Airport developers to hike airport charges

The developers of Delhi international airport led by GMR group and Mumbai international airport led by GVK group are planning to hike the airport facility charges after getting government’s indication to seek the extra annual charges levied from the developers, as per sources reported.

According to sources, the Ministry of civil aviation and airport developer consortium led by GMR and GVK groups have discussed over this topic and expressed their concern regarding the hike of charges of Rs. 200 for domestic passengers and Rs.1000 for international passengers in account of using the airport facilities.

The proposal of GMR and allied came after government demanded for additional charges from developers to enhance its revenue shares. But, as the developers claim that they cannot absorb the hike annual charges alone and thus it would be passed to the customers. The hiked prices would be used for the development of the airport facilities, as per developers’ claim.

However, the aviation ministry has not approved the proposal of the developers to hike the prices. The civil aviation ministry says, “Ministry is concerning over the proposal and is seeking the way where the customers will not suffer from this hike, and the margins of the developers will not be affected. For this, government is considering to cut off the duty in Aircraft Turbine Fuel (AFT) by 4%,” said the official.

The ministry is also seeking the revenue shares from all proposed 24 non-metro airports that are in the pipeline for modernisation. Unlike, metro airports that give higher revenue ratio, the ministry is seeking other ways to get more revenue from the non-metro airports (which would not give so much revenue) by accelerating a fixed percentage in annual charges at every few years besides generating other sources of revenue.

The reason behind hiking the fees also include that the bidders of non-metro airports would avoid establishing the subsidiaries near by airport premise and would not refuse to share the incomes with the government from their profits.

It is known that government has 26% stake in Delhi International Airport (DIAL) and Mumbai International Airport (MIAL) through Airport Authority of India ltd, while in margin it takes 46% of share in total profits.

According to the concession agreement between the airport operators and the government, ‘the operators can not increase the airfare before three years after completion of the development of airport and after three years, it can increase airport operation charges by 10%.’

That’s why, the airport developers are seeking the other way to hike the charges and it may translate into the price hike in account of using airport facilities including car parking facilities and passengers entry fee.

On the other hand, government has directed the developers to must set up the free hand foods and drinking vending machines, a low cost option for the commuters who do not want to pay the higher charges for sitting and eating or drinking in an airport restaurant, as per officials said.