No airport development fee after privatization

NEW DELHI: Realizing that its poll-eve decision to privatize six more Airports Authority of India (AAI) airports has led to fears that these places may also impose hefty user charges for flyers like those levied at Delhi and Mumbai, the government has decided not to allow airport development fee ( ADF) there.

Aviation minister Ajit Singh said only user development fee (UDF) will be allowed at these airports, unlike Delhi and Mumbai that charge both ADF and UDF. The six airports UPAII wishes to privatize in its remaining tenure are Chennai, Kolkata, Ahmedabad, Lucknow , Jodhpur and Guwahati.

“Only UDF will be allowed at these airports even after they are being maintained by private players. Any hike in charges will be allowed only if and when certain capital expenditure is incurred on things like adding capacity. Flyers from these places should not be burdened by high charges,” said Singh.

The ministry wants private bidders to “operate, maintain and develop” these six airports on a revenue-share model with AAI for a concession period of 30 years. Aviation authorities may decide the aeronautical tariff structure for the entire 30 years with inbuilt clauses for escalation when costs go up, to give the bidders a clear idea of revenue generation. “We do not want costs — and consequentially charges levied on passengers and airlines — to go haywire as they did in Delhi,” said asource.

The decision to allow only UDF comes after the government failed to get the private developers in Delhi and Mumbai to stop charging ADF and just levy one charge on flyers. The private shareholders of Delhi and Mumbai airport had refused to infuse additional equity and scrap the steep ADF. They only reduced the amount of ADF from January 1, 2013, and increased the duration that it is collected for. Apart from passengers complaining of high user charges, airlines also say that Delhi is among the most expensive airports globally .

The aviation ministry’s decision to privatize six more airports also led to fears that they may become expensive like their metro counterparts. So, the government has now tweaked its earlier model of airport privatization.

Unlike airports in Delhi, Mumbai, Hyderabad and Bangalore , AAI will not be asked to invest anything in the private companies that will bid to run the six airports as the ministry has decided to allow the private players to have 100% stake. AAI has 26% stake in Delhi and Mumbai and 13% in Hyderabad and Bangalore airports. Bidders for these six airports may have to retain the entire staff there as unlike last time, AAI now has no place left to ‘adjust’ staff from these airports to other units.