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Airfares to drop sharply as govt enforces Delhi tariff

LiveMint logoLiveMint 07-07-2017 Tarun Shukla

New Delhi: Airfares are set to drop along with aircraft landing and parking fees in a potential boon to both passengers and airlines.

The aviation regulator, directorate general of civil aviation (DGCA), in an order on Friday slashed airport development fees for passengers on both domestic and international flights originating from Delhi with immediate effect.

Passengers will be charged only Rs10 as a user development fee (UDF) for domestic flights like Delhi-Mumbai from as much as Rs578 currently.

For an international flight like Delhi-New York, this will drop from as much as Rs1,335 per ticket to Rs45, the DGCA said in its order, which was reviewed by Mint.

Until now, both departing and arriving passengers had to pay the UDF. Now, only those departing from Delhi airports will have to pay the fee.

Airlines will save on aircraft landing and parking fees, which are being nearly halved.

A Delhi-Mumbai flight for the next fortnight is currently selling for a base price of Rs2,100. This could become Rs1,600 if the airlines pass on the benefits to consumers.

Air India, Jet Airways, IndiGo, Vistara, SpiceJet and GoAir did not respond to an email seeking comments on the subject.

“It is a big relief, fares will fall,” said an airline executive, who did not wish to be named.

The new tariffs have been pending implementation for a few years because the Delhi airport operator had gone to the courts against proposed tariff revisions.

Air India challenged this in the Supreme Court, which on 3 July vacated a stay granted by the Delhi high court, allowing the revised tariffs to kick in.

The GMR Infrastructure Ltd-led Delhi International Airport Limited (DIAL) told the Bombay Stock Exchange on Friday that it will pursue the matter with an appellate tribunal

The Supreme Court, it said, “has also directed the appellate tribunal to decide the tariff appeals filed by DIAL expeditiously, preferably within two months from the date of the order of the Hon’ble Supreme Court. DIAL would engage constructively with the regulator to endeavour a balanced implementation and will work expeditiously with the appellate tribunal to reach a fair and positive outcome in the two months directed by the Hon’ble Supreme Court”.

An analyst welcomed the move.

“Its a good thing if someone is saying let’s get on with it. Let consumers benefit. Otherwise what happens is a passenger of today is paying for a passenger of tomorrow for no reason just because airport operator wants better cash flow and keeps fighting for better ones,” said Amrit Pandurangi, former head of infrastructure practice at Deloitte Touche Tohmatsu India Llp.

He said the airport regulator Airports Economic Regulatory Authority (AERA) takes decisions based on extensive consultation with all stakeholders and its decisions should be respected. Otherwise, the whole purpose of having a regulator is defeated, Pandurangi added.

“The whole purpose of AERA was do decide tariffs based on overall consultation. All airport operators have been questioning it to simply defer tariff implementation. Airports should learn to make money from commercial means and not just airport charges in such a great growth market,” he said.

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