed AAI to exempt the following categories of persons from levy and collection of
UDF/ASF.
a) Children (under-age of 2 years),
b) Holders of Diplomatic Passport,
c) Airlines crew on duty including sky marshals & airline crew on board for the particular flight
only (this would not include Dead Head Crew, or ground personnel),
d) Persons travelling on official duty on aircraft operated by Indian Armed Forces,
e) Persons traveling on official duty for United Nations Peace Keeping Missions.
f) Transit/transfer passengers (this exemption may be granted to all the passengers transiting
up to 24 hrs. “A passenger is treated in transit only if onward travel journey is within 24 hrs.
from arrival into airport and is part of the same ticket, in case 2 separate tickets are issued it
would not be treated as transit passenger”).
g) Passengers departing from the Indian airports due to involuntary re-routing i.e. technical
problems or weather conditions.
vi. General Condition:
a) All the above Charges are excluding GST. GST at the applicable rates are payable in addition
to above charges.
b) Flight operating under regional connectivity scheme will be completely exempted from
charges as per Order No.20/2018-19 dated March 31, 2017 of the Authority from the date
the scheme is operationalized by GoI.
Consultation Paper No. 05/ 2024-25 Page 113 of 119LIST OF ANNEXURES
17.2 Annexure II: Annual Tariff proposed by the Authority for Consultation process
17.2.1 As detailed in Table 71 (Chapter 14), VIA is entitled to recover an ARR of ₹ 795.80 Crores (in NPV
terms). The present value of total projected Aeronautical revenues based on the Authority’s proposed
Landing, Parking and UDF charges is ₹ 795.80 Crores (in NPV terms), which is equivalent to the Target
Revenue/ ARR determined by the Authority for the Second Control Period.
17.2.2 The Authority has examined the Annual Tariff Proposal submitted by AAI for VIA. After its
examination as detailed in para 14.2, the Authority proposes the following Aeronautical tariffs for VIA
for the Second Control Period for consultation process:
17.2.3 Landing charges proposed by the Authority for Varanasi International Airport for the Second Control
Period is as follows:
Table 82: Landing charges(domestic) proposed by the Authority for VIA for the Second Control Period
(Rates in ₹)
Weight of the FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
Aircraft
Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f.
01.12.2024 01.04.2025 01.04.2026 01.04.2027 01.04.2028
Up to 25 MT 296 per MT 314 per MT 333 per MT 353 per MT 374 per MT
Above 25 MT up to 7,400 + 532 7,850 + 564 per 8,325 + 598 per 8,825 + 634 per 9,350 + 672 per
50 MT per MT in MT in excess of MT in excess of MT in excess of MT in excess of
excess of 25 25 MT 25 MT 25 MT 25 MT
MT
Above 50 MT up to 20,700 + 549 21,950 + 582 per 23,275 + 617 per 24,675 + 654 per 26,150 + 693 per
100 MT per MT in MT in excess of MT in excess of MT in excess of MT in excess of
excess of 50 50 MT 50 MT 50 MT 50 MT
MT
Above 100 MT to 48,150 + 555 51,050 + 588 per 54,125 + 623 per 57,375 + 660 per 60,800 + 700 per
200 MT per MT in MT in excess of MT in excess of MT in excess of MT in excess of
excess of 100 100 MT 100 MT 100 MT 100 MT
MT
Above 200 MT 1,03,650 + 536 1,09,850 + 568 1,16,425 + 602 1,23,375 + 638 1,30,800 + 676
per MT in per MT in excess per MT in per MT in excess per MT in excess
excess of 200 of 200 MT excess of 200 of 200 MT of 200 MT
MT MT
Notes:
1. The Authority has proposed one time increase of 40% in Domestic Landing charges with effect from December
1, 2024 and 6% increase Y-o-Y thereafter till FY 2028-29.
2. Existing tariff will continue up to November 30, 2024.
Table 83: Landing charges(international) proposed by the Authority for VIA for the Second Control Period
(Rates in ₹)
Weight of the FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
Aircraft
Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f.
