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Bangalore International Aiport ( BIAL ) : how its hurting Passengers on UDF

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Aviation

BIAL files criminal complaint against KFA, Vijay Mallya

Airlines accused of defaulting on payment to airport operator  : That to Passenger who paid as UDF Amount

Liquor baron Vijay Mallya-owned Kingfisher Airlines (KFA) landed in more trouble with the Bangalore International Airport Limited (BIAL) filing a private criminal complaint in a magistrate court at Devanahalli in Bangalore Rural district seeking clearance of Rs 208 crore dues.

“We moved the magistrate court in Devanahalli on October 21 filing a private criminal complaint against KFA, Vijay Mallya, chairman and managing director, Sanjay Agarwal, chief executive officer, A Raghunathan, chief financial officer and Bharath Raghavan, company secretary, ” the BIAL lawyer Siddarth told Deccan Herald.

The BIAL sought action under IPC sections 403 ( dishonest misappropriation of property), 406 (criminal breach of trust), 409 ( criminal breach of trust by public servant, or by banker, merchant or agent), 120 B (criminal conspiracy), 418 (cheating) and 430 (mischief) and direction to the Devanahalli police to probe the matter. 

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While the BIAL lawyers claimed that they registered an FIR with the police on Thursday, DCP (North-East) T Suresh said the police are yet to receive an official order from the court and would act accordingly once the report is received.

User development fee

The Director General of Civil Aviation had issued a circular on September 22, 2008 directing the airlines to collect user development fees (UDF) and passenger service fees (PSF) under the provisions of the Airports Economic Regulatory Authority of India Act, 2008. The circular also directed the private airliners to remit the money to the airport operator (BIAL).

 The KFA collected Rs 260 per domestic passenger from July 1, 2009 and Rs 1,070 per international passenger from September 3, 2008. The UDF was collected till September 30, 2012 and PSF till March 25, 2012, the days when the airlines stopped operations. As per the directions, the airlines had to remit the money with the BIAL, but failed to do so. Instead, the airlines used the money to clear its other dues, the BIAL alleged.

The KFA remitted some money during the initial stage and stopped it later. The BIAL’s financial audit is underway and the exact amount owed by the KFA would be known shortly, sources said.

http://www.deccanherald.com/content/365132/bial-files-criminal-complaint-against.html

So its no surprising that either Capt.  Gopinath, Rajiv Chandrashekar, H N Ananthakumar, PC Mohan,  Venkayia Naidu who are representing Bangalore in Center and GOK, GOI thru AAI who are share holders in BIAL as 26% keeping quite on the amount collected from Passengers as UDF is not remitted to BIAL. 

So either of these MP's  or  Govt of GOK or GOI   have any issue in increased UDF charges.  Passengers are cows,  milk them as much as  the policy.

 

Comments

Naveen's picture

Do you prefer AAI cowsheds?

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Passengers are cows,  milk them as much as  the policy.

This may be your view, but air passengers are generally better off & don't mind paying UDF as they now have a modern airport that has good conveniences when compared to the AAI cattle sheds.

Chennai's airport newly "modernized" & being operated by AAI is having all kinds of problems like roof leaking, repeated instances of false ceiling pieces falling off, baggage belt too steep, toilets dirty /stinking, unfriendly staff, long wait for baggage reclaim, etc.

Compared to this, BIAL (& all other privately built or modernized airports that charge UDF) is a huge improvement & investments have to be recovered & running costs are high. This criticism seems meaningless.

idontspam's picture

People & culture

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AAI cant put glass & steel & think the airport is transformed Chennai airport is a perfect example. It doesnt have the people & culture to make a world class airport.

At the same time, I would still hold GoK accountable if any airport authority tries to exploit people, regulator has to be on top of the game and cant let operators game the system. There is a need to prove to the people that higher UDF is really necessary considering the non-airport revenue stream has not been exploited as per the original plan. I dont care that people using the airport can afford the fee but that is no license to try dirty tricks.

Naveen's picture

Business is cyclical

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Non-airport revenues are cyclical & dependent on the state of the economy, demand for real estate space at the airport, etc. Projections made at the time of signing MoUs or agreements are indicative & cannot be claimed to be guaranteed like in any other business. The airport hotel is an example - it is still to take off due to very slack demand, though the projections made out long ago were that it would be viable.

