Airfares may go up as government plans to raise passenger services fee

NEW DELHI: Passengers should brace themselves for a fare increase, as the government is likely to raise the passenger services fee (PSF) by at least 38% to meet the cost of security at Indian airports. The government, which earlier had plans to not raise PSF and transfer the cost to consolidated fund of India (CFI), will now have to raise it, after the finance ministry declined to fund the deficit.

“The finance ministry has agreed to transfer the cost to CFI but only if it is revenue-neutral for them, which would mean we will have to raise PSF. We estimate that the raise could be in the range of Rs 50 per ticket, which would not just help bridge the annual fund gap but also the deficit accumulated over the years,” said a senior aviation ministry official, who did not want to be identified. A PSF of Rs 130 is charged on every ticket booked and the fund accumulated from the levy is used to fund security cost at airports, primarily to pay salaries of the CISF personnel manning the airports.

The aviation ministry was of the view that any increase in rates would burden passengers and wanted the finance ministry to shift the cost of security at airports to the consolidated fund of India. Once the cost head is moved to the consolidated fund, the government would finance the deficit directly. However, the finance ministry has refused to fund any deficit.


“Now, whether we decide to continue with the existing system or move to CFI, the raise in PSF is bound to happen,” said the official. Officials said that it costs more than Rs 1,300 crore to provide security at airports across the country, while the fund collected through PSF falls short by about Rs 500 crore.

Of this shortfall, the state-owned Airports Authority of India (AAI) has a deficit of Rs 150 crore a year, which it says it pays from its own corpus. Private airports, however, do not pay from their own corpus. The issue of deficit piling up was also flagged off by Central Industrial Security Force (CISF) DG OP Singh, who had sought government’s intervention in getting CISF dues cleared.

“A review of outstanding dues against various airports shows that an amount of Rs 735.33 crore is outstanding against 59 airports. Moreover, during the last 12 months, total dues have further increased from Rs 542.57 crore to Rs 753.33 crore. Out of the total pending dues of Rs 735.33 crore, an amount of Rs 655.40 crore relates to DIAL (Delhi airport) alone,” read Singh’s letter, written in June.