New Delhi, July 8 (IANS) The government’s order on reduction of user development fee (UDF) charges at the IGI Airport is expected to benefit passengers flying in and out of Delhi. However, it might also have a negative impact on the future of investments required to increase the capacity at the airport, opined experts on Saturday.
This follows the civil aviation regulator Directorate General of Civil Aviation (DGCA) directive on Friday that implemented AERA’s (Airports Economic Regulatory Authority) order issued in 2015.
The AERA’s 2015 order had drastically slashed the UDF charges on departing air passengers and abolished it for the arriving ones. The order is being implemented after the Supreme Court set aside a stay order placed on it by the Delhi High Court.
The order was meant to be implemented for a period from April 1, 2014, to March 31, 2019.
According to a tariff order by the DGCA issued on Friday, departing domestic passengers will now have to pay Rs 10 as a UDF charge, while international passengers will have to pay a levy of Rs 45.
The earlier charges on departing domestic passengers were in a range of Rs 230 to Rs 545 and for international passengers Rs 560 to Rs 1,320.
“This is indeed a positive development for passengers, as it is expected to reduce the cost burden of flying in and out of Delhi,” Amrit Pandurangi, an independent aviation expert, told IANS.
“However, it is unlikely to have any major impact on the passenger traffic. The IGI Airport’s operator now needs to maximise its usage of the commercial properties and charges.”
From the passengers perspective, D.Sudhakara Reddy, Founder and National President, Air Passengers Association of India (APAI) said: “Its a welcome decision. However, we at APAI are concerned about the fact that more than Rs 10,000 crore has been collected by DIAL (Delhi International Airport Limited) during the last 4-5 years period against the ruling of the regulator (AERA).”
“More clarity is needed on the fact that how will these monies be used to facilitate and benefit passengers. We will approach the TDSAT and seek a mechanism through which these monies be utilised for passengers’ benefit,” Reddy said.
On the commercial front, Manish Agarwal, Partner Leader – Infrastructure for PricewaterhouseCoopers said that the Supreme Court’s order requiring implementation of AERA determined tariffs will severely impact the aero-revenues of DIAL.
“The non-aero revenues, currently around 30 per cent of overall revenue, do not get affected, and will cushion the overall impact. While the impact on aero revenues needs to be seen; if they reduce to 25 per cent of the current levels, the overall revenue could halve,” Agarwal told IANS.
“The revenue share (around 46 per cent of topline) paid to AAI (Airports Authority of India) will also similarly reduce.”
On its part, GMR Infrastructure has said in a regulatory filing to the BSE that its subsidiary 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 Supreme Court.
However, the lower UDF charges might hinder investment flows needed towards further development of the IGI Airport said Abhaya Agrawal, Partner, Infrastructure with EY India.
“The decision is going to adversely impact the finances of DIAL which is the operator of the IGI Airport. The impact might be in the range of 60-70 per cent reduction in aero revenue flow to the company,” Abhaya Agrawal told IANS.
“Thus it might have a major impact on future of investments going into the development of IGI Airport at the time of traffic congestion.”