I'm not sure there has been exploitation either - so far, they have only demanded a hike in UDF to be on par with Hyderabad airport & the ball is in GoK/GoI's court to decide on that - so, without their consent (as regulators), UDF cannot be increased. If they do give the consent for high UDF, it is the regulatory mechanism that is failing & not BIAL's fault as is being claimed since it suits people to bash BIAL rather than govt bodies or public sectors for whatever reasons.

The point is that when PPPs are involved, people have to accept certain higher costs in exchange for better services & not keep expecting everything at subsidized fares as before like Indian railways has been forced to do due to political compulsions & in the name of helping the aam aadmi.

idontspam's picture

I'm not sure there has been

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I'm not sure there has been exploitation either

We dont think so, you are not sure either, so let the govt make sure, why do you have to spring to their defense without all the facts? 

Naveen's picture

UDF is not exploitation

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why do you have to spring to their defense without all the facts?

The facts are already in the open & it's not unreasonable for BIAL to be charging UDF. Nobody is defending anybody here - rather some are seeing it fit to blame BIAL for charging UDF as they see UDF itself as exploitation, which it isn't since they have provided a much better airport than AAI ever could.

It is yet to be seen if UDF is going to be hiked up substantially as demanded by BIAL (to be on par with Hyderbad airport). No one knows & I said I was unsure about this, not anything else.

Sanjeev's picture

Already GOK & GOI have given their consent without seeing

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the ball is in GoK/GoI's court to decide on that - so, without their consent (as regulators), UDF cannot be increas  

Blind clearance already given by GOK & GOI without even lookinbg at the cost of project completion  and running expenditure few weeks back.  Go thru' the AERA   website and read all documents of BIAL.  It clearly shows GOK & GOI have surrendered to BIAL.

Things r compared again keeping with something back  of mind.  Read all documents of AERA and then tell me.   No one is asking any subsidy or free lunch in case of Airport  and if UDF to be charged,  let  the amount be decided after considering the economic efficency of BIAL  Managament and not only the operating efficiency.  Also not justiying the AAI operating the Aiport  and manner in which BIAL has free run deciding the UDF.

 If I am an investor of 26% stake in the project,  I will definitly do the figures vetted by third party and not go by the blind  fugures of BIAL,   if  I am not expert in the airport operations

Regarding the Hotel Airport still to take off due to slack demand :  Read BIAL own admitting  court litigation with L&T / EIH  and 300 crore penalty  to be paid as per Devanhalli Court,  failure to collect 40 Crore from King Fisher Airlines on UDF and not even follow up with Mallay.  Finaly case filed in Devanhalli court.

Not looking for any reply  and kindly  go thru all the AERA documents on  BIAL.

In any case BIAL has to pay land rentals after 8th or 10th year to GOK,  so  BIAL will have to fork  even if it does not exploit the land.

Also after some years,  HAL Airport can be operated as per concession agreement.

 

Sanjeev's picture

BIAL has right to claim 24% return on investment and not GOK

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Non-airport revenues are cyclical & dependent on the state of the economy, demand for real estate space at the airport, etc. Projections made at the time of signing MoUs or agreements are indicative & cannot be claimed to be guaranteed like in any other business.

If  BIAL has to get back 24% return on invetsment  as per the agreement,  same time Projection of real estate returns should not be claimed  by GOK??  what an one sided argument.

Let the BIAL managment ban Mally  using this Bangalore Aiport  till he gives 40 Crore due on collected as UDF.  This way firm messages will go to all Business Houses how to deal in business  Public domain. 

For common passengers it will be acted in firm way  and  not for business houses???

Naveen's picture

AERA documents

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Read all documents of AERA and then tell me

I'm unable to find BIAL related articles on AERA web site. Can you please post the links?

If blind approval for high UDF has been given, then obviously it is CoI /GoK who are responsible, not BIAL which is a business organization & will always attempt to maximize incomes.

Agree that financials must be vetted before approving UDF escalation.

Re. the hotel, the wrong height was in the MoU & it is GoI /GoK's lapse. As for Mallya, he owes money to lot of banks & employees also. So, should his employees have asked for payment first before starting any flight? The complaint that BIAL should not have accorded credit to KF isn't right. The industry works on credit basis.

