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Leading airports in the world impose much lower user development fees (UDF) on passengers departing from their premises than what the private developers that are building or modernising airports in India propose to charge.
UDF, also called airport improvement fees or departure tax in other countries, is charged by developers to partly recoup the heavy investments that modernisation entails.
It is common in many other airports that are being modernised including New Zealand's Auckland airport and Ireland's Dublin airport. Almost all Canadian and Brazilian airports impose fees on passengers to fund modernisation.
In India, controversies have arisen recently as the new airports in Hyderabad and Bangalore -- being developed by public-private consortia -- proposes to charge a steep UDF of around Rs 750 from each domestic passenger and Rs 950 to Rs 1,000 from each international passenger.
Low-cost carriers have been especially vocal against this levy saying it would raise ticket prices by a third to a half.
The new Hyderabad airport starts commercial operations next week, while the one in Bangalore will be operational at the end of March.
In comparison, Bangkok's Suvarnabhumi international airport, which handles over 50 million passengers a year, charges much less. This is despite the fact that it doubled domestic airport charges and more than tripled international levies last year.
Indian airport developers defend charging higher rates on the ground that their capital costs are higher and the passenger base is much lower than international airports.
"Our rates might be a little higher because of the high capital cost we have incurred in the initial years. The UDF is high in the first year but will go down and stabilise after that," said a senior executive of Hyderabad-based GMR group, which is modernising Delhi airport.
"Also, we have started operations with a much lower passenger base (Hyderabad gets only seven million passengers compared with Suvarnabhumi's 30 million), so the cost is spread across more passengers," he added.
Developers also point out that unlike many other airports like Norwich or Dublin, Hyderabad and Bangalore are greenfield projects and do not have a revenue base from day one.
Nevertheless, several carriers like Jet Airways and Air Deccan have hinted that they will reduce the number of some short-haul flights from these locations as they may not be viable due to the steep UDF.
Responding to the pressure, GMR has already announced it will not impose any UDF on domestic travellers for the time being.
The civil aviation ministry has requested Bangalore to do the same and suggested that the developers negotiate and come to a more rational UDF, at least for the domestic passengers.
