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BIAL files default notice against aviation ministry

The Deccan Herald reports that the Bengaluru International Airport Limited (BIAL) consortium has filed a default notice about 10 days ago against the Union civil aviation ministry asking it to make good losses of Rs 23 crore. BIAL claims it had incurred the losses and indirectly held the ministry responsible for it — its complaint was the failure to clear the user development fee (UDF), to be charged by the operator on departing domestic passengers, resulted in the losses.

BIAL, which has been asking the ministry to approve the UDF for a couple of months now, wants the approval for Rs 675 UDF and civil aviation minister Praful Patel may go into this issue next week.

Official sources claim that it was not a loss which would affect the functioning of the airport. According to them, it was only supposed to bridge the revenue deficit which in any case can be carried forward to the next financial year.

It is unclear whether the notice is just a pressure tactic on the part of BIAL to push forward their long pending UDF request. For a few months, there have been persistent rumours that the cash flow at BIAL was precarious. I can infer from these developments that Siemens, the dominant private partner, has choked off funds to BIAL, leading to desperate times.

The ministry has directed the 105,300-square metre, Rs 2,500 crore RGIA to charge Rs 375 from outgoing domestic passengers from August. The 71,000-sq m Rs 2,470 crore BIA has sought permission for Rs 675 UDF.

The civil aviation ministry had appointed a consultant to look into to the UDF request and verify BIAL’s capital expenditure claims. Under pressure from various quarters ,the ministry wanted to know whether a smaller airport with lesser facilities can cost as much as a bigger airport with better facilities and in this case, it was BIAL vis-à-vis the bigger GMR promoted Rajiv Gandhi International Airport (RGIA).

The ministry was to take a call on the UDF issue some time after the BIAL filed the audit report on the project cost in August-September. As per Deccan Herald sources, the consultant has submitted the report on financial verification and this should enable the ministry to finalise the UDF soon.

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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