Sanjeev's picture

AERA Link for BIAL

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Following link has file which has all links related :

http://aera.gov.in/writereaddata/event/234.pdf

AERA consultation paper on BIAL released on 26th June 2013 :

http://aera.gov.in/writereaddata/consultation/333.pdf

This some replyies recd

http://aera.gov.in/writereaddata/event/227.pdf

Also my earlier post in Praja has all links :

http://praja.in/en/blog/sanjeev/2013/09/14/bial-airport-concession-agreement-its-future-exapansion-udf-charges-no-infus

 

Naveen's picture

Sanjeev - thanks for the

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Sanjeev - thanks for the links.

I think there have been plenty of regulatory lapses. The initial concessionaire agreement was for 'double till' approach, but 'hybrid till' was being followed as an interim solution whereby low UDF was being charged with 30% cross-subsidization from non-aeronautical revenues upon insistence by AERA. Now, AERA insists on 'single till'.

Further, they seem to be in breach of terms by insisting on land value adjustment. Also, GoK & AAI have not infused equity for the expansion.

All these flip-flops make the venture difficult to work with for BIAL, at least from what every partner has stated in his suggestions. The financials also show poor rate of return (well below the 16% in CA).

Double till is a norm in PPP airports whereby non-aeronautical revenues are not considered for regulation.

See this link: http://www.aci.aero/aci/a...

Under "Airport Operators associations", AAI has stated in point (24) as follows:

In the proposal of BIAL, they have proposed to charge UDF for development of the Airport also. AAI has no comments at this stage since AERA has not spelt out its policy in this regard.

AND

A policy need to be framed regarding %age of revenue to be recovered from passenger through UDF and amount of revenue to be recovered from Airline through airport charges.

 

BIAL has said this in their report:

The First Control Period in case of Bangalore International Airport Limited (BIAL or the Company) is 01st April, 2011 to 31st March, 2016. Control period specifies the Company can levy revised tariff w.e.f 01st April, 2011 but due to the fact that the tariff is being revised and proposed to be made effective 01st October, 2013, the Company couldn’t collect the revised tariff during the period 01st April, 2011 to 30th September, 2013 which is 2 years and 6 months (half of the first Control Period).
The money which is pending for collection from 01st April, 2011 till 30th September, 2013 is again being spread over next two and half years i.e. from 01st October, 2013 to 31st March, 2016.

 

 

blrpraj's picture

why protest UDF only; why not protest high ATF taxes?

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Why protest the UDF hike only? Why is nobody protesting the high ATF taxes? That also hurts the passengers. I think the aviation policy as a whole needs to be overhauled.

Sanjeev's picture

AERA consultation paper on UDF for BIAL

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Consultation paper which was released on 24th Jan'2014 by AERA authority.

http://aera.gov.in/consultationcat.php?cat=197

 

Stake holder coments released on 14th March'2014 by AEAR authority

http://aera.gov.in/writereaddata/event/243.pdf

Now AERA has in the process of recomendng UDF with 30% or 40 %  shared Till for BIAL.

All the Airlines British Airways, Cathy Pacific, Lufthansa, Federation of Indian Airlines, IATA, BPAC Bangalore have questioned  on the following :

1. Authenticity of  BIAL's expenditure on Capital and  Airport running which are very much inflated.

2. Also BIAL has changed its stand on revenue / income generated of Aeronautical - Nonaerunatical and now BIAL is showing 90% Aero Vs 10% Non Aero,  where as earlier in June'2013,  BIAL  had shown Non Aero revnue arround 30%.

3. BIAL failure to develop real estate business when compared to Hyderabad Airport which has well developed  non-aero business

4. Allowing Rs 47 Crore default / non payment  by King Fisher Airlines  and recovering same getting recovered from the Passengers thru UDF

5. Trumphet Flyover costing Rs 137 Crore ( as against NHAI Rs 40 Crore estimation ) getting recoverd 100% thru the UDF from passengers only apart from the  Toll what we pay to Navyug

6. Manpower beeing charged to BIAL account,  where as actually employees working at other projects executed by GVK

7. Failure to bring equity for future expansion of Terminal-2 by the airport promoters.

Looks like BIAL is in the line after NICE n Bangalore.

Its failue of GOK and GOI as share holders having 26% stake to protect the Govt investment, Airport and Passengers.

