Equity crunch: Govt may lower, not abolish airport fee

New Delhi: The government may have to eat crow on the issue of Airport Development Fee (ADF) which was to be abolished by next month at Delhi and Mumbai International Airports. According to sources, instead of abolishing it completely, the civil aviation ministry may have to agree to lower the fee per person but extend the period of levy beyond 2014.

On 16 October, the ministry had directed the Airports Authority of India (AAI) to infuse more equity into Delhi and Mumbai airports, which operate on a Public Private Partnership model with a consortium of private developers owning majority equity in the ventures. The government wants AAI to bring in more equity and also the consortium led by GMR to pitch in so that the ADF is abolished for Delhi.[caption id=“attachment_551226” align=“alignleft” width=“380”]  Delhi airport. Reuters[/caption]

But while the AAI has agreed to infuse more equity, GMR has said it cannot bring in more funds since its lenders are not advancing more loans.

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Left with no choice but to compromise, the ministry may be unable to abolish ADF all together in Delhi from 1 January, as promised.

A senior ministry official told Firstpost, ADF may be reduced if not abolished but no final decision can be taken unless the Airports Economic Regulatory Authority (AERA) takes a view. “The matter is before AERA. In case AERA comes out with a fresh consultation paper in the next few days, it means AERA is willing to reconsider its position. In that case, ADF may be lowered. But lets wait and see what happens”.

If Delhi gets to continue levying ADF for longer, even the developers of Mumbai airport would seek this option.

ADF is a method to bridge the gap in any airport project funding. The expected financing gap for Delhi International Airport (DIAL) is likely to be Rs 1,500 crore if ADF is abolished from January.

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Delhi as well as Mumbai airports (which is also a PPP model airport with GVK-led consortium the majority partner) were allowed to collect the levy on an ad-hoc basis for 36 months.

Departing domestic passengers pay Rs 200 and Rs 100 at Delhi and Mumbai airports, while those flying abroad pay Rs 1,300 and Rs 600 respectively as ADF.