Karnataka government permits BIA to increase user development fee

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BANGALORE: Declining to give more equity participation, the state cabinet on Friday permitted the shareholders of Bengaluru International Airport (BIA) to increase user development fee (UDF) for both domestic and international passengers in order to mop up revenue.

The shareholders of BIA – GVK (43%), Siemens (26%), Zurich Airport (5%), Airports Authority of India and Karnataka State Industrial and Infrastructure Development Corporation (KSIIDC) (13% each) – had sought additional Rs 150 crore equity participation from the state government.

Law minister T B Jayachandra told reporters that shareholders had sought to increase equity participation following expansion and other infrastructure development activities in BIA. However, the government has asked them to mop up revenue by increasing UDF on par with Rajiv Gandhi International Airport (RGIA), Hyderabad.

The RGIA charges UDF of Rs 430 for domestic and Rs 1,700 for International passengers. BIA charges Rs 231 for domestic and Rs 952 for International passengers.

Jayachandra said the passenger flow in 2012-13 in BIA was over 11 million, while RGIA had 8.36 million. “Due to increase in passengers, BIA is slated to be third biggest airport in the country. Besides, the BIA is allowed to commercially exploit in regard to space available,” he said.

A second terminal is being built in the BIA to cater to increase in passenger capacity.

Meanwhile, BIA authorities were not available for comment. But industry sources said the final decision on the UDF vests with the Airports Economic Regulatory Authority (AERA), the body established by the Union government to regulate tariff for aeronautical services provided at major airports, determine other airport charges and to monitor the performance standards of these airports.

The UDF is one charge among many that airports impose on airlines, passengers and other concessionaires, and AERA’s decision on UDF for the Bangalore airport will take into account all of the other charges BIA imposes. BIA needs money for expansion, and a UDF increase appears to be one of its proposals to AERA to bring in funds.

AERA treats each airport differently, given that each airport has different concession agreements with the government and operates under different state laws.

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