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Airfares set to rise as Aera approves Delhi airport levy

Airfares set to rise as Aera approves Delhi airport levy
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First Published: Mon, Nov 14 2011. 11 51 PM IST

Costlier travel: The T3 terminal of Delhi international airport. Pradeep Gaur/Mint
Costlier travel: The T3 terminal of Delhi international airport. Pradeep Gaur/Mint
Updated: Mon, Nov 14 2011. 11 51 PM IST
New Delhi: Airfares for passengers travelling from Delhi airport will increase from 1 December with the airport regulator lifting a five-month freeze that banned the operator from collecting an airport development fee.
Airports Economic Regulatory Authority (Aera) has allowed GMR Infrastructure Ltd-run Delhi International Airport Pvt. Ltd (DIAL) to charge Rs 200 on domestic passengers and Rs 1,300 on international passenger, the regulator said in its order on Monday that has been reviewed by Mint.
The Supreme Court had on 26 April quashed the charging of the fee by the Delhi and Mumbai airports unless Aera passed orders allowing its collection.
Aera has accepted the project cost of Indira Gandhi International Airport at Rs 11,801.66 crore to calculate the charges, compared with Rs 12,857 crore submitted by DIAL. The reduced cost allows for lesser charges as the base gets reduced.
Aera has decided not to take into consideration projects worth Rs 700 crore, which are being implemented currently, besides the upfront fee DIAL paid to Airports Authority of India (AAI) at the time of taking over the airport in 2006 and the cost incurred for building about 8,600 sq.m. of a new terminal area, T3, which was not entirely approved by the government authorities.
Costlier travel: The T3 terminal of Delhi international airport. Pradeep Gaur/Mint
As a result of this approval though, DIAL will get about Rs 1,230 crore over the next 18 months. This comes as a relief for the operator, which is struggling with non-payment of dues from its hub carrier Air India Ltd and Kingfisher Airlines Ltd and posted a loss in the second quarter.
The Mumbai and Delhi airports were allowed to charge development fee on clearance from the civil aviation ministry when Aera was not established.
A proposal for allowing a similar fee for the Mumbai airport is under Aera’s consideration but is likely to take few weeks to be cleared since the project will only end in 2013.
Delhi airport completed its first phase of modernization in March 2010.
DIAL is promoted by GMR Group, Airports Authority of India, Fraport AG and Malaysia Airports Holdings Berhad.
A GMR official, who declined to be named, said airlines will be informed of the new levy. The levy has to be added to the airfare from December.
The move is also likely to help clear Rs 130 crore in pending dues to DIAL from Airports Authority of India. This amount is the advance airport development fee collected soon after the Supreme Court ruling. AAI had been seeking clearances from Aera to release these funds, the GMR official said.
Hit by higher interest outgo, GMR Infrastructure reported a loss of Rs 62.53 crore for the July-September quarter despite an increase in income from operations. The company, having interests in airports, power and roads among others, had clocked a Rs 71.12 crore profit a year earlier.
Monday’s clearance by Aera will likely be followed by another tariff hike for airlines early next year after the regulator conducts an audit of the financial models submitted to it by DIAL.
The Hyderabad, Bangalore, Jaipur and Ahmedabad airports already have similar airport development fees for viability-gap funding.
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First Published: Mon, Nov 14 2011. 11 51 PM IST
More Topics: Airfares | Delhi Airport | DIAL | Airfares | Aera |