Looks like this beeing white corruption ( govt offically allowing ) where as Minning was black corruption

Its surprising to see big shots in Bangalore, Karnataka keeping  quite which is most surprising.  That means Bangalorens have learnt to leave with all mess either garbage, traffic, NICE road, BBMP Bankrupt, Lake encroachment, exhorbitant toll of Electronic city flyover and  BIAL

 

Sanjeev's picture

Look at Hyderabad Airport UDF is zero from 1st April

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Similar type of PPP project at other state AP,  that airport will have ZERO UDF.

Wait and see what AERA will pass the order for BIAL and Bangalore people will be happy to pay hgher UDF to help BIAL promoters to milk the passengers

Sanjeev's picture

Are U happy to pay UDF for following developments in BIAL

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UDF from Passengers collected by BIAL includes followng :

1. Rs 47 Crore due from King fisher airlines which was not paid by KF to BIAL, Will be recovered from Honest & Sincere Passengers. Because passengers have enjoyed thru King Fisher Calender & Poor owner of KF is from Bangalore, its OK for Bangaloreans to pay for the same.

2. Rs 138 Crore spent by BIAL / L&T to construct Trumphet Flyover ( where as NHAI estaimated Rs 40 Crore for the same ) will be completely recovered from Air passengers only  along with Toll to be to be paid  by Air Passengers to Navyug Toll on NH-7 of NHAI

3. Rs 300 Crore ( Rs 75 Crore for interest + Rs 225 Crore for compensation ) to L&T by BIAL failure to complet Airport hotel,  Because BIAL could not spare extra 2 Acres of land ( out of 4000 Acres ) to L&T to get 300 rooms as per agreement. Also UDF inclueds payment  of legal charges which BIAL will be hiring top lawyers to fight this battel

4. Extra land which BIAL will be forced to pay to GOK as rent after 5 years of free period. As BIAL promoters did not had time to develop real estate business becuse they were busy in exchanging shares in 1000 crores, and they forgot the interest of passengers.

5. As promoters of BIAL are inexperienced in Airport business, so to mitigate their risk of making profit of 20% of their investment,  thru UDF  they will be allowed to make profit.

6. To recover Construction cost of Rs 20 Crore  for VIP area  and runing cost of VIP area :  Thru UDF this will be recovered,  becuase our VIP's / MPs/ MLAs do not pay for their Air Tickets,  so recover from Honest & Sincere Passengers.

Sanjeev's picture

Looking to GVK to get Airport Hotel with their past experience

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GVK group which is major share holder in the Bangalore airport,  should get the much needed Airport hotel operational without having to burden the Airport revenues.

Here GVK with TATAs  :  TAJGVK    are already operating SIX FIVE STAR  Hotel business in Hyderabad, Chandigarh and Chennai  since 1999 which is 15 years :

TAJGVK Hotels & Resorts Limited (TAJGVK) is a joint venture, formed through a Strategic Alliance, between the Indian Hotels Company Limited (IHCL) and the Hyderabad based GVK Group in the year 1999/00.

http://www.tajgvk.in/

GVK  in the interest of Bangalore Airport should make this Airport Hotel operational even with 151 rooms which are ready to open.

Total dispute with BIAL  - L&T was for extra 2.10 acers of land within BIAL  due to Hotel height reduced from 45 Mtrs to 30.36. 

http://www.larsentoubro.com/lntcorporate/Uploads/110%20L&T%20Bangalore%20Airport%20Hotel%20Limited.pdf

Now same TAJGVK are planning to construct Five star hotel near Yelahanka on 6 acres of land which is very close to National Highway NH-7 by building bridge.

See the details on page 8 of the TAJGVK annual report :

http://www.tajgvk.in/i/annual-report-2012-13.pdf

Now their is new  company called : Bangaluru Airport & Infrastructure Developers Pvt Ltd 

 

 

 

 

Sanjeev's picture

2.10 Acre of land was not extended to Hotel to resolve the issue

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As  Original plan to construct 321 rooms on 4 Acres 19 guntas with height of 45 meters for Hotel.  This is how agreement signed between BIAL - L&T Bangalore Airport Hotel Ltd on 26th Nov'2006.  This hotel was to be developed in two phases with 154 rooms in ph-1 and balance 167 rooms in Ph-2  under the brand name : TRIDENT.

