Court bars Mumbai airport from levying development fee

SC order brings relief for passengers, DIAL won’t be affected

In a move that will benefit air travellers, the Supreme Court today said the operator of Mumbai airport cannot charge airport development fee (ADF) from passengers as it does not have the approval of the Airports Economic Regulatory Authority (AERA).

A Bench of Judges Cyriac Joseph and A K Patnaik said only AERA had the power to approve this levy and not the government.

The operator of the Delhi airport, Delhi International Airport Ltd (DIAL), had AERA’s permission, the court said.

“We hold that development fees cannot be collected by the lessees of the two major airports, DIAL and MIAL (Mumbai International Airport Ltd), on the authority of the two letters of the central government,” it said.

The two had taken permission from the government as AERA came into existence only in January 2009.

DIAL said it would not be impacted as it had AERA’s permission, too. “We took permission from AERA in March 2010, when our project was almost complete. Since we have the approval, we will not be impacted,” said a spokesperson.

The order came on a petition filed by some non-government organisations (NGOs), including Consumer Online Foundation.

The fee in Delhi is Rs 200 for domestic flights and Rs 1,300 for international ones. In Mumbai, travellers have to pay Rs 100 for domestic and Rs 600 for international flights.

The levy was imposed to bridge the gap between the projected and the actual cost of developing these airports. For example, the cost of developing the Delhi airport was Rs 12,700 crore, as against the projection of Rs 9,000 crore at the time it was privatised.

Only Delhi and Mumbai airports charge ADF. Others charge user development fee (UDF), which is to bridge the difference between an airport’s revenue and its operational expenditure. UDF revenue has to be shared with the Airports Authority of India (AAI).

The two airport operators do not have to share ADF revenue with AAI, their partner.

MIAL was authorised to collect about Rs 1,500 crore in 2009. However, it has approached AERA to raise another Rs 1,400 crore, which means passengers will have to pay Rs 200 for domestic travel and Rs 1,375 for international travel.

A civil aviation ministry official said UDF could be an alternative to ADF. But this would mean an extra burden on passengers, as UDF collections had to be shared with AAI, he said.

In August 2009, the Delhi High Court had rejected the NGO’s petition, saying private airport developers were free to charge ADF.

Today’s order impacted the shares of GMR Infrastructure, the promoter of DIAL, and GVK Power, the promoter of MIAL. GMR fell 3.16 per cent to Rs 38.3 on the Bombay Stock Exchange, while GVK lost 4.57 per cent and closed at Rs 25.05.