Tuesday, 1 May 2012

Flying from Chennai, Kolkata set to get costlier


AAI also plans to levy user development fee at 10 other airports
New Delhi, April 30:
After Delhi and Mumbai, now flying from Chennai, Kolkata and 10 other airports is set to become costlier.
The Airports Authority of India (AAI) has sought an increase in airport charges (which includes user development fee) for the two metro airports, while it plans to levy a user development fee for 10 other airports.
A person familiar with the development told Business Line, “The Authority is seeking a 50 per cent hike in airport charges for Chennai while for Kolkata the quantum is 160 per cent. A formal proposal is being sent to airport regulator Airports Economic Regulatory Authority (AERA).”
Increase in airport charges for Chennai and Kolkata will also mean increase in user development fee. Since passenger capacity is less in Kolkata while investment is high, an increase is being sought for Kolkata, the person added. Airport charges include landing, parking, housing and user development fee (UDF).
Charges such as landing, parking and housing are paid by Airlines. These charges reflect in their operating costs and airlines collect them from passenger as a part of basic fare. UDF is levied above the basic fare. It is paid directly by the passenger and collected by the airlines.
While increase in other charges are permanent, UDF is charged for a specific period.
Interestingly, when AAI earlier approached the regulator for approval of a development fee of Rs 150 per passenger, the regulator had indicated that it might not accept the proposal. The State-owned airport operator had approached the regulator seeking levy of the fee to partially offset the expenditure incurred in modernising the two metro airports.
The development fee is a pre-financing levy. Sources indicated that the regulator feels the fee should be levied only as a “last resort” and when there is no other option left to bridge the gap in the funding of the project.
In this context, there are sections in the AERA which feel that it makes little sense to allow the AAI to raise about Rs 150 crore through imposition of development fee when the entire cost of Rs 2,500-3,000 crore is being raised by the airport operator.
Though the regulator has said, on record, that the proposal is still under consideration and no final decision has been taken.

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