Mial to charge development fee from March

Mial to charge development fee from March
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First Published: Sun, Feb 22 2009. 10 34 PM IST

Expansion mode: The Chhatrapati Shivaji airport, Mumbai. Passenger-handling capacity is to be increased from 25.8 mn to 40 mn by 2010. Madhu Kapparath / Mint
Expansion mode: The Chhatrapati Shivaji airport, Mumbai. Passenger-handling capacity is to be increased from 25.8 mn to 40 mn by 2010. Madhu Kapparath / Mint
Updated: Sun, Feb 22 2009. 10 34 PM IST
Mumbai: Flying out of Mumbai is set to become more expensive from March.
The airport will start collect ing a fee of Rs350 per domestic passenger and Rs1,000 from international fliers, upon approval from the ministry of civil aviation that is expected this week, to finance its expansion and modernization.
Expansion mode: The Chhatrapati Shivaji airport, Mumbai. Passenger-handling capacity is to be increased from 25.8 mn to 40 mn by 2010. Madhu Kapparath / Mint
The Mumbai International Airport Pvt. Ltd (Mial), a special purpose vehicle set up to improve the infrastructure and facilities at the Chhatrapati Shivaji International Airport in Mumbai, will levy the fee for an airport development fund, or ADF. The consortium (Mial) is led by infrastructure firm GVK Group.
“We have made all necessary submissions before the government for approving ADF for the Mumbai airport,” said a senior executive at GVK who did not want to be named. “We are aiming at collecting Rs2,000 crore in the form of ADF for the next three years.”
Money from the fund, he said, would be used to reduce Mial’s debt burden and for capital expenditure.
A senior government official, who did not want to be named, said GVK’s proposal would be approved after due diligence, in time for introduction of the new levy by March. Audit and consulting firm KPMG India is doing the due diligence on the submissions.
On Friday, Sanjay Reddy, managing director of Mial, said the airport was facing a shortfall of Rs2,000 crore and had requested the government to allow it to collect the money to bridge this investment.
“Worldwide, airports are witnessing a slowdown. India is no exception,” aviation minister Praful Patel said the same day.
Mumbai Airport is India’s busiest. It handled 25.8 million passengers in financial year 2008, and the expansion and modernization are aimed at increasing this capacity to 40 million passengers by 2010.
But the additional charges come at a time when passengers are opting not to fly because of the high taxes and surcharges that add to the ticket prices.
Passenger traffic for India’s domestic airlines declined by about one-sixth from a year ago in the peak October-January season, as per the data with the regulator directorate general of civil aviation.
The country’s eight domestic airlines carried 12.78 million passengers between October and January, compared with 15.35 million a year earlier. In 2006-07, the comparable data was 12.66 million passengers.
Both India’s domestic and international airlines are expecting to end the fiscal year with combined losses of about Rs9,900 crore because of high jet fuel costs and excess capacity in 2008.
“Additional levies at India’s major airports are going to further pull down passenger growth,” said an analyst with an international brokerage.He can’t be named as he’s not authorized to speak with the media.
The extra money will help private airport developers save on interest payments as it will reduce their borrowings, but it would also result in fewer passengers and, in turn, hurt the airports, he said.
Some other airports are already levying similar fees. The Bengaluru International Airport charges a user development fee of Rs260 per domestic passenger and Rs1,070 per international passenger.
At the Hyderabad airport, the fee is Rs375 and Rs1,000, respectively.
On 9 February, the government approved a submission for an airport development fee by the Delhi International Airport Pvt. Ltd (Dial), which runs New Delhi’s Indira Gandhi International Airport.
Domestic passengers flying out of New Delhi will have to pay Rs200 each from March, and international passengers, Rs1,300.
The levy will be in effect for three years to help the GMR Group-led consortium, which runs the airport, raise Rs1,827 crore to cover the costs of modernizing it.
“Nothing comes for free. We are building international airport infrastructure in Indian cities, which is making travel safer, simpler and easier,” a senior GMR Group executive said on condition of anonymity.
Passengers flying from Mumbai and Delhi already have to bear airport charges indirectly. Mumbai airport increased its airport charges for airlines by 10% from 1 January, and the Delhi airport got an approval recently for levying a similar charge.
As a result, airlines have increased their passenger service fee to Rs233 from Rs225 for those flying out of Mumbai or Delhi airports.
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First Published: Sun, Feb 22 2009. 10 34 PM IST