User fee to help Hyderabad airport operator

For the first time in 2014-15, the airport had crossed the 10-million mark in passenger traffic, with 20% growth as compared to a 4.3% rise in 2013-14

Higher passenger fee may help GMR Hyderabad International Airport (GHIAL) get back in black as the stoppage of user development fee (UDF) from April, 2014 had pushed the airport operator into losses.

GMR Hyderabad International Airport had a net loss of Rs 245 crore in 2014-15, despite a 20 per cent jump in passenger traffic.

Revenue was hit after the Airports Economic Regulatory Authority (AERA) had asked the company to stop collecting User Development Fee (UDF) from embarking passengers beginning April 2014. This order was reversed on Tuesday.

The operator, a subsidiary of GMR Infrastructure, had a net profit of Rs 78 crore the previous year, though the passenger base was smaller. Reversal of the earlier decision  would still mean a lot, as Hyderabad maintains similar growth in passenger traffic this year. For the first time in 2014-15, the airport had crossed the 10-million mark in passenger traffic, with 20 per cent growth as compared to a 4.3 per cent rise in 2013-14.

With discontinuation of UDF, the airport operator lost an estimated Rs 798 crore in 2014-15 revenue.

The entire revenue of the airports division of GMR Group was Rs 4,608 crore in the year.

In the first half of this financial year (April 1-September 30), Hyderabad airport had a 20.4 per cent increase in domestic traffic and 15.4 per cent in international traffic, similar to last year's trend. Total passenger traffic was 5.92 million in these six months.  

Based on these numbers, the company is expected to collect around Rs 400 crore for the remaining period up to March 2016.  

AERA's order (for the period till March 2016) was in February 2014. The company challenged this at the high court here, after the appellate tribunal rebuffed it. Last month, the HC ruled in favour of the company. And, this Tuesday, the Director General of Civil Aviation issued the order restoring the UDF for the airport.

If the same level of UDF -- Rs 430 per domestic passenger and Rs 1,700 per international passenger -- is allowed to be collected by the operator even  beyond March 2016, this would alone create an annual revenue stream of more than Rs 1,000 crore, by the traffic trend.

In a filing sent on Thursday to the stock exchanges, GMR Infra noted that the DGCA order also restores all other rates/charges as before the AERA order of February 2014. AERA had stopped the collection of passenger service fee (PSF) and made it part of the UDF, besides making UDF nil for a period between April 2014-March 2016 when it had passed the order. A PSF of about Rs 225 per passenger was being collected across all airports prior to these orders.

Restoration of other charges/tariff prevailed prior to the February 24 order would further add to the Hyderabad airport revenues. However, It is unclear if these would also come into force at Hyderabad.

A spokesperson of the airport company refused to comment on these aspects.