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Business News/ Companies / News/  Mumbai airport wants 660% hike in tariffs
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Mumbai airport wants 660% hike in tariffs

User development fee on passengers sought as modernization cost has nearly doubled

The Mumbai airport modernization project cost has nearly doubled to `12,300 crore since it was privatized. Photo: Hindustan Times (Hindustan Times)Premium
The Mumbai airport modernization project cost has nearly doubled to `12,300 crore since it was privatized. Photo: Hindustan Times
(Hindustan Times)

New Delhi: Mumbai International Airport Pvt. Ltd has sought a more than sevenfold increase in aeronautical tariffs, which will make it more expensive for users if the proposal is accepted by the regulator.

The GVK Infrastructure and Power Ltd-controlled operator has asked permission from the regulator to increase tariffs by 660% and has also sought an introduction of a user development fee on passengers since the airport modernization project cost has nearly doubled to 12,300 crore since it was privatized, according to two government officials, who spoke on condition of anonymity.

Aeronautical tariffs include parking, landing and navigation fees for airlines, besides passenger levies on fares.

New Delhi airport had sought a 775% increase and was granted a 340% hike in the year that started on 1 April, making it the most expensive airport for passengers in the country. The hike was so steep that the airport had to introduce the idea of charging not just departing passengers, but also passengers arriving at the airport. Domestic and international passengers pay 221 and 1,413, respectively, every time they fly from the airport.

From 15 May, Airports Economic Regulatory Authority (AERA) allowed the Delhi airport operator to charge an additional user development fee of up to 540 for every domestic passenger and 1,200 for every international passenger, depending on the length of the flight. 

Higher airport levies may discourage passengers and worsen the financial situation of local carriers. Jet Airways (India) Ltd, Kingfisher Airlines Ltd, Air India Ltd, SpiceJet Ltd and GoAir are estimated to post a combined loss of $2.5 billion last fiscal, according to consulting firm Centre for Asia Pacific Aviation.

AERA will publish a consultation paper over the next fortnight to discuss the demand for tariff hikes by the Mumbai airport. The operator declined to comment on the development.

Unlike in the case of New Delhi, where increased tariffs were granted after the modernization was completed in 2010, in the case of Mumbai airport, the new tariff may come before even the airport is fully modernized, said one of the officials cited above.

“This may be challenged by consumer bodies," he said, referring to Mumbai airport’s modernization, which is slated to end only in 2014.

Mumbai airport was India’s top airport by annual traffic when it was privatized in 2006. That position has since been wrested by Delhi airport. Mumbai handled about 30.97 million passengers in the year ended 31 March compared with 35.9 million by the Delhi airport.

The government auditor has criticized the government for giving post-contractual benefits to Delhi airport, which the operator denies.

A travel firm executive said the Delhi airport hike was already hurting.

“It is shocking that government is allowing mandatory fees to be collected per passenger," said Keyur Joshi, chief operating officer of India’s largest travel website “Taxing passengers in a monopoly environment is detrimental to growth and possibly not fully ethical, more so when airports around the world with similar or less volume are offering better services for lesser or no fees."

He said the government should look at policies adopted by Singapore and Dubai, where airports focus on making money from ancillary revenue and not fees on passengers. “We need airports and thought processes like Changi (in Singapore), where airlines are incentivized and not penalized for using their airport," he said.

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Updated: 23 Sep 2012, 11:43 PM IST
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