01.12.2024 01.04.2025 01.04.2026 01.04.2027 01.04.2028
Up to 25 MT 497 per MT 527 per MT 559 per MT 593 per MT 629 per MT
Above 25 MT up to 12,425 + 1,007 13,175 + 1,067 13,975 + 1,131 14,825 + 1,199 15,725 + 1,271
50 MT per MT in per MT in excess per MT in excess per MT in excess per MT in excess
excess of 25 MT of 25 MT of 25 MT of 25 MT of 25 MT
Consultation Paper No. 05/ 2024-25 Page 114 of 119LIST OF ANNEXURES
Weight of the FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
Aircraft
Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f.
01.12.2024 01.04.2025 01.04.2026 01.04.2027 01.04.2028
Above 50 MT up to 37,600 + 1,126 39,850 + 1,194 42,250 + 1,266 44,800 + 1,342 47,500 + 1,423
100 MT per MT in per MT in excess per MT in excess per MT in excess per MT in excess
excess of 50 MT of 50 MT of 50 MT of 50 MT of 50 MT
Above 100 MT to 93,900 + 1,281 99,550 + 1,358 1,05,550 + 1,439 1,11,900 + 1,525 1,18,650 + 1,617
200 MT per MT in per MT in excess per MT in excess per MT in excess per MT in excess
excess of 100 of 100 MT of 100 MT of 100 MT of 100 MT
MT
Above 200 MT 2,22,000 + 2,35,350 + 1,401 2,49,450 + 1,485 2,64,400 + 1,574 2,80,350 + 1,668
1,322 per MT in per MT in excess per MT in excess per MT in excess per MT in excess
excess of 200 of 200 MT of 200 MT of 200 MT of 200 MT
MT
Notes:
1. The Authority has proposed one time increase of 40% in International Landing charges with effect from December
1, 2024 and 6% increase Y-o-Y thereafter till FY 2028-29.
2. Existing tariff will continue up to November 30, 2024.
Notes:
1. No Landing Charges shall be payable in respect of a) aircraft with a maximum certified capacity of less
than 80 seats, being operated by domestic schedule operators at airport, b)helicopters of all types, and c)
DGCA approved Flying school/flying training institute aircrafts.
2. All domestic legs of international routes flown by Indian operators will be treated as domestic flights as
far as landing charges concerned irrespective of flight number assigned to such flights.
3. Domestic leg of international routes of foreign carriers shall be treated as international flights.
4. Charges shall be calculated on the basis of nearest MT (i.e. 1000 kg).
5. “A minimum Landing charge of Rs.4000/- per Flight in respect of Domestic Non-Scheduled
Operators/GA operators or the applicable landing charges whichever is higher will be applicable”.
6. Flight operating under regional connectivity scheme will be completely exempted from Landing charges
from the date of the scheme is operationalized by GOI.
17.2.4 Parking charges proposed by the Authority for VIA for the Second Control Period is as follows:
Table 84: Parking charges (per hour) (Domestic ATM) up to four hours after first two free hours for the
Second Control Period proposed by the Authority
(Rates in ₹)
Weight of the FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
Aircraft
Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f.
01.12.2024 01.04.2025 01.04.2026 01.04.2027 01.04.2028
Up to 25 MT 4.20 Per Hour 4.45 Per Hour 4.70 Per Hour 5.00 Per Hour 5.30 Per Hour
Per MT Per MT Per MT Per MT Per MT
Above 25 MT up 105.00 + 6.45 per 111.25 + 6.85 117.50 + 7.25 125.00 + 7.70 132.50 + 8.15
to 50 MT MT per hour in per MT per hour per MT per hour per MT per hour per MT per hour
excess of 25 MT in excess of 25 in excess of 25 in excess of 25 in excess of 25
MT MT MT MT
Above 50 MT up 266.25 + 7.70 per 282.50 + 8.15 298.75 + 8.65 317.50 + 9.15 336.25 + 9.70
to 100 MT MT per hour in per MT per hour per MT per hour per MT per hour per MT per hour
excess of 50 MT in excess of 50 in excess of 50 in excess of 50 in excess of 50
MT MT MT MT
Consultation Paper No. 05/ 2024-25 Page 115 of 119LIST OF ANNEXURES
Weight of the FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
Aircraft
Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f.