Consoritum for Hotel was : L&T 74% - Oberai ( EIH Company ) 26% with investment of  Rs 72 Crore.  and they won  against  :European major Accor Group with its Novotel brand and the Dubai-based property major's Emaar-MGF Land India consortium

Subsequently AAI has allowed hotel height upto 30.36 meters with 154 rooms.

Subsequently BIAL board has alloted  additional 2.10 acres of land their board letter dated 17th Nov'2009  to complet the project.  This happened just after 19th Nov'2009 when Zurcih AG had sold  its 12% stake to GVK out of 17%.

Just after this few days  ( 3 /4 days ),  L&T sold its 17% stake to GVK group.

Subsequently BIAL board letter dt : 28th July'2010 not to allot afforsaid additional land  to hotel.

Hotel consoritium has written repeated letter on 2nd June'2010, 13th July'2010 and 9th Aug'2010 to withdraw the letter of BIAL board dated 28th July.

Similar  time,  20th Aug'2011 was the date when GVK group purchased 14% stake from Siemens ( 40% )  and became major share holder 43 %.

Infact Hotel company written letter to Chief Sec / GOK on 7th Sept'2010  requesting their personal intervention and advice BIAL to provide 2.10 acres land,  this decison was approved by BIAL board during Nov'2009.  When GVK was minor share holder.

http://www.lnt.in/LTSubsi...

How is that GOK and GOI thru AAI are mute spectators of the BIAL  mismanagment.

Now this hotel mess is  Rs 301 Crore and  Rs 50 crore as interest towards security deposit of Rs 76.50 Crores with 18% interest as awarded by court.

As such BIAL had  so much land of 1000 acres at their disposal without any economic development,  refusing to give 2.10 acres land and making hotel construction to come to halt initally consting to give 2.10 additional land.

Now you can see who will take over this hotel business and how decisions of the International Airport changes with change of onwership.  

GOK and GOI have failed to protect the interest in this case.

 

 

Sanjeev's picture

550 Crore burden BIAL carrying for various reasons,burden on UDF

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Rs 47  Crore due from King Fisher Airlines

Rs 137 Crore for the Trumphet flyover whenNHAI was responsible to construct with 40 Crore as project cost.

Rs 301 Crore for Airport Hotel payment to L&T Bangalore Airport Hotel with interest on security depost of 76 Crore.

So all these with interest loss over the 3 / 4 years and also their is no development of nonaeronutical activites in BIAL except the expansion of terminal and not even runway.

Returns GOK and GOI not getting for their 26% stake and GOK has given Rs 350 crore interest free loan financial support for 10 years.

Both Govt GOK & GOI along with Private promoters have created Financial mess in BIAL company.  This will be costly affair for Bangalore Airport.  

So we have one more addition to NICE list.

Sanjeev's picture

calls for review of proposal to hike charges at Bangalore airpor

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Mazumdar-Shaw and Pai have also called for an audit on the expenses for the airport expansion as it is not clear if the BIAL had made the cost estimation of the project available during their consultation with certain stakeholders. As a result, B.PAC indicated there could have been an inflation in the costs of the works undertaken at the airport, leading to an increase in flying costs. There is a "higher (undesired) capital cost, but not adding desired value to the travellers," the letter said.

"T1 expansion cost of Rs 1,545 crore looks extremely inflated and would add unsolicited burden to passengers. Expansion cost of T1 must be thoroughly audited and benchmarked in comparison with the similar airport expansion projects recently completed in Chennai and Kolkata," B.PAC said in the letter addressed to the Airports Economic Regulatory Authority (AERA), which regulates tariff for aeronautical services rendered at major airports in India.

Besides, the letter has also charged that the cost of Rs 11,744 per sq ft is high, raising doubts about the method adopted for the area of footprint calculation.

"It is also understood that there is huge variation of completion cost (around Rs 300 crore) from the original scope," the letter said, adding "This needs proper justification if those expenditures were actually necessary to be executed as the burden of this straight away falls on the users."

The B.PAC has also called on a thorough audit of payroll of top category (20%) of employees and has advocated that care must be taken to allocate only relevant costs to BIAL.

Aero, non-cost bifurcation

The B.PAC has also called for the cost bifurcation between aero and non-aero (91 per cent and 9 per cent respectively), which it alleged was not on par with international airports worldwide.

