Wednesday, March 03, 2021

AERA rejects MIAL request for ad hoc UDF; int'l UDF slashed from next month

New Delhi: Come April and flying abroad from Mumbai will get marginally cheaper. The Airports Economic Regulatory Authority (AERA) has ruled that user development fee (UDF) for outbound international flyers will be Rs 171 from April 1, 2021, instead of Rs 278 at present. The B S Bhullar-headed AERA’s tariff order for Mumbai Airport’s third control period (in force till March 31, 2024 or much later till next order comes) has decided to continue with having no UDF for domestic departing passengers.

Importantly, the regulator has rejected Mumbai International Airport Ltd’s (MIAL) plea to levy an ad-hoc UDF of Rs 200 and Rs 500 for every domestic and international outbound passenger, respectively, till March 31, 2023, to tide over the Covid crisis. It had last October sought this ad hoc charge to “ensure economic and viable operations of (the) airport.”

Taking a pro-user stand, AERA order quotes a stakeholder’s request to determine tariff order keeping in mind “the financial health of all stakeholders — passengers, travellers etc — who come from different strata of the society as air travel is no more luxury but a necessity.”

The Mumbai Airport operator had on January 5, 2021, written to AERA seeking “cash support” on the grounds of “substantial shortfall of cash to meet operating expense, capex requirement and debt service obligations… interest and loan payment”. And that due to rating downgrade “MIAL may not be able to obtain loans and has sought debt restructuring.” It estimated a total shortfall of Rs 4,508 crore, which it wanted to partially tide over by raising Rs 1,396 crore from ad hoc UDF.

“MIAL has over-collected revenues (by) Rs 1,462.6 crore in first and second control periods which requires to be compensated to airport users through appropriate reduction in third control period tariff. If ad-hoc UDF is allowed, it is unfair to airport users as having already over-paid in prior years… they would have to bear additional burden,” Bhullar’s order states.

02/03/21 Saurabhi Sinha/Times of India

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