Civil aviation policy on user fee at airport

BY SRIDHAR KUMARASWAMI

NEW DELHI

July 4: The Union civil aviation ministry has formulated a draft guideline policy on the levying of User Development Fees that will lay down the guidelines for both private-led airport operators in the country, including those at Bengaluru and Hyderabad, as well as the state-run Airports Authority of India (AAI) to charge UDF from passengers boarding both international and domestic flights. The draft guidelines have been prepared keeping in mind the "cost-plus" factor that will allow the airport operators to recover money invested by them in the airport development, well-placed government sources said. This also means that the government is likely to give the green signal soon not just to private airport operators but also to the AAI to charge passengers for usage of airports across the country.

Currently, the AAI does not levy UDF on any of the airports managed by it, including Kolkata and Chennai. A Parliamentary Standing Committee report tabled earlier this year had revealed how the AAI had earlier envisaged levying of UDF of Rs 300 per passenger at the Ahmedabad and Thiruvananthapuram airports but that the government had shot down the proposals. The AAI had envisaged those proposals on the grounds that the Initial Rate of Return was not achieved at these airports. "Those proposals were not implemented due to the outcry that passengers would have to pay UDF. But now the draft guidelines will permit the levying of UDF even by the AAI. When the concession agreements signed earlier with the Bengaluru and Hyderabad airport developers can permit levying of UDF, why should the AAI be left behind," pointed out well-placed civil aviation sources.

"The proposals for levying of UDF by airport developers will be cleared if it is in accordance with the final guidelines that will be issued by the civil aviation ministry.

The draft guidelines that have been prepared will be discussed at a meeting in the civil aviation ministry on July 11," government aviation sources said.

Both the private-led consortia managing the new greenfield airports at Bengaluru and Hyderabad had earlier submitted proposals to the government on levying UDF on passengers. The Union government had permitted the private-led airport developers at Bengaluru and Hyderabad to charge UDF from international passengers only for the first three months from the date of operationalisation of the new greenfield airports in these cities.

The government had, in March this year, approved the proposal of the GMR-led consortium (HIAL) which has constructed the new greenfield Hyderabad airport on levying of a charge of $25 (about Rs 1,000) as User Development Fee (UDF) per passenger catching an international flight from the airport. HIAL has now sent a detailed proposal recently to the ministry on levying of UDF both on international and domestic passengers.