BENGALURU: The Airports Economic Regulatory Authority of India (AERA) on Saturday massively slashed the User Development Fee (UDF) to about one-third of the existing fee for departing domestic and international passengers from the Kempegowda International Airport. However, the Bangalore International Airport Ltd (BIAL) which operates the airport, says the cut will not translate into any change in air fares for passengers as airlines follow a dynamic fare structure, an aspect confirmed by AERA.
Aircraft parking, handling and housing charges for flights using the airport too have been slashed substantially, a move that will provide a huge benefit to all airlines reeling under heavy losses. The reduction in UDF has been effected with differential rates for the thre financial years until 2021. The biggest reduction has been effected for the seven months ending March 31 next year, with the fee for domestic passengers slashed to `100 from the existing `306 and for international passengers to `400 from `1,226 prevalent now. The subsequent financial years will have a slight increase over this fare with `139 and `179 for 2029-2020 and 2020-2021, respectively for domestic flyers. The corresponding UDF for international flights will be `558 and `716.
The whole process was set in motion on May 29 when AERA first proposed a fee cut of `79.19 for domestic and `316.76 for international passengers. The issue was hotly debated since then with BIAL which had initially mooted the idea of a higher UDF subsequently pressing on the need for at least continuance of the existing UDF. It had even warned that if the fee was slashed, it will not be able to go ahead with its `1,200-crore Eastern Tunnel connectivity project proposed as third access route for the airport.
Hari Marar, CEO, BIAL, stressed UDF cut will not result in price reduction as fares are dictated by dynamic fare mechanism. “Everything in the airline industry is dependent on demand and supply. A ticket might cost `20,000 one day and `5,000 on another day. So, this aspect of UDF will not translate into an instant reduction in air fare,” he told The New Indian Express. S Machendrananth, Chairman of AERA said, “We have taken care of all the capital project costs of the airport. The airport can manage that and other operations with the present charge fixed. Of course, the airport wanted some more.” He also conceded it may not translate into an immediate slash in air fare. “In the long term, it might have some impact.”