The government has approved the imposition of a user development fee from next year for the Ahmedabad and Thiruvananthapuram airports that are being developed by the Airports Authority of India.
These will be the first AAI-run airports to impose the fee, which, the aviation ministry officials say, could be in the region of Rs 300 per passenger.
The government had earlier approved the imposition of such fees for the new Bangalore and Hyderabad airports being developed under public-private partnerships.
Ahmedabad and Thiruvananthapuram are among the 35 smaller airports being developed by the AAI, all of which are entitled to approach the government for permission to impose the fee. Their modernisation plans are scheduled to be implemented by February or March 2009.
AAI is spending Rs 12,434 on development of airport infrastructure, according to the Eleventh Five-Year Plan (2007 to 2012).
Aviation ministry sources said Kolkata and Chennai, which are also being developed by AAI, may also seek permission to impose the fee. "AAI plans to borrow Rs 2,000 crore (Rs 20 billion) for the modernisation of Kolkata and Chennai airports. If there is a gap there, they might ask for UDF for these airports also," said a ministry official.
"UDF can be levied by any airport which is not getting returns commensurate with the investment that has been pumped into the modernisation of the airport," said a senior official at the aviation ministry. "However, no airport can levy UDF until the modernisation work is over," he added.
According to the ministry, AAI is spending Rs 421 crore (Rs 4.21 billion) on upgrading the Ahmedabad airport, while around Rs 138 crore (Rs 1.38 billion) is being pumped in for the modernisation of the Thiruvananthapuram airport.
Due to increase in air traffic to these places, both airports were among the few AAI airports to make profits last year. For 2006-07, Thiruvananthapuram made a marginal profit of Rs 23.61 crore (Rs 236.1 million) and Ahmedabad Rs 24.96 crore (Rs 249.6 million).
However, till now, both these airports have used less than 50 per cent of the investment allocated for their modernisation.
"By the time they use the entire money, there will be a gap between investment and returns on investment, which will have to be filled by the development fee," said an industry source.
