Delhi International Airport invokes force majeure clause to suspend revenue-sharing agreement with AAI

The Delhi International Airport (DIAL) has invoked the force majeure clause to suspend the revenue-share agreement with state-owned Airports Authority of India (AAI). This so because the Covid-19 pandemic continues to impact traffic flow and revenue. The DIAL operates the Indira Gandhi International Airport, India’s largest in terms of passenger footfall. The  said clause will further hit the finances of AAI which will register a loss in FY21 for the first time since its formation in 1995.

DIAL pays 45.99 per cent and MIAL 38.7 per cent of its revenue as fees to AAI. This forms the bulk of AAI’s revenue making it one of the few profitable public sector units in the country.

According to the agreement signed between AAI and DIAL in 2006, DIALhas paid 45.99 per cent of its annual revenue as concession fee to AAI. The DIAL deposits the money on a quarterly basis in an escrow account which AAI then transfers to its own account.

After the government imposed a Nationwide Lockdown to contain the spread of the novel coronavirus,  air transport had become totally inoperative from March 24 for two months.

Travel, both international and domestic, was among the biggest casualties of the lockdown. While domestic air traffic has recovered 60 per cent of its 2019 levels, normal international travel has not resumed yet, forcing airports to defer expansion and capacity expenditure plans.