Airport UDF hike-Impact on real estate
Loaded with rising airfares, the passengers at BIA(Bengaluru International Airport) will soon be troubled with hike in UDF. Airports Economic Regulatory Authority of India, which sanctioned the hike, sees it as a temporary revive. The hike is an indirect way for the air commuters to pay for the incompetence of BIAL to raise revenue for the huge real estate neighbouring the airport.
Past Action
Before the construction of airport took off, the BIAL took possession of nearly 4000 acres of land on concessional rental terms from the State government. Apart from the runway, the terminal and other infrastructure of the airport that encompassed a huge portion of land that had a monetary worth of Rs 175 crore, was set aside for real estate. It was estimated that the plot of land could generate big revenue for the shareholders. However, according to airport infrastructure experts, the plot of land remained unexplored in the last five years.
The recent news that has stepped in declares that BIAL now intends to earn revenue from the hike in UDF via its airport expansion ground plans. According to BIAL, an additional equity of Rs 649 crore is required to fund the expansion programs of the airport. However, the Centre, shareholders and private promoters have shown their inefficiency to generate adequate funds for the present market situation. BIAL is empowered with additional rights to generate more revenue by promoting commercial ventures on the said assigned land. The proposed list of projects on such a land includes- restaurants, meeting facilities, trade fairs, theme parks, golf courses, hotels, conference venues, business centers, real estate, amusement arcades along with entertainment facilities, shopping malls and bank exchanged.
Calculating UDF
Airports Economic Regulatory Authority of India lays down by the law that to calculate UDF single-till model is the perfect tool, since it allows the passengers to pay the minimum amount. In such a model, non-aeronautical along with aeronautical charges are also included to compute the airport charges.
Under the present shareholding pattern of the airport, private promoters are entitled to 74%, while the Karnataka State Industrial and Infrastructure Development Corporation and Airport Authority of India holds 13% respectively. According to few developers, the Centre and the State has spent nearly Rs 40000 crore via their own funds on the Metro construction project, however investing in airport is not the view of the government.
