Airports may’ve to cross-subsidise costs

New Delhi: Wiser from the row over user development fees (UDF) with the developers of GMR Hyderabad International Airport (GHIAL) and Bengaluru International Airport Ltd (BIAL), the government is planning to mandate greenfield airport developers to cross-subsidise aeronautical cost with the non-aeronautical revenues. The move is expected to result in reasonable UDF burden on air-travellers and increased air traffic growth.
This comes at a time when GHIAL and BIAL are planning to charge steep UDF from domestic and international passengers. The government wants to avoid a similar situation in the case of the proposed greenfield projects being discussed for Goa, Pune, Vishakhapatnam and Kannur. The stipulation would not apply to the new Hyderabad and Bangalore airports.
User charges are directly proportional to the investment made by the airport developer in building aeronautical infrastructure. The operation, management and development agreement (OMDA) for Delhi and Mumbai airports require the operators to cross-subsidise aeronautical cost with non-aero revenue effective 2009.
22/03/08 Nirbhay Kumar/Economic Times

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Categories: Airports Mar 2008