The body has also pointed out a discrepancy in utility cost allocation saying the rate recovered from the consumers appeared about 50 per cent higher than the rate paid by BIAL to the utility suppliers after incorporating capital investment costing and overhead charges

This leads to double recovery of capital cost, from passengers and form utility consumers, and also converting a portion of it as non-aero revenue, the letter alleged.

Among its allegations, B.PAC also said the allocation of expenditure between aero and non-aero revenue in terminal expansion project accounting did not appear to be in line with the real scenario. "The real footprint of non-aero commercial activities (as listed in the document) looks three times higher than what is projected," the response from B.PAC said.

Objections of B.PAC
 

* Expansion cost of T1 to be thoroughly audited and benchmarked in comparison with airport expansions in Chennai and Kolkata.

* There was no public consultation involving the pretentious stakeholders - passengers

* Citizen forums and industry bodies were not involved for consultation

* Overall cost bifurcation between aero and non-aero (91%-9%) not in comparison with intl airports of similar capacity

* Why passengers have to bear the lease cost of land lying idle, when BIAL failed to utilise it for commercial development

* T1 expansion cost of Rs 1,545 cr looks extremely inflated and would add unsolicited burden to passengers

Current: Rs 231.40 (domestic) and Rs 952.30 (intl)

Proposed:

Single-till

Rs 783.09 (domestic), Rs 1,700 (intl)

Dual-till

Rs 1,729 (domestic), Rs 1,700 (intl)

http://www.business-standard.com/article/current-affairs/kiran-mazumdar-shaw-calls-for-review-of-proposal-to-hike-charges-at-bangalore-airport-114032100940_1.html

Good to see Bangalore citizens questening the BIAL claims to AERA. Will AERA get the cost audit by independ body before taking decision on UDF.

Its surprising to see GOK is keeping quite on the whole issue and taking soft stand with BIAL

 

Sanjeev's picture

Airport real estate was to cushion UDF, but it isn’t

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BIAL move to hike user charges draws attention to anomaly

The land available for commercial development in Kempegowda International Airport (KIA) has become contentious with some stakeholders urging the Airport Economic Regulatory Authority (AERA) to consider its value before reviewing the current user development fee (UDF) paid by passengers.

At present, the GVK-led Bangalore International Airport Ltd. (BIAL) is charging an UDF of Rs. 260 from departing domestic travellers and Rs. 1,070 from international passengers. It has approached AERA seeking an increase in UDF and tariff for other services to fund its future expansion plan. In response, AERA initiated a consultation process.

Revenue models

As per the submission made by the State government to AERA, BIAL has been given 4,008 acres with the aim of catering to 50 million passengers (5 crore) per annum. At least 720 acres are available for non-aeronautical, or commercial, activities.

In the present arrangement, all revenue from aeronautical services is considered for determining user charges. This is the single till model originally proposed by AERA. Now, AERA is open to a hybrid till model under which all revenue from aeronautical and 40 per cent from non-aeronautical services will be considered.

BIAL’s take

The airport operator has said AERA does not have jurisdiction over real estate activities. It has argued that as per the land lease deed with the State government, it is free to utilise the land for aeronautical and non-aeronautical activities. It has also cited the concession agreement and the State support agreement to substantiate its claim.

The objection

After AERA released the consultation paper last week, Federation of Indian Airlines (FIA) and Bangalore Political Action Committee (B.PAC) raised the issue of land development for determining UDF.

"Since BIAL has not submitted any concrete proposal for bridging the funding gap through monetisation of land, real estate deposits or any other instruments, the aeronautical tariff (including UDF) cannot be determined for capital expenditure funding," FIA said.

B.PAC has said that the land for non-aeronautical purpose is not earning any revenue, which could benefit the travelling public. It wants the government to take over the land, develop it and cross subsidise UDF.

Government stand

Vandita Sharma, Principal Secretary, Infrastructure Development Department has written to AERA stating "the government (which holds 13 per cent stake in BIAL) has no issue with the stand taken by AERA that whatever revenue BIAL may generate from commercial exploitation of the excess land should be entirely ploughed back into the airport project." She, however, has said that deducting upfront the market value of the land used for commercial development from regulatory asset base (RAB) might result in skewed cash flow.

