Thursday , 1 October 2020

BIAL should not UDF itself out of the market

Air travel in India has boomed due to the introduction of low cost airlines (LCCs) which have opened air travel to the masses. Their air fares are highly competitive with the upper classes of train fares. Even United Progressive Alliance chairperson Sonia Gandhi said, air travel was not elitist any more, when inaugurating the new airport at Hyderabad. Despite this boom, less than 2% of India’s population travels by air.

Despite many requests from the Ministry of Civil Aviation, the BIAL consortium wants to levy a User Development Fee which I can only describe as excessive.

Currently air passengers in India pay a Passenger Service Fee (PSF) of Rs. 200 + 12.24% Service Tax, for a total of Rs. 225. Out of this 200, Rs. 130 goes to the Central Industrial Security Force and Rs. 70 to the airport operator.

BIAL wants to charge departing passengers both UDF and PSF – totalling, Rs. 983 for domestic and Rs. 1,298 for international, a 437% and 577% increase respectively. In year 1 alone the fees add up to Rs. 524 Crore, and rise to Rs. 856 Crore by year 5. i.e. in these 5 years, the passengers from Bangaore, will pay to BIAL an amount greater than their investment in the airport till date. The justification for these high charges is “a state of the art world class airport”.

These prices make BIAL one of the most, if not the most, expensive airport in the world. Add to this the cost to get to the airport at approximately Rs. 800 or higher, depending on your mode of transport. Therefore a passenger will have to spend total of about Rs. 1,800. The airfare to most regional destinations from Bangalore are around Rs. 1,800 – Rs. 2,500.

BIAL is pricing itself out of the reach of the very public it is meant to serve and by extension its main customers — the airlines.

The high charges proposed at the new GHIAL airport at Hyderabad has already led to a revolt by airlines, who are refusing to operate at the new airport, thus leading to a delay in launch, minutes after being inaugurated.

In Bangalore, low cost airlines are experiencing a 35% drop in their short-haul bookings, and have indicated that they will cut back their operations to Bangalore and deploy their aircraft to other airports.

What is the point of having an exclusive “5-star cost” airport which drives away both the passenger and the airline thus hurting the public interest instead of serving it ?

Does it not make sense to keep a low featured low cost airport like HAL in operation ? After all, as statistics show, there is plenty of demand to make both airports viable.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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