Airports Authority of India refuses to bail out DIAL

New Delhi: State-owned airports authority, the Airports Authority of India (AAI) has rejected a request from joint venture partner, Delhi International Airport Ltd (DIAL), to extend it a loan of Rs350 crore which would enable the airports operator to tide over a tight financial period.

The proposal was made by DIAL chairman GM Rao at a meeting held at the Prime Minister's Office in August. DIAL offered to pay nine per cent rate of interest on the loan.

AAI has also turned down a proposal to let DIAL pay its share of revenue on a 'cash' basis, saying this would not be in conformity with its accounting principles. Transactions on a 'cash' basis would entail payments made on actual revenues, excluding dues from Air India.

Airports operator DIAL faces a cash crunch as state-owned Air India has defaulted on payments of over Rs250 crore. However, it is compelled to pay 45.99 per cent revenue share to joint venture partner AAI at the beginning of each month, based on normal revenue projections.

Rejecting the proposal, AAI said there were no provisions for extending such loans to any entities, including joint venture partners. The state-owned airport operator also said it had already borrowed Rs1,500 crore from the open market at an interest rate of 10 per cent per annum.

AAI also pointed out that its dues with various airlines and concessionaries as on 31 March 2011 amounted to Rs1,687 crore. By 30 June 2011 Air India already owed it Rs845 crore.