Air fares at IGI may drop on AERA push for 78% cut in airport charges

The Airports Economic Regulatory Authority proposes 78% lower airport charge at Delhi's IGI Airport. Stakeholders have to reply by month-end

In what could lead to a drop in fares on flights going in and out of this city, the government’s airport rates regulator has proposed a 78 per cent lower charge at the GMR-operated Indira Gandhi International (IGI) Airport for a five-year period.

If it goes through, airlines will benefit in lower landing and parking fees, while air passengers could save up to Rs 800 on a return flight on the busiest domestic sector, Delhi-Mumbai. Currently, IGI charges a user development fee (UDF) for departing passengers at Rs 275.3 (short haul) to Rs 550.61 (long haul), and arriving passengers at Rs 233 to Rs 466. A Delhi-Mumbai return passenger, thus, pays Rs 1,017 as UDF to Delhi airport but only Rs 274 for Mumbai (departing passenger).

A consultation paper published on the Airports Economic Regulatory Authority (AERA) website, dated January 29, has a proposal for a 78 per cent reduction in the aggregate revenue requirement (ARR) for Delhi International Airport Ltd (DIAL) in the 'second control' period. ARR is the charge levied by DIAL on flyers, while control period refers to a five-year term. The first such period on which AERA permitted charges was between April 2009 and March 2014.

Stakeholders have to reply by February 27. Implementation will be done once DIAL, a joint venture between GMR (74 per cent) and government-owned Airports Authority of India (26 per cent) present new rate slabs for its approval. The rates for Delhi Airport were previously revised in 2012, when AERA allowed DIAL to raise these by 346 per cent, as against 775 per cent sought by the latter.

Responding to queries, a DIAL spokesperson said, “The company intends to submit a response to the consultation paper in support of the Company’s previously-submitted tariff (rate) proposal.”

Adding: “In the public notice, AERA acknowledges the Delhi High Court’s order, dated January 22, 2015, whereby the court directed that the current aeronautical tariffs from the first control period remain in effect until the final adjudication of the company’s appeals against AERA’s tariff determination for the first control period."

Till date, the Bangalore-based GMR Group has invested  Rs 12,500 crore in the Delhi airport. Airlines and the travel sector have welcomed the development. Conrad Clifford, regional vice-president,  International Air Transport Association, said: “This is a positive development...will translate into reduced charges at Delhi Airport. This will be a welcome relief for airport users. We are still waiting for the tariffs for the 2nd control period, which should have been determined 10 months ago. It is important that the reduced charges be implemented promptly."