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

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.

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

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.

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.

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

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 ???

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 ????