GMR Wins Big: Tribunal Quashes AERA’s HRAB Math, Orders Fresh Tariff Recalculation

In a major regulatory win for GMR Airports Ltd, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has quashed the Airports Economic Regulatory Authority’s (AERA) calculation of the Hypothetical Regulatory Asset Base (HRAB) for Mumbai International Airport. The tribunal has directed AERA to recalculate the HRAB, citing multiple inconsistencies and procedural lapses in the original computation.

 

The HRAB is a critical component in determining aeronautical tariffs, directly impacting airport charges levied on airlines and passengers. GMR had challenged AERA’s methodology, arguing that it undervalued key assets, excluded legitimate capital expenditures, and failed to align with the OMDA (Operation, Management and Development Agreement) and State Support Agreement frameworks.

 

Key Highlights:

 

TDSAT ruling invalidates AERA’s HRAB calculation for the third control period (FY21–FY26).

Tribunal found AERA’s treatment of depreciated assets and capitalized costs to be inconsistent with regulatory norms.

GMR argued that the flawed HRAB led to under-recovery of tariffs, affecting financial viability.

AERA has been ordered to recompute tariffs after revisiting asset allocation, depreciation, and cost of capital assumptions.

The ruling may set a precedent for other private airport operators challenging AERA’s tariff orders.

GMR welcomed the decision, calling it a “vindication of fair regulatory practice.”

 

This verdict is expected to have ripple effects across India’s airport privatization landscape, potentially reshaping how infrastructure costs are recovered through user charges.

 

Sources: Indian Kanoon, CaseMine, AERA Tribunal Order