The Hindu Business Line : KPMG likely to determine airport user fee

New Delhi, June 13 Consultancy firm KPMG is likely to be commissioned by the Airports Authority of India (AAI) to study how much the state-owned airport operator should charge as user development fees at nine airports, including Chennai, Tiruchi and Thiruvananthpuram.

Sources told Business Line that the proposal will be sent soon after the AAI Chairman returns from an official trip abroad early next week.

KPMG’s brief

KPMG is likely to come up with its recommendations within two months of getting the project.

The levy, which KPMG is likely to propose, will have to be approved by the Government before the AAI can levy it on travellers.

Sources said that the decision to appoint KPMG is because it has already carried out a similar study for the Jaipur airport.

How it is decided

“The amount to be levied at each airport will be finalised based on the average of the maximum and minimum number of passengers that the airports have handled over a fixed period of time, which could be three or five years.

The numbers will be juxtaposed against future traffic projections and the quantum of funds that will be required to build modern world class airports to come up with a figure which could be levied as a fee,” sources said.

User charge levy

The Government allows greenfield airports, as also existing facilities where development work is being undertaken, to levy a fee on passengers to fund the projects.

At the moment these fees are being levied at Delhi, Mumbai, Hyderabad and Bangalore airports.

The rates vary from Delhi charging Rs 200 and Rs 1,300 from every departing domestic and international passenger respectively to Bangalore’s Rs 260 and Rs 1,070.

Hyderabad levies a fee of Rs 375 on each departing domestic passenger and Rs 1,000 on each international passenger.

IATA not in favour

The decision to levy the fee has been opposed by the Geneva-based International Air Transport Association.

It argues that there is no guarantee that a passenger who pays the fee now may or may not use the airport in the future after it is modernised.

It suggests that the Government look at reducing or freezing airport charges for airlines to stimulate passenger demand.

Related Stories:
Levying user fee
BIA to levy Rs 260 as domestic user fee from Jan 16