Airport fee refund has flyers in a flap

“Please arrange to refund my Airport Development Charges of Rs 600 collected excess while booking of ticket before January 1, 2013 as my return journey (Tokyo-Shanghai-Delhi) will end on February 27, 2013. Since this payment was made through credit card, the amount may please be credited through credit card.”

This is not a letter written to an airline for a refund for the excess Development Fee (DF) collected at Delhi airport; instead it is a letter from a reader of Business Line. Reading about the Directorate General of Civil Aviation’s (DGCA) decision to halve the DF collected at Delhi’s Indira Gandhi International Airport from Rs 1,200 to Rs 600 for an international flight and from Rs 200 to Rs 100 for a domestic flight, readers like this one are wondering how they can collect the refund.

NEEDLESS CONFUSION

This is a valid question as the decision is to be implemented with retrospective effect. What this means is that all those passengers who had booked their tickets before January 1 for a flight after that date are entitled to get this money back.

This decision was taken after DGCA issued an Aviation Information Circular, commonly known as AIC, on collection of Development Fee at IGI Airport, Delhi on December 31, 2012. The circular also says that the airlines were being directed to refund the excess amount that they had collected from passengers who will travel after 1.1.13 but who had booked their tickets prior to this date.

To realise the mess that this decision has created, just consider the numbers. Close to 1.4 million passengers depart from Delhi airport every month --- or over 45,000 passengers every day, two-thirds of whom are domestic flyers while the rest are international flyers. Further, the airport handles 47 international airlines and 7 domestic airlines.

Passengers entitled to the refund will have to run after the airline to get the money back. The other option is running after travel agents who booked the tickets to get a refund.

Even if 50 per cent of these flyers have to be paid a refund, the daily payout will be Rs 15 lakh for domestic flyers and Rs 45 lakh for international flyers, which will divided among the airlines. On their part, some of the airlines maintain that a circular specifying the refund in DF has not been issued to them as yet.

Messy though this sounds, the situation is even more complicated as airlines collect DF as a part of the ticket cost. The DF is then separated and parked in an Escrow account managed by the Airports Authority of India (AAI).

The airport operator (GMR) approaches AAI with a request for releasing funds which are to be used to pay off loans against the shortfall of funds for developing the airport. This billing cycle is twice a month. Imagine the problem that will be created, as even collating the number of passengers due for refund has to be worked out, for which the airlines will have to give the numbers. The amount to be returned too will have to be collated. There is no clarity on the time limit within which the airlines should refund this amount, so will it be an indefinite wait to find out how much money the airport operator will get for this period?

Little wonder then that many are coming to the conclusion that this was a hasty decision taken by the airline regulator, DGCA, without considering the ramifications of such a move.

BETTER OPTION

DGCA could have been populist and yet implemented the decision in a more rational manner. Take the case of how and when airlines increase the fuel surcharge. An increase in fuel surcharge means that a passenger has to pay more, but the airlines specify that the enhanced fuel surcharge will be applied on tickets issued on or after a particular date.

This is what the DGCA should have done when it came to reducing the DF. It could easily have said that the amount would be halved for tickets booked after January 1 this year.

This way flyers would have known that they will have to pay less, the airlines would have deducted this amount from the tickets, AAI would have got the right amount and GMR would have known what was coming to its kitty.

If it did not want to follow the airlines’ approach then it should at least have made the flying public aware of its move. What sense does it make to come up with something favourable for the flyers when they don’t even know about it?

Now that the decision has been taken, the only way out seems to be to follow what was done in 2012. After the Supreme Court first disallowed and subsequently allowed imposition of DF at Delhi, rather than setting up physical counters to collect the fee, it was decided that the Airports Economic Regulatory Authority will allow the airport operator to collect DF for an additional number of days, to ensure that the passengers were not inconvenienced and the airport operator did not suffer any financial losses.

But will the DGCA take this step? Or will hapless flyers write letters to the editor to find out where to get their money back?

Directorate General of Civil Aviation could have been populist and yet implemented the decision in a more rational manner.

http://www.thehindubusinessline.com/todays-paper/tp-opinion/airport-fee-refund-has-flyers-in-a-flap/article4291663.ece