India Ministry of Civil Aviation: Air Travel to Cost Less; Civil Aviation Minister Shri Ajit Singh D

Close on the heels of the decision not to levy Airport Development Fee (ADF) at Chennai and Kolkata Airports, Civil Aviation Minister ShriAjit Singh has directed Airports Authority of India (AAI) to infuse more equity in Mumbai International Airport Ltd. (MIAL) and Delhi International Airport Ltd. (DIAL) with the objective of abolishing ADF at Mumbai andDelhi Airports and accordingly submit its proposals to Airports Economic Regulatory Authority (AERA).

Presently Rs. 200/ per domestic passenger and Rs. 1300/ per international passenger are being charged as ADF at Delhi Airport and Rs. 100/ per domestic passenger and Rs. 600/ per international passenger are being charged as ADF at Mumbai Airport.The expected financing gap in case of Mumbai International Airport Ltd. (MIAL) will beapproximately Rs. 4200 Crore while in case of Delhi International Airport Ltd. (DIAL), it will beapproximately Rs. 1175Crore if the ADF is abolished with effect from 1st January 2013.

AERA has uploaded a Consultation Paper on its website and is in the process of determining ADF and Aeronautical Tariff for ChhatrapatiShivaji International Airport, Mumbai for the regulatory period 1.4.2009 to 31.12.2014. It has asked the AAI the extent to which it would be able to inject additional equity into the project. In response, to this letter of AERA, the Civil Aviation Minister has asked AAI to infuse additional equity of approximately Rs. 288Crorein case of Mumbai International Airport Ltd. (MIAL) against its 26% share in equity of MIAL. The balance in financing gap will have to be met by the Airport Operator/ Promoter (MIAL) through infusion of their share of equity.

Similarly in case of Delhi to fill the balance in financing gap of approximately Rs. 1175 Crore, ShriAjit Singh has asked the AAI to contribute equity share of approximately Rs. 102 Crore. It is noteworthy that when ADF was levied at Mumbai and Delhi Airports, AAI had taken the plea that it is not in a position to contribute more equity in view of its critical financial condition.

Emphasizing on the objective of the Government to make the air travel affordable and to ensure that the passengers are not subjected to any extra burden, Shri Singh has asked the AAI to take on priority the equity infusion with the purpose of abolition of ADF. If the present funding gaps in case of MIAL and DIAL are met in terms of equity infusion and proportionate raising of loansby the airport promoter including AAI, the ADF will stand abolished. As per the directions of ShriAjit Singh the proposal regarding equity infusion by AAI will be soon submitted to AERA.