01.12.2024 01.04.2025 01.04.2026 01.04.2027 01.04.2028
Above 100 MT to 651.25 + 12.30 690.00 + 13.05 731.25 + 13.85 775 + 14.70 821.25 + 15.60
200 MT per MT per hour per MT per hour per MT per hour per MT per hour per MT per hour
in excess of 100 in excess of 100 in excess of 100 in excess of 100 in excess of 100
MT MT MT MT MT
Above 200 MT 1,881.25 + 12.60 1,995.00 + 13.35 2,116.25 + 14.15 2,245.00 + 15.00 2,381.25 + 15.90
per MT per hour per MT per hour per MT per hour per MT per hour per MT per hour
in excess of 200 in excess of 200 in excess of 200 in excess of 200 in excess of 200
MT MT MT MT MT
Note:
1. The Authority has proposed one time increase of 40% in Parking charges with effect from December 1, 2024
and 6% increase Y-o-Y thereafter till FY 2028-29.
2. Existing tariff will continue up to November 30, 2024.
Table 85: Parking charges (Domestic ATM) beyond first four hours for the Second Control Period proposed
by the Authority
(Rates in ₹)
Weight of the FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
Aircraft
Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f.
01.12.2024 01.04.2025 01.04.2026 01.04.2027 01.04.2028
Up to 25 MT 8.40 Per Hour Per 8.90 Per Hour Per 9.40 Per Hour 10.00 Per Hour 10.60 Per Hour
MT MT Per MT Per MT Per MT
Above 25 MT up 210.00 + 12.90 222.5 + 13.70 per 235.00 + 14.50 250.00 + 15.40 265.00 + 16.30
to 50 MT per MT per hour MT per hour in per MT per hour per MT per hour per MT per hour
in excess of 25 excess of 25 MT in excess of 25 in excess of 25 in excess of 25
MT MT MT MT
Above 50 MT up 532.50 + 15.40 565.00 + 16.30 597.50 + 17.30 635.00 + 18.30 672.50 + 19.40
to 100 MT per MT per hour per MT per hour per MT per hour per MT per hour per MT per hour
in excess of 50 in excess of 50 in excess of 50 in excess of 50 in excess of 50
MT MT MT MT MT
Above 100 MT to 1,302.50 + 24.60 1,380.00 + 26.10 1,462.50 + 27.70 1,550.00 + 29.40 1,642.50 + 31.20
200 MT per MT per hour per MT per hour per MT per hour per MT per hour per MT per hour
in excess of 100 in excess of 100 in excess of 100 in excess of 100 in excess of 100
MT MT MT MT MT
Above 200 MT 3,762.50 + 25.20 3,990.00 + 26.70 4,232.50 + 28.30 4,490.00 + 30.00 4,762.50 + 31.80
per MT per hour per MT per hour per MT per hour per MT per hour per MT per hour
in excess of 200 in excess of 200 in excess of 200 in excess of 200 in excess of 200
MT MT MT MT MT
Note:
1. The Authority has proposed one time increase of 40% in Parking charges with effect from December 1, 2024 and
6% increase Y-o-Y thereafter till FY 2028-29.
2. Existing tariff will continue up to November 30, 2024.
Table 86: Parking charges (per hour) (International ATM) up to four hours after first two free hours for the
Second Control Period proposed by the Authority
(rates in ₹)
Weight of the FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
Aircraft
Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f.
01.12.2024 01.04.2025 01.04.2026 01.04.2027 01.04.2028
Up to 25 MT 4.35 Per Hour 4.60 Per Hour Per 4.90 Per Hour 5.20 Per Hour Per 5.50 Per Hour Per
Per MT MT Per MT MT MT
Consultation Paper No. 05/ 2024-25 Page 116 of 119LIST OF ANNEXURES
Weight of the FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
Aircraft
Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f.
