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
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.