BY TIOL News Service

NEW DELHI, DEC 09, 2015: THE issue is: Whether increase in office rentals of the airlines on IGI airport for a fresh term of agreement by DIAL is abuse of dominant position, when it is done in rationalised manner keeping the licence fee uniform for all the member airlines. No is the answer.

Facts of the case

The Airline Operators Committee (AOC), (the Informant) is established by International Air Transport Association (IATA) for facilitating the movement and handling of passengers, baggage, cargo, mail etc. for the airlines operating at Indira Gandhi International Airport, New Delhi. While Delhi International Airport Pvt. Ltd. (the OP/'DIAL') was a joint venture consortium of GMR Group, Delhi International Airport Pvt. Ltd, Malaysia Airport and Fraport. OP entered into an Operation, Management and Development Agreement ('OMDA') with Airport Authority of India for an initial term of concession of 30 years.

The informant acting on request of Air France and other member airlines filed the complaint and alleged that the OP has unilaterally and whimsically increased the licence fees by 100.75% and other rentals with effect from 01/04/2015. The OP has increased the licence fee and other rentals without consulting Air France and member airlines and the said increase was against the prevailing agreement / arrangement and the practices. The informant further alleged that the OP was a dominant undertaking and was making abusive use of its dominant position as referred in section 4 of the Act. The informant accuses the OP for partiality and discrimination as the rate of increase of rentals i.e 26-100% in some cases and 7.50% only for others. It was alleged that OP had forced members to pay exorbitant rentals without there being any basis or reasons for such increase. According to informant, OP had grossly abused its dominant position by enhancing the rate more than the price index prevailing in that year.

Reasoning

1. The relevent market here is for provision of office space to the airlines for non-aeronautical services at Terminal 3, IGI Airport, New Delh. Here OP is in dominant position as per section 4 of the act as being the JV consortium having an operations management and development agreement signed with AAI with exclusive rights for a period of 30 years. The OP has increased the office space rentals in varying manner by 25% -100% to making the same uniform i.e., Rs. 2615.72/- per sq. mtr. The Authority refused to buy the argument of Informant that the escalation should not be more than 7.5 percent per year keeping the base rate at Rs. 1,822/- per sq. mtr. as a prevailing rate for the financial year 2009-10. The various documentary evidences proved that OP is free to increase the rentals and there is no restriction to keep it at nominal rate of 7.5 percent per year.

2. The Commission notes that the central argument of the Informant to the effect that it was agreed that the base rate for rentals should be Rs. 1,822/- per sq. mtr. as a prevailing rate for the financial year 2009-10 and thereafter there ought to have been an escalation @ 7.5% per year only, is misconceived. There is nothing on record to suggest that it was agreed that the increase in rental would be only nominal. Similarly, it is not borne out from the records that the increment in the office space rental would not be in any event more than 7.5 % per annum. In fact, the increase envisaged @ 7.5% was during the subsistence of the agreement on annual basis. Once the term of the agreement to license office space expired by efflux of time, the said limit was not attracted. In the absence of any material, a mere increase in the rental for the fresh term of the agreement cannot be viewed as per se unfair particularly when the license fee appears to be rationalized in a uniform manner.

(See 2015-TIOL-14-CCI-CACT)