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Air travel set to become more expensive

Flying is set to become dearer as the state enterprise Airports Authority of India (AAI) is finalising a proposal to levy development fee on departing passengers...

Written by Smita Aggarwal | New Delhi | Published: July 28, 2009 1:05:49 am

Flying is set to become dearer as the state enterprise Airports Authority of India (AAI) is finalising a proposal to levy development fee on departing passengers from 10 major non-metro airports across the country,a top official has said. The proposal is likely to be fast-tracked as the company faces shortage of funds to undertake the upgrade of key non-metro airports.

For the modernisation work currently under way at the Chennai and Kolkata airports,the authority would levy development fee,similar to the fee charged at the Delhi and Mumbai airports,to meet the estimated capital expenditure shortfall of Rs 1,300 crore.

“AAI has engaged a third party consultant to undertake an independent study to estimate the fund shortage and recommend the development fee to be charged from passengers flying out from each of these airports,” the official told The Indian Express. Earlier,four private airport developers were allowed to charge airport fee from departing passengers at Delhi,Mumbai,Bangalore and Hyderabad.

Once the authority firms up the actual charges,the proposal will be vetted by the civil aviation ministry before a cabinet note is prepared for the consideration of the Cabinet Committee on Economic Affairs (CCEA). AAI is likely to finalise the proposal in a month’s time,the official said. As Chennai and Kolkata airports are still being modernised,the authority plans to levy development fee and the remaining eight airports may see the levying of a user development fee. These eight airports may include Jaipur,Udaipur,Amritsar,Thiruvananthapuram,Goa and Ahmedabad.

In case the authority receives the green signal for levying the fee at these airports,it would seek bank loans based on the estimated collection from the development fee charges. “If the development fee is allowed,the authority may defer the issuing of tax-free bonds of around Rs 1,000 crore,the proposal for which has already been forwarded to the finance ministry,” said the official.

The AAI had drawn out an ambitious plan to modernise 35 non-metro airports by 2010 for which Rs 12,000 crore had been set aside in the Eleventh Plan period. The total shortfall in the Plan funds is now estimated to be around Rs 5,000 crore. “Fund shortage is being felt as AAI’s revenues have gone down due to the privatisation of the Hyderabad and Bangalore airports. From the initial estimates,a total amount of Rs 5,000 crore is now required for carrying out modernisation works at the Chennai and Kolkata airports alone,” said the official.

However,the pace of modernisation has not been able to match the grand plans. The airside development has taken place at only nine of the 21 non-metro airports which were to be ready by March 2009. The city-side development of these airports lags behind,according to the latest official assessment. Of the remaining 14 airports which were to be completed by March 2010,work has been completed at nine airports.

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