Aviation Min scraps levy at Mumbai, Delhi airports

Moneycontrol Bureau

Air travel will get cheaper from Delhi and Mumbai airports as the civil aviation ministry has scrapped the levy of airport development fees (ADF) on passengers at the at these airports. ADF is levied for 'funding or financing the costs of upgradation, expansion or development of the airport at which the fee is collected."

The ministry has directed the Airports Authority of India to arrange alternate sources of funding to bridge the funding gap. The Delhi and Mumbai airports are run by private-led consortia. Currently, Rs 200 per domestic passenger and Rs 1,300 per international passenger are being charged as ADF at Delhi Airport and Rs 100 per domestic passenger and Rs 600 per international passenger.

The expected financing gap in case of Mumbai International Airport Ltd. (MIAL) will be approximately Rs. 4200 crore while in case of Delhi International Airport Ltd. (DIAL), it will be approximately Rs 1,175 crore if the ADF is abolished with effect from January 1, 2013.

The Delhi International Airport Limited (DIAL) has reacted to the scrapping of the ADF. In a statement, DIAL said it was in talks with its lenders and equity partners for their views. The company will analyse its financial structure and ability to raise further debt and equity. DIAL said it will also have to assess the impact on aeronautical tariffs which are likely to go up.

"DIAL has completed modernisation and expansion of IGI Airport in March 2010. DIAL has achieved financial closure. DIAL in consultation with partners, will take views of its lenders and equity partners. DIAL wll analyse its financial structure, including ability to raise further debt and equity. DIAL will also assess the consequential increased impact on the aeronautical tariffs and respond appropriately to AERA," said a DIAL spokesperson.

The IATA has welcomed the aviation ministry's move to abolish ADF. In a statement, IATA spokesperson said this was a significant step towards reducing cost for passengers. IATA also expressed belief that the ministry will look into other issues relating to the high-cost enviroment for aviation in India.