GOVERNMENT OF INDIA
Ministry of Civil Aviation

RAJYA SABHA
UNSTARRED QUESTION NO: 1396
TO BE ANSWERED ON 23/11/2010
Compensation to AAI

1396. SHRI RAJEEV CHANDRASEKHAR:
Will the Minister of CIVIL AVIATION be pleased to state:

(a)    Whether the Airports Authority of India (AAI) has sought compensation from Government for revenue loss suffered due to closure of commercial operations at Hyderabad and Bangalore;

(b)   Whether the Government had earlier refused to issue 5000 crore worth tax free bonds to help AAI to meet its shortfall in revenue; and

(c)    If so, the reasons therefor?

ANSWER
MINISTER OF STATE (INDEPENDENT CHARGE) OF THE MINISTRY OF CIVIL AVIATION
(SHRI PRAFUL PATEL)

(a)    Yes, Sir. As part compensation for closure of commercial operations of Airports Authority of India (AAI) airports at Hyderabad and Bangalore, AAI has requested the Government of India to pass on the four percent Concession Fees on the Gross Revenue of Bangalore International Airport Limited (BIAL) and Hyderabad International Airport Limited (HIAL) receivable by Government of India to AAI in accordance with the provisions of Concession Agreements with BIAL and HIAL.

(b)   & (c ): Yes Sir. The request of AAI in the first instance, was not agreed to by the Finance Ministry citing the reason that tax free bonds tend to distort the actual market determined rates of interest and lead to competing demands for issue of such bonds by other entities as well.