TravTalk - India

AERA restricts Hyderabad Airport on UDF

In its recent notificati­on, the Airports Economic Regulatory Authority has imposed a bar on levying User Developmen­t Fee (UDF) by Hyderabad Internatio­nal Airport effective April 1, 2014. The regulatory body is also scrutinisi­ng the amount of UDF being col

- RATAN KR PAUL

According to the Concession Agreement, about the Regulated Charges including User Developmen­t Fee, it is mentioned that Hyderabad Internatio­nal Airport Limited (HIAL) would be allowed to levy UDF w.e.f the airport opening date, duly increased in the subsequent years with inflation index from embarking domestic and internatio­nal passengers. The UDF is for the provision of passenger amenities, services and facilities and it would be used for the developmen­t, management, maintenanc­e, operation and expansion of the facilities at the Airport.

The Authority decided that the first control period for determinat­ion of tariffs for airport operators will be the five year period from 1.4.2011 to 31.3.2016, i.e. the period 201112 to 2015-16. However, in view of the fact that HIAL is estimated to make an over

` recovery of 31.79 crore on NPV basis as on April 1, 2014 and at the end of the current control period (1.4.2011 to

` 31.3.2016) of 38.47 crore, the Airports Economic Regulatory Authority (AERA) has instructed the airport to abolish UDF for the remaining two years (FY 2014-15 and FY 2015-16) of the control period. It is found that if the existing rates of landing, parking and housing charges are continued for the remaining years of the current Control Period namely FY 2014-15 and FY 2015-16, there will be no requiremen­t of UDF from April 1, 2014. The decision was taken after getting inputs and observatio­ns from HIAL and industry stake- holders through a consultati­on process.

AERA made the calculatio­ns on the ‘ single till’ model. In this model, both aeronautic­al and nonaeronau­tical charges

are included to arrive at charges to be calculated at airports. Presently, the UDF for the entire Control Period (1.4.2011 to 31.3.2016) works out to approximat­ely ` 283 per embarking domestic passenger and ` 1,120 per embarking internatio­nal passenger.

The AERA sources also maintained that the UDF as well as calculatio­ns for other aeronautic­al charges for the next Control Period commencing 1.4.2016 would depend upon the various building blocks considered by the Authority while determinin­g aeronautic­al tariff for the next Control Period including the required true-ups.

It is pertinent to mention that all major airports including Delhi, Mumbai, Kolkata, Chennai and Bangalore, among others, charge this fee, which remains to be a bone of contention for the users (both airlines and passengers) of the airports. The AERA sources said the consultati­on process for Delhi and Mumbai airports where first control period for them ends on March 31, 2014, will begin soon.

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