Cochin International Airport Limited Multi Year Tariff Proposal FY 2016-17 to FY 2020-21 December 2015 1 Cochin International Airport Pvt. Ltd. Multi Year Tariff Proposal FY 17-FY21 Table of Contents 1. Preamble ............................................................................................................................................... 6 2. Background ........................................................................................................................................... 6 3. Traffic .................................................................................................................................................. 11 Passenger Traffic .................................................................................................................................... 11 Air Traffic Movements ............................................................................................................................ 12 Air Cargo ................................................................................................................................................. 14 4. Capital expenditure ............................................................................................................................. 15 Need for the new International terminal and modification of existing terminals .............................. 15 Parking bays, runway, taxiways and roads........................................................................................... 16 Cargo Facilities ....................................................................................................................................... 17 IT Systems ............................................................................................................................................... 17 CISF residential building ......................................................................................................................... 18 Other Capital Projects ............................................................................................................................ 18 Financing of the new international terminal ........................................................................................ 19 Summary of total capital expenditure ................................................................................................... 19 Capital expenditure for the second control period ............................................................................... 19 5. Allocation of Fixed Assets ................................................................................................................... 21 6. Regulatory Asset Base (RAB) for the Control Period .......................................................................... 23 7. Fair Rate of Return (FRoR) .................................................................................................................. 24 Debt ........................................................................................................................................................ 24 Equity ...................................................................................................................................................... 24 Weighted average gearing .................................................................................................................... 25 Fair Rate of Return (FRoR) ..................................................................................................................... 25 8. Operations and Maintenance Cost ..................................................................................................... 25 Employees’ Cost ...................................................................................................................................... 27 Operational Expenses ............................................................................................................................. 28 Repairs and Maintenance expenses ..................................................................................................... 28 Power, Water and Fuel charges ........................................................................................................... 29 Safety & Security expenses................................................................................................................. 29 Vehicle running and maintenance expenses ....................................................................................... 30 Housekeeping expenses ...................................................................................................................... 30 Consumables expenses ........................................................................................................................ 31 2 Cochin International Airport Pvt. Ltd. Multi Year Tariff Proposal FY 17-FY21 Other operational expenses ................................................................................................................. 31 CUTE operating expenses ................................................................................................................... 32 Administration and General Cost .......................................................................................................... 32 Summary of Operations and Maintenance expenses ........................................................................... 33 9. Depreciation ........................................................................................................................................ 34 10. Tax on income ................................................................................................................................. 36 11. Non-aeronautical revenues ............................................................................................................ 36 Non-aeronautical royalties, license fees and lease rentals .................................................................. 37 Duty free revenue ................................................................................................................................... 38 Utility service charges ............................................................................................................................ 39 Interest Income ....................................................................................................................................... 39 Other Income .......................................................................................................................................... 39 12. Additional Issues ............................................................................................................................. 40 Contingent liabilities .............................................................................................................................. 40 Cargo tariff filing .................................................................................................................................... 41 Fuel throughput royalty ......................................................................................................................... 41 Ground handling royalty ........................................................................................................................ 41 13. Aggregate Revenue Requirement ................................................................................................... 41 14. Yield Calculation and escalation factor ........................................................................................... 42 15. Conclusion ....................................................................................................................................... 43 16. Annexures ....................................................................................................................................... 43 3 Cochin International Airport Pvt. Ltd. Multi Year Tariff Proposal FY 17-FY21 List of Tables Table 1: Ownership structure of CIAL as on 30 November 2015 ................................................................ 7 Table 2: Passenger Traffic at Cochin Airport (million pax) ....................................................................... 12 Table 3: Projected passenger traffic at Cochin International Airport (million) .......................................... 12 Table 4: Growth in Air Traffic Movements at Cochin Airport ................................................................... 13 Table 5: Forecasted number of passengers per ATM at Cochin International Airport ............................... 13 Table 6: Projected air traffic movement at Cochin International Airport ................................................... 13 Table 7: Growth in Domestic Air Cargo handled at Cochin Airport .......................................................... 14 Table 8: Growth in International Air Cargo handled at Cochin Airport ..................................................... 15 Table 9: Projected cargo traffic at Cochin International Airport (MT) ....................................................... 15 Table 10: Total capital expenditure for new international terminal and related works .............................. 16 Table 11: Capital expenditure for roads, runways and culverts .................................................................. 17 Table 12: Major capital expenditure in the second control