New Delhi, Feb 26: Delhi International Airport Ltd (DIAL), the operator of Indira Gandhi International Airport (IGIA), is bracing for significant equity erosion in the current financial year, a situation that may escalate its borrowing costs. The financial strain comes as DIAL awaits regulatory approval for higher aeronautical tariffs.
DIAL, a consortium led by GMR Group, has incurred cumulative losses amounting to ₹2,900 crore as of December 31, 2024. Speaking on the ongoing tariff proposal, CEO Videh Kumar Jaipuriar expressed cautious optimism, stating that the revised tariffs could help the operator return to profitability. "With the present tariff proposal, we might get into the black," Jaipuriar remarked.
Pending Tariff Approval and Financial Strain
DIAL has proposed a differentiated User Development Fee (UDF) for economy and business class passengers on international flights under the fourth control period, spanning April 1, 2024, to March 31, 2029. However, the final approval rests with the Airports Economic Regulatory Authority (AERA).When questioned about contingency plans in case of rejection, Jaipuriar acknowledged the challenges, highlighting the heavy debt burden. “I am already sitting on debt in excess of ₹14,000 crore, and my equity is getting eroded. The majority of it will be wiped out this fiscal. In such a case, raising additional debt will be difficult, and if our rating suffers, borrowing costs will increase, creating a negative cycle,” he explained.
For the ongoing financial year (FY 2024-25), DIAL is expected to post a loss exceeding ₹1,500 crore, further exacerbating its financial woes. As of December 2024, its outstanding debt had crossed ₹15,000 crore.
Industry Advocates for Tariff Revision
Backing DIAL’s case, the Association of Private Airport Operators (APAO) emphasized the need for a tariff revision to align with infrastructure investments. APAO Secretary General Satyan Nayar pointed out that IGIA has undergone massive infrastructure upgrades, including the redevelopment of Terminal 1, a fourth runway, and the Eastern Cross Taxiway."The existing aeronautical tariffs at IGI Airport need to be revisited in line with the regulatory approach. Even with AERA's proposed 140% tariff revision, IGI Airport’s charges will still remain among the lowest in India and globally," Nayar stated.
With the final decision on tariff adjustments pending, DIAL faces a precarious financial future, with equity erosion and rising debt adding to its challenges. The coming months will be crucial in determining the economic stability of India's busiest airport.