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Corporate Jan 1, 2013

Delhi airport development fee to be halved from today

By Sindhu Bhattacharya

New Delhi: The Civil Aviation Minister has been unable to fulfil his promise of completely abolishing the development fee (DF) levied on departing passengers at Delhi International Airport.

After the operating consortium of the airport, led by GMR, expressed its inability to bring in fresh funds, the Airports Economic Regulatory Authority (AERA) has allowed it to merely halve the DF. So instead of Rs 200 per domestic departing passenger and Rs 1300 per international departing passenger, now the amounts payable would be Rs 100 and Rs 600, respectively. The new rates come into effect from tomorrow.

But while the AAI agreed, GMR said it cannot bring in more funds since its lenders are not advancing more loans. Reuters

The DF was levied by the GMR-led consortium to bridge a massive funding gap in the airport development project. Now, since the DF has been halved, the levy will continue for two additional years to make up the loss to the airport developer.

On October 16, Civil Aviation Minister Ajit Singh had directed the Airports Authority of India (AAI) to infuse more equity into Delhi and Mumbai airports, which operate on a public private partnership model with a consortium of private developers owning majority equity in the ventures.

The government wanted AAI to bring in more equity and also the consortium led by GMR to pitch in so that the ADF is abolished for Delhi.

But while the AAI agreed, GMR said it cannot bring in more funds since its lenders are not advancing more loans.

DF is a method to bridge the gap in any airport project funding. Had the DF been completely abolished, Delhi airport would have been left with a funding gap of Rs 1,500 crore.

Delhi as well as Mumbai airports (which is also a PPP model airport with GVK-led consortium the majority partner) were allowed to collect the levy on an ad-hoc basis for 36 months earlier.

Now that GMR has been allowed extension of the levy period when DF has been halved, a similar formula is expected at the Mumbai airport also.

by Sindhu Bhattacharya

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