Kiran Mazumdar Shaw calls for review of proposal to hike charges at Bangalore airport

She is part of Bangalore Political Action Committee, a citizen's collective that aims to build a better Bangalore

The Bangalore Political Action Committee (B.PAC), a citizen's collective that aims to build a better Bangalore and enhance the quality of life, has contested Bangalore International Airport Limited (BIAL) demand for raising the User Development Fees (UDF) and called on a scrutiny of the works undertaken by the BIAL.

A letter from the B.PAC, signed by Kiran Mazumdar-Shaw, President of the body and CMD of Biocon, and Vice President Mohandas Pai said "there had been no public consultation involving the "pretentious stakeholders" - passengers." The two have questioned why BIAL had not consulted citizens and industry bodies on the issue.

Mazumdar-Shaw and Pai have also called for an audit on the expenses for the airport expansion as it is not clear if the BIAL had made the cost estimation of the project available during their consultation with certain stakeholders. As a result, B.PAC indicated there could have been an inflation in the costs of the works undertaken at the airport, leading to an increase in flying costs. There is a "higher (undesired) capital cost, but not adding desired value to the travellers," the letter said.

"T1 expansion cost of Rs 1,545 crore looks extremely inflated and would add unsolicited burden to passengers. Expansion cost of T1 must be thoroughly audited and benchmarked in comparison with the similar airport expansion projects recently completed in Chennai and Kolkata," B.PAC said in the letter addressed to the Airports Economic Regulatory Authority (AERA), which regulates tariff for aeronautical services rendered at major airports in India.

Besides, the letter has also charged that the cost of Rs 11,744 per sq ft is high, raising doubts about the method adopted for the area of footprint calculation.

"It is also understood that there is huge variation of completion cost (around Rs 300 crore) from the original scope," the letter said, adding "This needs proper justification if those expenditures were actually necessary to be executed as the burden of this straight away falls on the users."

The B.PAC has also called on a thorough audit of payroll of top category (20%) of employees and has advocated that care must be taken to allocate only relevant costs to BIAL.

Aero, non-cost bifurcation

The B.PAC has also called for the cost bifurcation between aero and non-aero (91 per cent and 9 per cent respectively), which it alleged was not on par with international airports worldwide.

The body has also pointed out a discrepancy in utility cost allocation saying the rate recovered from the consumers appeared about 50 per cent higher than the rate paid by BIAL to the utility suppliers after incorporating capital investment costing and overhead charges

This leads to double recovery of capital cost, from passengers and form utility consumers, and also converting a portion of it as non-aero revenue, the letter alleged.

Among its allegations, B.PAC also said the allocation of expenditure between aero and non-aero revenue in terminal expansion project accounting did not appear to be in line with the real scenario. "The real footprint of non-aero commercial activities (as listed in the document) looks three times higher than what is projected," the response from B.PAC said.

Objections of B.PAC

* Expansion cost of T1 to be thoroughly audited and benchmarked in comparison with airport expansions in Chennai and Kolkata.

* There was no public consultation involving the pretentious stakeholders - passengers

* Citizen forums and industry bodies were not involved for consultation

* Overall cost bifurcation between aero and non-aero (91%-9%) not in comparison with intl airports of similar capacity

* Why passengers have to bear the lease cost of land lying idle, when BIAL failed to utilise it for commercial development

* T1 expansion cost of Rs 1,545 cr looks extremely inflated and would add unsolicited burden to passengers

Current: Rs 231.40 (domestic) and Rs 952.30 (intl)

Proposed:

Single-till

Rs 783.09 (domestic), Rs 1,700 (intl)

Dual-till

Rs 1,729 (domestic), Rs 1,700 (intl)