2012 turbulent yr for Indian aviation on airport fees, KFA

The year 2012 was a turbulent period for the Indian aviation sector. While the Kingfisher crisis hogged the limelight, passengers were also disappointed over the controversial Airport Development Fee (ADF) charged at the Delhi and Mumbai airports.

The CAG termed the ADF illegal and airlines cried foul along with passengers. Bu the ADF is still being levied and CNBC-TV18's Sumit Jha reports that affordable airfare in India remains a distant dream.

While there are still no takers for Indian carriers, the Indian aviation market has become the worst performing in terms of passenger traffic according to aviation body International Air Transport Association. For five straight months, from July to September - domestic traffic fell on account of skyrocketing fares.

Irate fliers forced the government to probe charges of cartelisation by airlines even as private carriers defended the fare hike by blaming it on exorbitant taxes  and the high Airport Development Fee at the Delhi and Mumbai airports.

In April, the Aeronautical Economic Regulatory Authority gave its nod to hike the ADF at the Delhi airport by 334 percent and Mumbai airport operator MIAL followed suit seeking an almost 7-fold jump.

Mumbai airport charges Rs 100 and Rs 600 per each departing domestic and international traveler as ADF while Delhi airport charges Rs 200 per domestic passenger and Rs 1,300 per international traveler. Beleaguered carriers claimed high fuel costs and airport charges were jeopardising operational viability.

Tony Tyler, CEO, IATA opined, "The airport fee at Delhi is not good for passengers, the airlines or the airport." Even as airlines cried foul, Delhi airport operator GMR came under severe criticism from the CAG for levying what the auditor claimed was an illegal fee. The government hit back with a strong rebuttal.

Aviation minister Ajit Singh commented, "ADF is legal as the Supreme Court has upheld it." Strangely, two months after defending the levy of ADF, Ajit singh surprised the aviation industry by announcing his intent to abolish the controversial fee. Singh argued that private operators and the AAI should bridge the funding gap estimated at Rs 1,175 crore in Delhi and Rs 4,200 cr in Mumbai if ADF was stopped from January 1, 2013.

While AAI agreed, private operators at airports stalled. It seems Ajit Singh may have given in to populism and neglected the hard facts on the ground, forcing the government to eat humble pie and withdraw its decision to abolish ADF and reduce the feel. A final decision on ADF will be taken by the airport regulator.

Kingfisher remains grounded though Vijay Mallya has made a huge offering of gold to the gods. Affordable airfares are now a distant memory and the airport fees have become a hard reality.