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A view of the Bangalore international airport.

Ashwini Phadnis

New Delhi, Nov. 17

A final decision on the levy of user development fee (UDF) on domestic passengers flying from the newly set up Bangalore airport will be taken after considering whether the promoters have met all the mandated capital expenditure and building specifications.

Official sources told Business Line that the Centre “was not against” the levy of UDF but needed to satisfy itself that the project has been constructed according to what was mandated.

The project promoters are keen on imposing a UDF of Rs 675, which is Rs 300 more than what is being imposed by the newly commissioned airport in Hyderabad.

Sources indicated that the Centre will have to tread carefully as the airport has faced strong objections from public and industry representatives about its capacity and amenities.

A 21-member Joint Committee of the Karnataka Legislature is looking into the alleged violations of terms and conditions by the operator, Bangalore International Airport Ltd (BIAL), during the construction of the airport.

The probe panel held a public hearing on November 13 to garner grievances of citizens and affected parties.

The delay in the Ministry of Civil Aviation allowing the levy of UDF on domestic passengers was one of the reasons cited by the BIAL Chief Executive Officer, Mr Albert Brunner, for the airport project incurring a monthly loss of Rs 22 crore. Non-payment of dues amounting to Rs 59 crore by airlines and the overall dip in passenger traffic were the other reasons mentioned by Mr Brunner for the loss.

The concession agreement that the promoters have signed allows them to levy a user development fee. According to the draft guidelines for fixing the UDF, costs related to aeronautical activities, depreciation, maintenance and cost of capital employed in the project would be considered in fixing the tariff.

For estimating the cost of the capital employed, cost of debt on actual basis and 14 per cent return on equity would be considered. According to the guidelines, the UDF would be reviewed after two years.

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