User fee reduced by 89% at Delhi airport but implementation stayed

AERA reduces Delhi airport charges by 89%; new charges in abeyance till disposal of appeal in previous tariff order

Airports Economic Regulatory Authority (AERA)  has cut the User Development Fee (UDF) levied on domestic and international passengers at Delhi airport to Rs 10 and Rs 45, respectively.  Also, arriving passengers will no longer be charged any.

At present, Delhi International Airport Ltd (DIAL) levies Rs 275-550 as UDF on each departing passenger and Rs 233-466 on each arriving one, on domestic flights.

International passengers departing are charged Rs 635-1,270 and arriving passengers pay Rs 518-1,048 as user development fee. This includes service tax component.

AERA's order for Delhi formally covers the 2014-19 period.  However, the reduced charges will not take effect till appeals on the earlier rate order are settled.

Overall, the  charges on passengers and airlines have been reduced  by 89.4 per cent. These include levies on landing and parking of aircraft, common use terminal equipment charges,  UDF and fuel throughput charge.

DIAL had sought a 42 per cent increase in rates and over and above the 346 per cent rise granted to it by the regulator for the first control period (2009-14).  

AERA rejected the plea and initially ordered a 96 per cent reduction. DIAL pleaded these would make airport operations unviable, lead to a downgrade in credit ratings and default on loan payments. AERA then modified its decision.

In its earlier order for 2009-14, it had allowed a 346 per cent increase. The order was passed in 2012, nearly three years after the start of the control period and the time frame for recovery of charges was curtailed  to 22 months.

That 2012 order is under appeal before the Airports Economic Regulatory Authority Appellate Tribunal (AERAAT). While the appeal has still not been disposed Delhi International Airport Limited (DIAL) moved the Delhi High Court and secured a stay on implementation of order for period 2014-19. AERA has challenged this order in the Supreme Court.

"DIAL has appealed to AERAAT on issues related to tariff for first control period which has bearing on determination of tariff for second control period. Accordingly, Hon'ble high court has directed that the existing tariff shall continue till disposal of appeal of DIAL by AERAAT. Hence, the current order of AERA cannot be implemented until final outcome of that appeal," Delhi airport said.

Similarly the tariff for period 2014-19 has still not been implemented and in effect Delhi airport has "over recovered" the charges from passengers and airlines. The over recovery has resulted in reduction in average revenue requirement of Delhi airport and thus the steep reduction in user charges, AERA noted in its order.