Bangalore airport to cut user fees further on govt advice

Bangalore airport to cut user fees further on govt advice
Financial Express

Bangalore, Mar 25 Grappling with the vexatious issue of the user development fee, the Bangalore International Airport Ltd (BIAL) is willing to negotiate with the government to further reduce the fee from the current proposed level of Rs 240-plus taxes and Rs 520-plus taxes for domestic and international passengers, respectively. BIAL is also willing to extend the discount for a longer period than the current two months after the scheduled opening of Bengaluru International Airport on May 11.

However, BIAL has clearly stated that it would not be feasible to go for a ‘zero user fee’ even for domestic passengers embarking from the new international airport. “The user development fee (UDF) is negotiable and we can even stretch the discounted period. But a zero UDF is not viable. There are no free lunches,” BIAL chief executive officer Albert Brunner said.

BIAL had initially proposed to levy an UDF of Rs 675 and Rs 995 on departing domestic and international passengers, respectively and later agreed to reduce it on the government’s advice for the first two months. The GMR Group-promoted Hyderabad International Airport that began operations on March 23 had decided to waive off the UDF for domestic passengers but is charging Rs 1,000 for international passengers taking off from Shamshabad.

Brunner justified the decision to apply UDF by saying the international traffic from the Bengaluru International Airport was estimated to be 20-25% of the total 10.2 million traffic per annum and the scope of work had increased by 70% since the construction started with the project cost going up from the initial Rs 1,412 crore to Rs 2,470 crore. “There has been an additional investment of Rs 1,000 crore by the concessionaires too,” he said. Brunner also categorically stated that BIAL would not renegotiate the concession agreement it has signed with the government and would insist on the closure of the existing HAL airport. “It will be a legal disaster (if the HAL airport is kept open). We need a second airport in Bangalore once BIAL is saturated. Two airports can work if they are just 10 minutes away, but not if it is such far away,” he said.