User development fee for Chennai air passengers reduced to Rs 69

C Shivakumar @ Chennai:

The user development fee (UDF) for domestic and international passengers embarking in Chennai airport will be reduced from beginning of next month. 

The Airport Authority of India has been collecting Rs 166 from domestic passenger and Rs 667 from the international passenger as user development fee. Now it will collect Rs 69 from both domestic and international passengers as user development fee.

This comes on the wake of Airports Economic Regulatory Authority of India passing an order on that the user development fee is reduced from May 1, 2018.

Once the order is implemented, it will cost the Airport Authority of India revenue loss of Rs 200 crore. Interestingly, on April 18, 2017, Airport Authority had proposed to increase the user development fee to Rs 200 per domestic passenger and Rs 400 per international passenger while AERA had suggested a total waiver of the user development fee in its consultation paper released on February.

The move to charge Rs 69 from both international and domestic passengers was taken after Airport Authority of India submitted that it requires an additional grant of Rs 300 crore to meet its operational requirements.

Interestingly, International Air Transport Association (IATA) has suggested that UDF should be removed as pre-funding of infrastructure investment by users.

“Abusing airport monopoly by making consumers pre-fund investment is more costly than funding through financial markets,” IATA had observed.

Meanwhile, domestic and international landing charges have been reduced by approximately 89 per cent. This would also impact the revenue collected from landing charges which was Rs 305.6 crore last year. Now it will fall to Rs 59.7 crore this financial year.

The move has been welcomed by the aviation industry which suggested eliminating unjustified differentials in landing charges between domestic and international flights.

When Express contacted sources in the aviation sector, they indicated it is too early to decide on whether the fares will be reduced or not. “The rise in oil prices has put pressure on the profitability of airlines and it is unlikely that the airlines will pass out the benefit to passengers immediately. Usually, the airlines will take time to come out with a decision on fare cuts,” said a source from one of the airlines in India.

The fuel throughput charge has also been reduced from Rs 1,774.4 to Rs 196. This comes as aviation industry has stated that fuel throughput charge has no cost basis and should be eliminated. The reduction in fuel throughput charge will reduce the Airport Authority of India revenue from Rs 131.7 crore to Rs 45.8 crore.

Factfile:

1.  User development fee for domestic and international passengers embarking in Chennai airport reduced to Rs 69.

2.  The Airport Authority of India has been collecting Rs 166 from domestic passenger and Rs 667 from the international passenger as user development fee.

3.  Once the order is implemented, it will cost the Airport Authority of India, a revenue loss of Rs 200 crore.

4.  The fuel throughput charge has also been reduced from Rs 1,774.4 to Rs 196.

5.  The reduction in fuel throughput charge will reduce the Airport Authority of India revenue from Rs 131.7 crore to Rs 45.8 crore