India cuts ADF for Mumbai and Delhi airports

India cuts ADF for Mumbai and Delhi airports

The Ministry of Civil Aviation (MoCA) has directed Airport Authority of India (AAI) to cut Airport Development Fee (ADF) at Mumbai and New Delhi airports.

Civil Aviation Minister, Ajit Singh has asked AAI to infuse more equity in Mumbai International Airport Limited (MIAL) and Delhi International Airport Limited (DIAL) with the objective to abolish ADF at Mumbai and Delhi airports and accordingly submit its proposals to Airports Economic Regulatory Authority (AERA).

No ADF will be charged at Mumbai and Delhi airport from 1 January 2013

Currently INR 200 per domestic passenger and INR 1,300 per international passenger are being charged as ADF at Delhi Airport, while Mumbai charges INR 100 per domestic passenger and INR 600 per international passenger as ADF. The expected financing gap in case of MIAL will be approximately INR4,200 crore while in case of DIAL it will be approximately Rs. 1175Crore if the ADF is abolished with effect from 1 January 2013.

The 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 April 2009 to 31 December 2014. It has asked the AAI the extent to which it would be able to inject additional equity into the project.

In response to the AERA letter, Singh has asked AAI to infuse additional equity of approximately INR 288 crore in case of 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 INR 1,175 crore, Singh has asked the AAI to contribute equity share of approximately INR 102 crore.

“Emphasising 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,” said the PIB release.  

“We will study the current development, assess its impact on our project and means of finance and after consulting with our Board of directors, partners and lenders, will respond to the relevant authorities, in due course of time,” MIAL said in its official statement.

The MoCA earlier this week announced Chennai and Kolkata airports to be ADF free.

Gary Marshall
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Gary Marshall
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