Govt not to oppose hike in user fee at BIA

State has no plans of investing in airport expansion

The State Cabinet on Friday decided not to raise any objection if the Bangalore International Airport Limited (BIAL) proposes to hike user development fee to raise funds for the airport expansion.

Law and Parliamentary Affairs minister, T B Jayachandra explained that private stakeholders had approached the government seeking an equity investment for the expansion of the airport.

“The Cabinet, in its meeting held on Friday decided that the government is not in favour of any capital investment for the airport expansion plan. However, in order to meet the financial requirements of BIAL, we have allowed the stakeholders to hike the UDF to suit their needs,” he said.

The government has considered the Hyderabad International Airport as the benchmark for hiking the UDF.

“Compared to Hyderabad airport, the Bengaluru International Airport (BIA) has more passenger flow. With the proposed expansion, the BIA will become the third largest airport in the country. In order to ensure better facilities for air travellers, we decided to allow BIAL hike the user development fee,” Jayachandra said.

However, the minister clarified that the hike in UDF may not exceed that at the Hyderabad airport.

Hyderabad comparison

At present, Hyderabad airport charges Rs 430 as UDF for domestic passengers and Rs 1,700 for international passengers. The corresponding charges in BIA is Rs 231 and Rs 952 respectively.

The BIA recorded passenger footfall of 11.99 million against 8.36 million in Hyderabad in 2012-13.

The minister said it was likely that the BIA may go for further expansion to accommodate the increasing air traffic to Bangalore.

“Our worry is that with every expansion plan, other stakeholders will approach the government for funding. In order to facilitate their plans without burdening the government, we have asked them to hike the UDF accordingly,” said Jayachandra.

Any increase in the UDF will apparently push up the air fare from BIA. Official sources said that tariff regulation is a subject matter under Airports Economic Regulatory Authority of India.

The State government has provided 4,008 acres of land in Devanahalli for the BIA.
The stakeholders in the airport include Siemens (23 per cent), Flughafen Zurich (5 per cent), GVK Bangalore International Airport Limited (43 per cent), Airport Authority of India (AAI) (13 per cent) and the Karnataka State Industrial and Infrastructure Development Corporation (KSIIDC) – State government owned company which has 13 per cent.

The 13 per cent stake is by way of the land made available by the KSIIDC for the construction of the airport.