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Air travel to cost less from Mumbai and Delhi

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Close on the heels of the decision not to levy airport development fee (ADF) at Chennai and Kolkata Airports, civil aviation minister Ajit Singh has directed Airports Authority of India (AAI) to infuse more equity in Mumbai International Airport (MIAL) and Delhi International Airport (DIAL) with the objective of abolishing ADF at Mumbai and Delhi Airports and accordingly submit its proposals to Airports Economic Regulatory Authority (AERA).

As per a PIB release, 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 MIAL will be approximately Rs 4200 crore while in case of DIAL, it will be approximately Rs 1175 crore if the ADF is abolished with effect from January 1, 2013.

AERA has uploaded a consultation paper on its website and is in the process of determining ADF and Aeronautical Tariff for Chhatrapati Shivaji 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 288 crore in case of MIAL against its 26 per cent 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, 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, 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 loans by the airport promoter including AAI, the ADF will stand abolished. As per the directions of Singh the proposal regarding equity infusion by AAI will be soon submitted to AERA.

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