Airport operators reject EY’s study conducted for determining fair RoR on airport land

Airport operators have rejected the proposal of the Airports Economic Regulatory Authority of India to provide their comments on the comparative study conducted by EY to ascertain the fair rate of return (RoR) earned on land acquired for various airport projects in and outside India. The comparative study was done in the light of land acquisition issues being faced while developing a new airport such as its inflated price which renders the project unviable. Post the study, EY came out with two possibilities – the first proposes the amortisation of the cost of land at a rate of 3 per cent of its total cost for the first 10 years if land is acquired against equity, while the second proposes that the acquisition of land must be entirely the responsibility of the state government and there should not be any gold-plating of assets. This means that the government must not allow expenditure beyond the estimated requirements for smooth and secure operations. The proposals were, however, rejected as the operators gave their own recommendations which they want the tariff regulator to accommodate in the final order.