B?lore airport may have to charge lower user development fee due to high traffic

The Bangalore airport may be forced to charge lower user development fee (UDF) from domestic passengers than the Hyderabad airport. According to civil aviation ministry officials, the reason stated is Bangalore handles more passengers than the Andhra Pradesh airport.

Analysts also feel that the Bangalore airport will make more non-aeronautical revenues due to larger amount of commercial land it has at its disposal. The GMR-run Hyderabad airport has already started charging UDF of Rs 375 while the Siemens consortium controlling the Bangalore airport will likely get an approval to charge around Rs 250.

But, final decision on the exact fee that Bangalore can charge is expected to come by the end of next week as the ministry of civil aviation is still examining the proposal.

According to sources, the Bangalore airport handles around 3,000 passengers during peak hours. Of these, almost 82% of the passengers are domestic travelers. The airport is expected to handle an estimated 12 million passengers in this financial year. The airport?s present capacity is around 9-12 million and expansion plan of the airport is already being implemented.

The GMR Hyderabad International Airport Limited run Rajiv Gandhi International Airport handles about 7.5 million passengers annually of which around 65-70% comprises of domestic passengers. While the GMR-promoted greenfield airport has already started charging UDF from domestic passengers but the Siemens-promoted Bangalore will be allowed to charge the fee only after it gets the government approval.

The UDF is levied to enable the developers of the private sector airport to recover a part of the project cost. It is calculated by the civil aviation ministry based on the total capital expenditure incurred by the developer of the airport and what the projected earnings are.

Interestingly, in the case of UDF to be paid by passengers traveling abroad, Bangalore charges Rs 1,070. The amount charged is Rs 70 more than what is charged by its Hyderabad-based counterpart.

The new airport in Hyderabad started operations on March 16 this year, while Bangalore airport started operating at the end of May. Both airports were allowed to charge, on an ad-hoc basis Rs 1,000 per passenger as UDF for the international departing passengers from Hyderabad International Airport and Rs 1,070 for Bangalore International Airport, for the first three months of operations. This was in applicable only for the time that the ministry calculated how much UDF they could charge and then gave the go ahead to the airports to levy the charge.

The directorate general of civil aviation (DGCA) recently ruled that airlines would collect the UDF at the time of issuing tickets and subsequently remit the same to the airport operators. This was not easily acceptable by the airlines as it added to their fare price which is already considered to be high enough.

The DGCA also put a ceiling of Rs 5 per passenger on the collection charges of UDF. However, airlines collection charges would be borne by the airport operator and these charges in no way be passed on to the passenger, the DGCA said.