Government gives DIAL Rs 1,827 crore bonanza

In a major concession to the Bangalore-based GMR-led consortium Delhi International Airport Ltd (DIAL) that is operating and upgrading Delhi airport, the government has allowed it to impose airport development fees (ADF) on passengers that will help them raise up to Rs 1,827 crore over three years.
The move also means that the government has forfeited its share of revenue since DIAL has been allowed to levy Airport Development Fees (ADF) and not User Development Fees (UDF).
Delhi airport, therefore, becomes the only airport in the country to be allowed to charge ADF. Bangalore and Hyderabad, new airports that came up under public-private partnership models, have been allowed to charge UDF which means they share 4 per cent of the revenue with the government. If DIAL had charged UDF, it would have had to share 46 per cent of the revenue with the government.
Mumbai airport, which is operated and being upgraded by a GVK-led consortium has also asked for permission to levy ADF.
A few months ago Civil Aviation Minister Praful Patel had said the government would allow ADF and not UDF because the former could be imposed for a limited period.
The cash will be used to meet a funding gap in financing the airport modernisation project that has emerged because of poor response to a related hospitality project and a slowdown in passenger traffic. The project entailed an investment of Rs 8,975 crore.
The government has allowed DIAL to levy a development fee of Rs 200 per domestic passenger and Rs 1,300 per international passenger. The charges will come into effect from March 1 this year and will be levied for three years.
DIAL is a consortium of GMR, Fraport AG of Germany, Malaysia Airport Holdings, Indian Development Fund and Airports Authority of India (AAI).
A ministry of civil aviation statement said the approval is subject to the condition that DIAL will submit final project cost estimates within six months from the date the ADF is levied and latest by August 31, 2009.
10/02/09 Business Standard

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Categories: Airports Feb 2009