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Parliamentary panel recommends withdrawal of user development fee at airports news
25 October 2008

New Delhi: The parliamentary standing committee on transport, tourism and culture has recommended an immediate withdrawal of user development fees (UDF) that is being levied by the new Hyderabad and Bangalore airports on passengers using the airports. It says that private operators had invested only Rs330 crore and Rs240 crore respectively to develop these airports.

The panel says that the government's policy was to popularise air travel and make it more affordable, and therefore the UDF imposed on passengers "may be withdrawn immediately and no more UDF may be imposed on passengers in any of the airports." 

Headed by CPI(M) leader Sitaram Yechury, the parliamentary standing committee also recommended that any future greenfield or brownfield airports should be developed with the Airports Authority of India (AAI) having a majority stake in a joint venture.

The panel maintained that while the private consortium which had developed the new Bangalore airport put in only Rs240 crore in terms of equity, in the case of the Hyderabad airport, the private equity contributed was only Rs330 crore. The remaining financing was on account of state support, the Airports Authority of India, the respective state governments and debt from financial institutions.

The panel made these observations as part of its report on the functioning of private airports that was tabled in Parliament this week. 

The head of the parliamentary standing committee Sitaram Yechury said that given this pattern of financing, these airports could well have been developed and operated by the Airports Auhority of India (AAI).

He said that given the AAI's resources and expertise, it should have  a "better say in the modernisation of airports" in the country. Yechury said the Committee has recommended that any future greenfield or brownfield airport project "must be done under the management of AAI'', and that though joint ventures can be formulated, the AAI must have a majority holding in the company, and the management control should rest with the AAI. 

Talking about the panel's previous recommendations about reopening the old airports at Hyderabad and Bangalore, Yechury said the committee found that the closure of the old Bangalore airport was not part of the concession agreement that was initially prepared and approved by the Cabinet.

"However, allegedly, the clause related to HAL airport closure was brought at a later stage into the concessional agreement," says the report, while going on to say that there were "irregularities" in the agreement and that the closure was not legally permissible. It says that the prevalent norm that prohibits a new airport being built within a 150 kilometre radius of an existing one was also violated.

Both the old airports at Hyderabad and Bangalore had undergone infrastructure development in the recent past, with the AAI spending Rs610 crore in 2007-08. The committee also rapped the government for the "hundreds of crores of rupees spent" to develop infrastructure at these airports that remains unutilised due to closure of commercial operations. It has sought a re-launch of short-haul flights from the existing airports.

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Parliamentary panel recommends withdrawal of user development fee at airports