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Ministry, new Bangalore airport body at odds on passenger levy – Bangalore Aviation

Ministry, new Bangalore airport body at odds on passenger levy

Govt wants it to charge only international passengers initially, on the lines of the new Hyderabad airport

Tarun Shukla
New Delhi

The operator of the Bengaluru International Airport, Bangalore International Airport Ltd (BIAL) has declined a suggestion from the ministry of civil aviation that it waive a controversial fee it plans to levy on passengers when it opens for operations in the second week of May.

BIAL, a Siemens AG-led consortium, wants to charge Rs240 from each domestic passenger and Rs520 on each international ticket from 11 May for the first two months and increase these to Rs675 and Rs955, respectively, thereafter.

This proposed charge, called user development fee, or UDF, also planned at the new GMR Hyderabad International Airport Ltd (GHIAL)-run Rajiv Gandhi International Airport is in addition to a Rs225 passenger service fee that the Airports Authority of India (AAI) levies on all airline tickets and taxes on such charges. The fee, to be eventually fixed by the Airports Economic Regulatory Authority when it is set up, is designed to partly help the airport developers recover their investments in the new airport complexes.

The other members of the BIAL consortium are Larsen and Toubro Ltd, Unique Zurich Airport (which operates the international airport at Zurich, Switzerland), India’s AAI and the Karnataka government.

The Rajiv Gandhi International Airport at Hyderabad, which opened for commercial service on Sunday, has agreed to the civil aviation ministry’s request to keep an all-inclusive UDF of up to Rs1,000 limited to international passengers while sparing domestic commuters for at least the
first three months of operations.

BIAL, a senior ministry official said, has written to it saying the airport cannot waive fees as the Hyderabad operator has done and has asked for a meeting with civil aviation minister Praful Patel to explain its stance. A BIAL spokeswoman said the matter was “currently under discussion” with the government.

The government wants BIAL to follow the same structure as Hyderabad as there cannot be two sets of exceptions.

“As it is, there are problems, this is only aggravating it further,” said the ministry official, who did not want to be identified, referring to the lack of proper connectivity to the new airport and demands of keeping the old airport open. “We are not in any way saying that (the BIAL) demand will not be considered-partially or fully. All we are saying is that let the transition happen smoothly.”

Both BIAL and GHIAL have to submit their total audited financial cost to the ministry after the first three months, following which a final figure for UDF will be calculated based on the shortfall in airport revenues. The charges sought by the two airports as of now, the same official said, are meant to recover the project cost within five years, while the agreement allows that period to be up to 15 years. If the cost is spread out over 15 years, the consequent UDF can be reduced for the passengers, something the two sides can agree once actual costs are submitted by the operators mandatorily.

However, given the current argument and counter arguments between the ministry and BIAL, the waiver on domestic passenger UDF is unlikely to be resolved before the coming fortnight when BIAL is expected to make its presentations.

Meanwhile, the Directorate General of Civil Aviation is likely to complete its technical evaluation of the new Bangalore airport at Devanahalli in the first week of April to grant it an aerodrome licence after which Air India’s flight to Singapore at 12.05 hours on 11 May will formally mark the inauguration of the international -airport.

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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