01.12.2024 01.04.2025 01.04.2026 01.04.2027 01.04.2028
Above 25 MT up to 108.75 + 7.40 115.00+ 7.85 per 122.50 + 8.30 per 130.00 + 8.80 per 137.50 + 9.35 per
50 MT per MT per hour MT per hour in MT per hour in MT per hour in MT per hour in
in excess of 25 excess of 25 MT excess of 25 MT excess of 25 MT excess of 25 MT
MT
Above 50 MT up to 293.75 + 9.40 311.25 + 9.95 per 330.00 + 10.55 350.00 + 11.20 371.25 + 11.85
100 MT per MT per hour MT per hour in per MT per hour per MT per hour per MT per hour
in excess of 50 excess of 50 MT in excess of 50 in excess of 50 in excess of 50
MT MT MT MT
Above 100 MT to 763.75 + 14.30 808.75 + 15.15 857.50 + 16.05 910.00 + 17.00 963.75 + 18.00
200 MT per MT per hour per MT per hour per MT per hour per MT per hour per MT per hour
in excess of 100 in excess of 100 in excess of 100 in excess of 100 in excess of 100
MT MT MT MT MT
Above 200 MT 2,193.75 + 2,323.75 + 15.25 2,462.50 + 16.15 2,610.00 + 17.10 2,763.75 + 18.15
14.40 per MT per MT per hour per MT per hour per MT per hour per MT per hour
per hour in in excess of 200 in excess of 200 in excess of 200 in excess of 200
excess of 200 MT MT MT MT
MT
Note-
1. The Authority has proposed one time increase of 40% in Parking charges with effect from December 1, 2024 and
6% increase Y-o-Y thereafter till FY 2028-29.
2. Existing tariff will continue up to November 30, 2024.
Table 87: Parking charges (International ATM) beyond first four hours for the Second Control Period
proposed by the Authority
(rates in ₹)
Weight of the FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
Aircraft
Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f. Tariff w.e.f.
01.12.2024 01.04.2025 01.04.2026 01.04.2027 01.04.2028
Up to 25 MT 8.70 Per Hour 9.20 Per Hour 9.80 Per Hour 10.40 Per Hour 11.00 Per Hour
Per MT Per MT Per MT Per MT Per MT
Above 25 MT up 217.50 + 14.80 230.00 + 15.70 245.00 + 16.60 260.00 + 17.60 275.00 + 18.70
to 50 MT per MT per hour per MT per hour per MT per hour per MT per hour per MT per hour
in excess of 25 in excess of 25 in excess of 25 in excess of 25 in excess of 25
MT MT MT MT MT
Above 50 MT up 587.50 + 18.80 622.50 + 19.90 660.00 + 21.10 700.00 + 22.40 742.50 + 23.70
to 100 MT per MT per hour per MT per hour per MT per hour per MT per hour per MT per hour
in excess of 50 in excess of 50 in excess of 50 in excess of 50 in excess of 50
MT MT MT MT MT
Above 100 MT to 1,527.50 + 28.60 1,617.50 + 30.30 1,715.00 + 32.10 1,820.00 + 34.00 1,927.50 + 36.00
200 MT per MT per hour per MT per hour per MT per hour per MT per hour per MT per hour
in excess of 100 in excess of 100 in excess of 100 in excess of 100 in excess of 100
MT MT MT MT MT
Above 200 MT 4,387.50 + 28.80 4,647.50 + 30.50 4,925.00 + 32.30 5,220.00 + 34.20 5,527.50 + 36.30
per MT per hour per MT per hour per MT per hour per MT per hour per MT per hour
in excess of 200 in excess of 200 in excess of 200 in excess of 200 in excess of 200
MT MT MT MT MT
Note:
1. The Authority has proposed one time increase of 40% in Parking charges with effect from December 1, 2024 and
6% increase Y-o-Y thereafter till FY 2028-29.
2. Existing tariff will continue up to November 30, 2024.
Consultation Paper No. 05/ 2024-25 Page 117 of 119LIST OF ANNEXURES
Notes:
1. No parking charges shall be levied for the first two hours. While calculating free parking period,
standard time of 15 minutes shall be added on account of time taken between touch down time
and actual parking time on the parking stand. Another standard time of 15 minutes shall be added
on account of taxing time of aircraft from parking stand to take off point. These periods shall be
applicable for each aircraft irrespective of actual time taken in the movement of aircraft after
landing and before take-off.
2. For calculating chargeable parking time, part of an hour shall be rounded off to the nearest hour.
3. Charges shall be calculated on the basis of nearest MT.
4. Charges for each period parking shall be rounded off to nearest rupee.
5. At the in-contact stands and open stands, after free parking, for the next two hours normal parking
charges shall be levied. After this period, the charges shall be double the normal parking charges.
