Come Jan, flying out of Delhi, Mumbai will become cheaper

Flying from Delhi and Mumbai will become cheaper from January 1.

The Ministry of Civil Aviation has sought the abolition of the Airport Development Fee (ADF) that is being charged at these airports. At the moment, a passenger taking a domestic flight from Delhi pays Rs 200 while one boarding an international flight pays Rs 1,300. In Mumbai, currently the levy for a domestic passenger is Rs 100 and Rs 600 for an international traveller.

The Airports Authority of India (AAI) has instead been asked to pump in more equity — Rs 102 crore in Delhi and Rs 288 crore in Mumbai. Even after AAI brings in additional funds into the two joint venture projects, its equity will remain at the current 26 per cent, sources said. It means that additional investment could be in the form of instruments such as preferential equity. If this were to happen, it will give additional revenue to AAI. The state-owned airport operator is a joint venture partner in the new companies that are managing the modernisation of the two airports.

Passengers will, however, continue to pay the User Development Fee for flying through the two airports. This fee is levied on both departing and arriving passengers. In the case of Delhi, the UDF varies from Rs 200 to Rs 1,100. While ADF is a facility to meet the funding gap in the project, UDF is a charge that the airport operator collects from airlines, passengers and others for using the airport.

Interestingly, the directive on doing away with ADF comes from the Ministry of Civil Aviation although there is an ‘independent’ Airports Economic Regulatory Authority (AERA) which had approved the levy after consultations with various stakeholders.

“If the ADF is abolished from January 1, the expected financing gap in Mumbai will be about Rs 4,200 crore while in Delhi, it will be Rs 1,175 crore,” a statement issued by the Ministry of Civil Aviation said.

The statement adds that when ADF was levied at the two airports, the AAI had taken the plea that it is not in a position to contribute more equity in view of its critical financial conditions.

Between 2006-07 and 2011-12, AAI has received Rs 2,873 crore as revenue share from Delhi airport. Delhi airport was transferred to the new joint venture company in 2006-07.

Meanwhile, the Delhi International Airport in a statement said that it will, in consultation with its partners, based on further communication by AERA, if any, take the views of its lenders and equity partners and analyse its financial structure, including ability to raise further debt and equity, and also the consequential increased impact on the aeronautical tariffs and respond appropriately to AERA.

> ashwini.phadnis@thehindu.co.in

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