Ktaka Cabinet okays user development fee hike for intl airport

The Karnataka Cabinet today cleared the proposal of Kempegowda International Airport Limited (KIAL) to hike the User Developmenty Fee (UDF) charged on domestic and international passengers.

"The Cabinet has approved KIAL's proposal to increase UDF charged on passengers by Rs 20 to Rs 30," Law and Parliamentary Affairs Minister T B Jayachandra told reporters here.

Last week, a citizen group of Bangalore - Political Action Committee (BPAC) - had shot off a letter to the Airports Economic Regulatory Authority (AERA), objecting to KIAL seeking an increase in UDF, putting most of the burden of raising revenue on passengers.

The letter by Biocon CMD Kiran Mazumdar-Shaw and Manipal Global chairman Mohandas Pai, suggested that instead of increasing UDF, the government should take back 1,000 acres of land given to KIAL to create non-aeronautical sources of revenue because they had done nothing about it.

However, the Minister said the proposal to hike the UDF was ratified considering the kind of investments required to take up airport expansion plan. "We need Rs 4,000 crore to Rs 5,000 crore in next three years. Therefore we have to create sources of revenue to meet the demand," he said.

The Kempegowda airport handles 1.40 crore international and domestic passengers per annum and is expected to double in future, Jayachandra said.

He also said the UDF charged by KIAL is less than what the Hyderabad airport charges. The UDF at Hyderabad is over Rs 400 and Rs 1,000 for domestic passengers and international passengers, respectively.

The BPAC, in their letter, argued that the government could take back the land given to KIAL and develop an airport city, SEZ, aerospace park and MRO (maintenance, repair and operations ) facility and use the revenues generated to cross-subsidise user charges at the airport.

GVK Group holds 43% stake in the airport, Siemens Project Ventures GmbH 26 per cent and Flughafen Zurich AG Ltd 5 per cent, while State-owned entities Airport Authority of India and Karnataka State Industrial Investment & Development Corporation Ltd hold 13 per cent each.