Expert says

"BIAL is not announcing its real estate plan because AERA would treat it as part of the airport’s revenue (the single till model considers all revenue from aero and non-aero services), which could even bring down UDF or even eliminate it fully, thus benefitting passengers," an aviation expert with knowledge on the consultation paper, claimed.

The stand of the Karnataka government, the expert felt, is not in the interest of the travelling public.

Real estate at airport

The non-aeronautical activities at KIA involve development of Airport City, which includes a Centre of Excellence, a knowledge-based hub with the focus on the aviation industry, an IT-ITES SEZ, a business district and a Central Area to house a multi-modal hub and a parking zone. The BIAL website says that all these are expected to be ready by 2020. However, during the inauguration of T1 terminal in December 2013, BIAL managing director G.V. Sanjay Reddy told reporters that the areas for real estate development had not been identified.

http://www.thehindu.com/news/cities/bangalore/airport-real-estate-was-to-cushion-udf-but-it-isnt/article5827381.ece

 

Sanjeev's picture

From July 1, you pay more to fly from KIA

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Passengers flying out of Kempegowda International Airport (KIA) will have to dig a bit deeper into their pockets from July 1. The Airport Economic Regulatory Authority (AERA) on June 10 cleared a hike in user development fee (UDF), which works out to 47.4 per cent for domestic and 43 per cent for international travellers.

For outbound domestic travellers, the UDF (excluding tax) will go up from Rs. 232 to Rs. 342. For outbound international travellers, the UDF will increase from Rs. 953 to Rs. 1,368. However, the passenger service fee of Rs. 70, which is currently being collected separately, will be stopped.

The new rates will be in force till the end of this fiscal. A revised amount will kick in from April 2015 to March 2016 when the UDF for domestic and international passengers will come down to Rs. 306 and Rs. 1,226, respectively.

The AERA’s order comes after several rounds of consultations on a proposal by the airport operator, GVK-led Bangalore International Airport Ltd. (BIAL), which had sought revision in UDF to pay for the expansion of terminal one (T1), which is completed, and also fund the second phase of expansion (Phase Two), which is estimated to cost about Rs. 10,000 crore. This is the first revision of UDF at the greenfield KIA that commenced operations in May 2008.

BIAL had sought an increase in UDF by 238 per cent for domestic and 79 per cent for international travellers departing from KIA, which the airport regulator had shot down last year and held fresh consultations with stakeholders before announcing its decision on June 10.

The airport regulator, while deciding on the revision of aeronautical tariff and UDF, has also rejected BIAL’s proposal to have a hybrid till model in which only 30 per cent of the non-aeronautical revenues are to be considered to determine the tariff and UDF. Instead, the regulator has insisted on 40 per cent. The State government, which has a 13 per cent stake in BIAL, had recently approved the decision to seek a hike in UDF.

Differential tariff

Airlines operating at KIA can take advantage of differential tariff for landing. Lower tariffs have been set for airlines operating during non-peak hours. BIAL will offer reduced tariffs for airlines bringing in more passengers. “KIA is the first airport in the country to have such a variable tariff plan,” a BIAL source told The Hindu.

In 2013-2014, the airport handled 1.29 crore passengers and the number is expected to reach two crore over the next four years. At present, the airport handles 1.25 lakh air traffic movements annually.

http://www.thehindu.com/news/cities/bangalore/from-july-1-you-pay-more-to-fly-from-kia/article6112297.ece

 

What did the GOK & GOI are getting returns for their investment of 26 % in BIAL ???

Is GOK serious on land not utilized by BIAL since last 8 Years,  only interested in people  not constructing houses ??? 

How many airports within karnataka are developed in last 10 years when we are saying Airport traffic boom ???

 

 

Sanjeev's picture

AERA hikes user fee for passengers at KIA

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7.7 pc rise for domestic, 29 pc for international travellers

The User Development Fee (UDF) for domestic and international passengers departing from the Kempegowda International Airport (KIA) here has been hiked from July 1, 2014. 

However, since a component of the Passenger Service Fee (PSF) has been merged with the new UDF, the effective burden (UDF + PSF) on air travellers will increase only by 7.7 per cent for domestic and 29 per cent for international passengers.   

The revision is the first since the airport opened in May 2008. The new UDF would have been much higher had the Airports Economic Regulatory Authority (AERA) agreed to the fee hike sought by the Kempegowda International Airport Limited (KIAL). 

