Flight ticket prices to drop sharply as govt enforces Delhi tariff

New Delhi: Airfares are set to drop, along with aircraft landing and parking fees, in a potential boon to both passengers and airlines.

In an order on Friday, Aviation regulator Directorate General of Civil Aviation (DGCA) slashed the user development fee (UDF) for passengers on both domestic and international flights originating in Delhi with immediate effect.

Passengers will be charged only Rs10 as UDF for domestic flights such as Delhi-Mumbai from as much as Rs578 earlier.

For a Delhi-New York international flight, this will drop from as much as Rs1,335 per ticket to Rs45, DGCA said in its order, which has been reviewed by Mint.

Until now, both departing and arriving passengers had to pay the UDF. Now, only those departing from Delhi airport will have to pay the fee.

Airlines will save on aircraft landing and parking fees, which are being nearly halved.

A Delhi-Mumbai flight for the next fortnight is currently selling for a base price of Rs2,100. This could be cut to Rs1,600 if airlines pass on the benefits to consumers.

“This is a welcome move that will benefit passengers flying out of Delhi,” said Ajay Singh, chairman and managing director of SpiceJet.

Air India, Jet Airways, IndiGo, Vistara and GoAir did not respond to emails seeking a comment.

“It is a big relief, fares will fall,” said an airline executive who did not want to be named.

The new tariffs have been pending implementation for a few years because the Delhi airport operator had gone to the courts against proposed tariff revisions.

Air India challenged this in the Supreme Court, which on 3 July vacated a stay granted by the Delhi high court, allowing the revised tariffs to kick in.

GMR Infrastructure Ltd-led Delhi International Airport (Pvt.) Limited (DIAL) told BSE on Friday that it will pursue the matter with an appellate tribunal.

The Supreme Court, it said, “has also directed the appellate tribunal to decide the tariff appeals filed by DIAL expeditiously, preferably within two months from the date of the order of the Hon’ble Supreme Court. DIAL would engage constructively with the regulator to endeavour a balanced implementation and will work expeditiously with the appellate tribunal to reach a fair and positive outcome in the two months directed by the Hon’ble Supreme Court”.

Delhi airport earns about Rs350 crore every month from these airport charges currently.

An analyst welcomed the move to lower the UDF, which has been imposed to allow airport operators to recover their investments.

“Its a good thing if someone is saying let’s get on with it. Let consumers benefit. Otherwise what happens is a passenger of today is paying for a passenger of tomorrow for no reason just because airport operator wants better cash flow and keeps fighting for better ones,” said Amrit Pandurangi, former head of the infrastructure practice at Deloitte Touche Tohmatsu India Llp.

Consumer body Air Passengers Association of India (APAI) said all the money already collected by Delhi airport because of delayed implementation of the new tariff should be returned to passengers and airlines immediately.

“This is a very good move,” said APAI chief Sudhakara Reddy, “APAI wants removal of ADF (airport development fee) and substantial reduction in UDF and landing, parking charges as recommended by AERA (Airports Economic Regulatory Authority of India) and refund of all amounts collected illegally by DIAL.”