A CABINET meeting of the Congress government in Karnataka on Thursday ratified a nominal hike in the user development fee (UDF) for the Kempegowda International Airport Limited (KIAL).
“KIAL has been allowed to increase the user fee for the airport. This will be about Rs 25 to 30. This follows an agreement arrived at by the Bangalore International Airport Limited (BIAL), the state government and the Airport Regulatory Authority,’’ Law Minister T B Jayachandra said.
The state Cabinet had last year allowed the BIAL to increase UDF to bring it on par with Hyderabad Airport; raising it from Rs 231 to Rs 430 for domestic passengers and from Rs 952 to Rs 1,700 for international travellers.
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The hike, however, was not ratified by the Airports Economic Regulatory Authority (AERA) which only allowed an increase of Rs 30. This hike has already been in effect and was only awaiting government ratification, which was accorded Thursday, the law minister said.
Last year the AERA, while rejecting the BIAL’s demand for a steep hike in UDF to finance expansion projects, had suggested that the BIAL utilise its excess land for commercial use instead.
An AERA consultation paper of June 26, 2013, on increasing tariffs at Bangalore Airport had emphasised that the BIAL failed to exploit commercial land available to it despite original agreements stating that the land provided for the project must be used to finance airport expansion.
During the inauguration of an extension to Teminal-1 and the renaming of the airport in December last year, BIAL managing director G V Sanjay Reddy had said real estate development would begin in 2014.
“As part of the airport development itself we will hopefully by 2014 work on a real estate development plan — the phases, the investments and various other things. We are also waiting for certain government approvals which we have to take before taking up the projects,’’ Reddy had said.
The Karnataka government which is a partner in BIAL has so far extended Rs 350 crore as state support for the first phase of the Rs 1,930 crore PPP project and has also provided 4,008 acres of land valued at approximately Rs 175 crore for the project. Over 100 acres of land is in excess of airport requirements.
BIAL designed the initial phase projecting 11.4 million passengers per annum and is currently expanding T1 to meet an expected 17.2 million traffic flow in 2015. Plans are afoot also to begin work on a second terminal.