6. It is proposed to waive off the night parking charges in principle for all domestic scheduled operators
at Varanasi Airport if the State Government has brought the rate of tax (VAT) on ATF < 5%. The
above waiver of night parking charges (between 2200 hrs. to 0600 hrs.) will be made applicable
from the date of implementation of < 5% tax on ATF by the State Govt. In the event of upward
revision in the tax rate of ATF by the State Govt., the relief of free night parking charges will also
be deemed to be withdrawn.
7. Flight operating under Regional Connectivity Scheme will be completely governed by AIC issued
on this subject by DGCA.
8. For unauthorized overstay of aircraft an additional charge of ₹ 20.00 per hour per MT beyond 24
hours is to be payable or as per revised rate if any.
17.2.5 User Development Fees (UDF): UDF charges proposed by the Authority for VIA for the Second
Control Period is as follows:
Applicable rates for travel date from December 1, 2024 to March 31, 2025
(Rate in ₹)
Type of Passenger Domestic International
Embarking passenger 440 1,350
Applicable rates for travel date from April 1, 2025 to March 31, 2026
(Rate in ₹)
Type of Passenger Domestic International
Embarking passenger 480 1,360
Applicable rates for travel date from April 1, 2026 to March 31, 2027
(Rate in ₹)
Type of Passenger Domestic International
Embarking passenger 500 1,370
Applicable rates for travel date from April 1, 2027 to March 31, 2028
(Rate in ₹)
Type of Passenger Domestic International
Embarking passenger 520 1,380
Consultation Paper No. 05/ 2024-25 Page 118 of 119LIST OF ANNEXURES
Applicable rates for travel date from April 1, 2028 to March 31, 2029
(Rate in ₹)
Type of Passenger Domestic International
Embarking passenger 540 1,390
Notes:
1. Collection charges: If payment is made within 15 days from receipt of invoice, then
collection charges per departing passenger shall be paid by AAI, as per the policy pertaining
to such charges between the Airport Operator and the airlines. No collection charges shall
be paid in case the airline fails to pay the UDF invoice to AAI within the credit period of 15
days or in case of any part payment.
2. No collection charges are payable to casual operator/non-scheduled operators.
3. For calculating the UDF in foreign currency, the RBI conversion rate as on the last day of
the previous month for tickets issued in the 1st fortnight and rate as on 15th of the month for
tickets issued in the 2nd fortnight shall be adopted.
4. No UDF will be levied for transit passengers.
5. Revised UDF charges will be applicable on tickets issued on or after 01/12/2024 for FY
2024-25 and thereafter applicable on date of travel from 1st April 2025 to 31st March 2029.
6. The existing UDF charges will be applicable on the tickets issued till November 30, 2024
17.2.6 Exemption from levy and collection from UDF at the Airports.
In terms of DGCA AIC No. 14/2019 dated 16.05.2019 and AIC No. 20/2019 dated 06.11.2019
(decision of Ministry of Civil Aviation, Govt. of India vide order no. AV 29012/39/2018-AD
dated 30.10.2019) the following categories of persons are exempted from levy and collection of
UDF.
(a) Children (under age of 2 years),
(b) Holders of Diplomatic Passport,
(c) Airlines crew on duty including sky marshals & airline crew on board for the particular
flight only (this would not include Dead Head Crew, or ground personnel),
(d) Persons travelling on official duty on aircraft operated by Indian Armed Forces,
(e) Persons traveling on official duty for United Nations Peace Keeping Missions.
(f) Transit/transfer passengers (this exemption may be granted to all the passengers transiting
up to 24 hrs. “A passenger is treated in transit only if onward travel journey is within 24
hrs. from arrival into airport and is part of the same ticket, in case 2 separate tickets are
issued it would not be treated as transit passenger”).
17.2.7 Aviation Security Fee: Rates and Exemption as prescribed by MoCA from time to time.
17.2.8 General Condition:
a) All the above Charges are excluding GST. GST at the applicable rates is payable in addition to
above charges.
b) Flight operating under Regional Connectivity Scheme will be completely exempted from
charges as per Order No. 20/2018-19 dated 31/03/2017 of the Authority from the date the
scheme is operationalized by GoI.
Consultation Paper No. 05/ 2024-25 Page 119 of 119