GVK to file response on UDF hike issue

The GVK group that operates Bangalore International Airport at Devanahalli here is expected to file its response before the Airports Economic Regulatory Authority (AERA) with its response on increasing user development fee (UDF) by the end of this month.

While the regulatory authority released the consultation paper last week that contains its comments on the proposal to hike the UDF, the Bangalore International Airport Ltd (BIAL), in which GVK holds 43 per cent share, has been permitted to file its response by the end of July.

The AERA, in the consultation paper, has turned down BIAL's proposal to increase UDF by 239 per cent for domestic and 79 per cent for international departing passengers from the airport. Presently, the UDF charged by BIAL is Rs. 231.40 and Rs. 952.30 for domestic and international departing passengers, respectively.

Responding to reports that the AERA has shot down its proposal, a source in BIAL told

The Hindu on Wednesday that the AERA has only published a consultation paper and it was not its final verdict. "We have time till the end of July to submit our views on the comments made by the AERA. The consultation has been a long affair and the airport operator has been communicating with the regulator ever since AERA came into existence."

According to BIAL's original proposal, the domestic UDF under single-till was to be Rs. 783.09 (3.4 times higher of the existing rates) and the international UDF to be Rs. 1,700 (1.8 times higher than the existing rates) with effect from May 1, 2013. In the dual-till model it proposed Rs. 1,729 for domestic and Rs. 1,700 for international passengers.

Further, the BIAL source said that various permutations and combinations have been worked out keeping in view the expansion plan and other expenditures. "Whether the regulator agrees to proposal made under single till or dual till or a combination of both is to be seen. The current UDF that is being charged at BIA is an ad hoc fee since AERA was not in existence when the airport became operational." The submissions by the BIAL was made keeping in mind global parameters for the same, the source said.

In single till mode, the government gets a fixed percentage share of revenue from both commercial and non-commercial operations. In the dual till mode, government gets only a small percentage share in revenue on commercial side and a fixed share from aeronautical operations that fall in the non commercial side. The percentage share for govt is less in dual till because it considers investments and future expansion plan of the airport operator.