Thursday, November 23, 2017

Airfares may go up as government plans to raise passenger services fee

New Delhi: Passengers should brace themselves for a fare increase, as the government is likely to raise the passenger services fee (PSF) by at least 38% to meet the cost of security at Indian airports. The government, which earlier had plans to not raise PSF and transfer the cost to consolidated fund of India (CFI), will now have to raise it, after the finance ministry declined to fund the deficit.

“The finance ministry has agreed to transfer the cost to CFI but only if it is revenue-neutral for them, which would mean we will have to raise PSF. We estimate that the raise could be in the range of Rs 50 per ticket, which would not just help bridge the annual fund gap but also the deficit accumulated over the years,” said a senior aviation ministry official, who did not want to be identified. A PSF of Rs 130 is charged on every ticket booked and the fund accumulated from thelevy is used to fund security cost at airports, primarily to pay salaries of the CISF personnel manning the airports.

The aviation ministry was of the view that any increase in rates would burden passengers and wanted the finance ministry to shift the cost of security at airports to the consolidated fund of India. Once the cost head is moved to the consolidated fund, the government would finance the deficit directly. However, the finance ministry has refused to fund any deficit.
23/11/17 Mihir Mishra/Economic Times