As profit soars, BIAL under pressure to withdraw user fee

With the Bengaluru International Airport (BIAL) registering huge profits in the past three years, there is a growing demand for the withdrawal of the user development fee (UDF) levied on passenger.

Pressure groups, including the Bangalore Political Action Committee (B.PAC), want the airport operator to source revenue for infrastructure projects from elsewhere instead of burdening the passengers.

Data collated by B.PAC show that the BIAL collected Rs 1,212 crore as UDF in the past two financial years. This is at least 30% (or Rs 280 crore) more than what it had estimated based on traffic projections in 2010.

One of the recent annual reports of the BIAL shows that it gets almost 40% of revenue from UDF. “In 2016-17, BIAL generated Rs 1,314.35 crore from operations (both aeronautical and non-aeronautical revenue). Of the total, around Rs 500 crore came only from the UDF charges,” the document reveals.

The BIAL is pushing for the continuation of the existing UDF till 2021 to fund infrastructure projects. It is running at its full capacity of 25 million passengers a year and the BIAL is targeting to double it in the next four years. The Airports Economic Regulatory Authority of India (AERA) projects passenger traffic in Bengaluru to increase to 38 million in 2021. “We have taken up several projects including a new runway, a second terminal and other supporting infrastructure. The total cost of these works will be about Rs 12,000 crore,” a BIAL spokesperson told ET.

The Bengaluru airport has also proposed the construction of a 2.76-km tunnel road, which will pass beneath the first and second runway. The Rs 1,033-crore project, the BIAL said, will make the airport more accessible to the eastern side of Bengaluru.

The Karnataka government has supported the BIAL’s stand on continuing the current UDF charges. “The excess revenues collected can be trued up in the next control period. It will smoothen the higher tariffs that are expected in the third control period due to higher capitalisation, thereby mitigating tariff spikes and shocks,” Sandeep Dave, additional chief secretary in the Infrastructure Development Department, wrote in a letter to AERA.

But groups like B.PAC want it to be scrapped. “We are urging AERA to protect the interest of air passenger by not allowing the BIAL to levy UDF during the current control period till 2021,” said Revathy Ashok, managing trustee of B.PAC. “The Bengaluru airport cannot burden air passengers even after earning a good 50% profit in the last financial year. This kind of profitability is unheard of in any industry and clearly establishes that excessive UDF charges have fully contributed to BIAL’s higher profit margin,” she said.

Citizen activist Sanjeev Dyamannavar said the BIAL should come out with a real estate plan to monetise over 4,000 acres of underutilised land. “In the past 10 years, BIAL has done nothing to generate income from the land. It should tap non-aeronautical revenue instead of burdening the passengers,” he said.