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AERA has revised the fees after months of consultation with various stake-holders including KIAL, the airlines and the State Government. 

Departing domestic passengers will now have to shell out Rs. 342 plus taxes as UDF (inclusive of Rs 77, the facilitation component of PSF) and Rs 130 as PSF. 

The existing UDF is Rs  231.40 plus taxes and PSF of Rs 207. Airlines collect the PSF from passengers and pay to KIAL for use of terminal, runway, emergency services and security facilities.  

For international passengers, the new UDF is Rs 1,368 plus taxes and PSF of Rs 130. This amounts to a 29 per cent increase over the current burden for the passengers (UDF of Rs 952.30 before taxes and PSF of Rs 207). 

These fares are effective only till March 31, 2015. New UDF rates will come into force from April 1, 2015 till March 31, 2016. 

AERA has exempted crew on duty and infants less than two years of age from paying UDF applicable to both domestic and international sectors. 

In its final order on the new UDF and other charges, AERA ruled that the airport operator cannot recover its charges incurred in the last 30 months from future passengers and airlines. 

“This approach is unacceptable as it would increase the operational expenditure of the airlines and rendering its operations economically unviable. ... Future consumers cannot be burdened with additional costs...,” the Authority observed. 

No losses since Sept 2009

AERA also noted that the airport operators had not posted any losses in its profit since September 1, 2009, when the Authority was notified. 

Hence, there was no question of considering any pre-control period shortfall in revenue generation, to determine the new tariff, it said. 

The new UDF and other charges have been calculated based on ARA’s control period of the airport from April 1, 2011 to March 31, 2016. 

No respite from UDF

Bangaloreans heading out of the country will have no such respite from UDF as those flying out from Hyderabad’s Rajiv Gandhi International Airport (RGIA). AERA had completely scrapped UDF at RGIA from April 1, 2014 till March 31, 2016. 

The 29 per cent combined hike in UDF and PSF will add to the burden of international passengers. Domestic passengers too are denied the UDF waiver, although they have been spared a hefty hike. On its part, the state government, with a 13 per cent stake in KIA, had given its nod last month for the UDF hike. 

http://www.deccanherald.com/content/413492/aera-hikes-user-fee-passengers.html

Already Hyderabad Airport promoters have gone to AP High Court on UDF order,  we may be surprised if BIAL managment  ( inclusing GOK & GOI ) goes to court to get hefty increase in UDF ???

Already people enjoying paying Toll for Devenhalli,  so whay not charge hefty for the KIA airport ??? In any case people are happy to pay high charges in Bangalore.

 

 

Sanjeev's picture

CBI searches Mallya residence in Rs 900 Cr loan default case

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CBI today carried out searches at residential and official premises of liquor baron Vijay Mallya and his now-defunct company Kingfisher Airlines in five places in connection with alleged default of over Rs 900 crore loan from IDBI Bank.

CBI sources said searches were carried out at the offices and residence of Mallya in Mumbai, Goa, Bangalore and other places. They said a case was registered by the agency against Mallya, Director of defunct Kingfisher Airlines; the company; A Raghunathan, Chief Financial Officer of the Airlines; and unknown officials of IDBI Bank.

It is alleged that the loan was sanctioned in violation of norms regarding credit limits. No immediate reaction was available from the company.

The CBI sources said an FIR into the alleged violations was registered recently as part of its wide probe into criminal aspects of loans declared to be non-performing assets by public sector banks.

The sources said there was no need for the bank to take the exposure outside the consortium. Mallya would soon be called for examination in connection with the case.

"It was first exposure to the bank. There was no need for the bank to take the exposure outside the consortium when already other loans were getting stressed," a senior CBI official, probing the matter, had earlier said.

The bank will have to explain reasons for extending the loan to the airlines, ignoring its own internal report which has warned against such a move. The debt-laden airlines stopped operations in October 2012.

The CBI sources said the agency has registered a total of 27 inquiries and cases with regards to "bad loans" given by public sector banks to various corporates in 2013.

The consortium of 17 banks had an outstanding of over Rs 7,000 crore on loans from Kingfisher with State Bank of India having the highest exposure of Rs 1,600 crore.

http://www.deccanherald.c...

Finally will law catch the BIG FISH ???  Or Fish will eat the Law ????

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