India to drop airport fee in New Delhi, Mumbai

NEW DELHI Tue Oct 16, 2012 10:45am EDT

A security personnel stands guard as Air India's Dreamliner Boeing 787 taxies upon its arrival at the airport in New Delhi September 8, 2012. AREUTERS/Mansi Thapliyal

A security personnel stands guard as Air India's Dreamliner Boeing 787 taxies upon its arrival at the airport in New Delhi September 8, 2012. A

Credit: Reuters/Mansi Thapliyal

NEW DELHI (Reuters) - India will abolish a controversial airport fee at New Delhi and Mumbai airports from January 2013, the government said, as the country seeks to bolster air travel amid complaints of high costs by global airlines.

India recently allowed foreign carriers to buy a maximum 49 percent stake in local carriers, but so far no airline has shown interest, with high infrastructure costs among the deterrents.

New Delhi airport has been termed the world's costliest by the International Air Transport Association (IATA).

Asia's largest budget carrier, AirAsia Bhd (AIRA.KL) of Malaysia, said last month it had no immediate plans to enter India because fuel taxes and airport charges were too high.

New Delhi airport charges passengers 1,300 rupees per international ticket as an airport development fee.

India's civil aviation minister, Ajit Singh, asked the state-run Airports Authority of India AAI.L to inject additional equity at the two airports where it is an operating partner, the government said in a statement on Tuesday.

AAI operates New Delhi airport with a consortium made up of GMR Group (GMRI.NS), Germany's Fraport (FRAG.DE) and Malaysia Airports Holdings Berhad (MAHB.KL). Its partner for Mumbai airport is a group of investors led by infrastructure firm GVK Power (GVKP.NS).

Delhi and Mumbai airports had started to levy an airport development fee as AAI failed to inject additional equity to meet development costs at the airports.

GMR came under the scrutiny of a government auditor this year for levying a development fee, which the auditor said was against the bid agreement.

Abolishing airport development fees will leave Mumbai airport with a financing gap of 42 billion rupees, while that gap will be about 11.75 billion rupees in New Delhi, the government said on Tuesday.

"The balance in financing gap will have to be met by the Airport Operator or Promoter through infusion of their share of equity," the statement said. (Reporting by Anurag Kotoky; Editing by Helen Massy-Beresford)

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