The Bengaluru International Airport (BIA) could charge passengers with heavy User Development Fee (UDF) who are already hampered with rising air fares.
The failure to heave revenue by the huge real estate surrounding the BIAL’s would impact on air commuters to pay high, though the Airports Economic Regulatory Authority of India (AERA) postponed its notice for a fresh consultation paper.
The construction of BIAL started two years before for which around 4,008 acres of land was taken from the state government on concession rental terms by Bangalore International Airport Limited (BIAL). Apart from the terminal; runway; and other airport infrastructure; a large parcel of land that cost around Rs 175 Crore then was allocated for real estate hoping to generate big ticket revenue for the shareholders. But, according to airport infrastructure experts the land remained to be undeveloped in the past five years.
With an idea to expand the airport, BIAL has planned to generate revenue by rising UDF. A stakeholder consultation meeting set up by the Authority on July 22 2013 quoted that BIAL requires an extra equity infusion of Rs.649 Crore for future expansion of the airport. But, the shareholders from the Centre, State and the private promoters had voiced their incapability to impart any additional equity. The land maintained by the BIAL would not generate sufficient funds through the real estate because of the slowdown of current market situation.
The state government had given BIAL the Concession Agreement (CA) by which BIAL privileges to spawn its own revenue by developing projects like restaurants, hotels, conference venues, business centres, shopping malls, other sports and/or entertainment facilities, and real estate on the allocated land.
Real estate veterans emphasized that if these projects were initiated earnestly at the right time, then BIAL would not have required relying on heft UDF to increase funds.
Single-till system
The Airports Economic Regulatory Authority of India (AERA) demands to consider the single-till model to calculate UDF as the passengers had to pay less because this model considers both aeronautical and non-aeronautical charges. While the dual-till system considers only aeronautical deeds, the hybrid-till model regards non-aeronautical revenue of 30percent and all the aeronautical.
BIAL has considered hybrid-till model for a 30percent cross subsidisation and firmly declined the single-till model with regards to the CA. For, further expansion and debt repayment, BIAL has sought out for a special consideration to raise funds.
In BIAL current share-holding 74percent sharing is held by the private promoters and include promoters like the GVK Group – 43percent, Siemens – 26percent, and Zurich Airport - 5 percent. While, in the current share-holding of BIAL the Karnataka State Industrial and Infrastructure Development Corporation (KSIIDC) and the Airports Authority of India (AAI) hold 13percent each.
Under the State Support Agreement, the State Government had stretched an interest-free capital of Rs.350 Crore for ten years to BIAL, but it refused the request for Rs.150 Crore equity contribution, which was unpleasant news for many infrastructure experts.
Arguing on this, one of them asserted that the State and Centre could expend Rs 40,000 Crore for Metro project through their own funds and loans. But they hesitate to invest in airport; though the cost is meagre amount compared to the Metro project and also added that they could get much higher returns from BIAL every year, which could have been an enormous chance.
With an idea to expand the airport, BIAL has planned to generate revenue by rising UDF. A stakeholder consultation meeting set up by the Authority on July 22 2013 quoted that BIAL requires an extra equity infusion of Rs.649 Crore for future expansion of the airport. But, the shareholders from the Centre, State and the private promoters had voiced their incapability to impart any additional equity. The land maintained by the BIAL would not generate sufficient funds through the real estate because of the slowdown of current market situation.
The state government had given BIAL the Concession Agreement (CA) by which BIAL privileges to spawn its own revenue by developing projects like restaurants, hotels, conference venues, business centres, shopping malls, other sports and/or entertainment facilities, and real estate on the allocated land.
Real estate veterans emphasized that if these projects were initiated earnestly at the right time, then BIAL would not have required relying on heft UDF to increase funds.
Single-till system
The Airports Economic Regulatory Authority of India (AERA) demands to consider the single-till model to calculate UDF as the passengers had to pay less because this model considers both aeronautical and non-aeronautical charges. While the dual-till system considers only aeronautical deeds, the hybrid-till model regards non-aeronautical revenue of 30percent and all the aeronautical.
BIAL has considered hybrid-till model for a 30percent cross subsidisation and firmly declined the single-till model with regards to the CA. For, further expansion and debt repayment, BIAL has sought out for a special consideration to raise funds.
In BIAL current share-holding 74percent sharing is held by the private promoters and include promoters like the GVK Group – 43percent, Siemens – 26percent, and Zurich Airport - 5 percent. While, in the current share-holding of BIAL the Karnataka State Industrial and Infrastructure Development Corporation (KSIIDC) and the Airports Authority of India (AAI) hold 13percent each.
Under the State Support Agreement, the State Government had stretched an interest-free capital of Rs.350 Crore for ten years to BIAL, but it refused the request for Rs.150 Crore equity contribution, which was unpleasant news for many infrastructure experts.
Arguing on this, one of them asserted that the State and Centre could expend Rs 40,000 Crore for Metro project through their own funds and loans. But they hesitate to invest in airport; though the cost is meagre amount compared to the Metro project and also added that they could get much higher returns from BIAL every year, which could have been an enormous chance.
Helpful Information..
ReplyDeleteHow much they will increase yar.. Prices are increasing across all the sectors in India including grocery items.... What govt. is doing we dont know...
ReplyDeleteThe prices are increasing exponentially in recent days. Very difficult for the middle class people to own a flat in a city like Bangalore.
DeleteOnce government has to think about it, They has to make the flat prices reachable to middle class people also.
DeleteIn Bangalore Industrial development and their infrastructure has become the major factor because of hundred of IT plant in all major Location.
ReplyDeleteNice to inform to all people who are going to sale/ buy the home.
ReplyDeleteVery good view on Real Estate, It helped me in finding answer to my queries.
ReplyDeleteReally real estate is typical industry.. When it will go up when it will go down no body knows..........
ReplyDeleteVery Helpful information about real estate industry. Thanks for posting.. Other blog posting are also good.
ReplyDeleteGreat post yar.. Keep doing. I gone through the other blog posts also. It was very good.
ReplyDeletePrices are increasing across all the industries. India is showing its poor economy status. Really Bad time..
ReplyDeleteBangalore is metro city so it is necessary to develop the International Airport as fast as possible. Metros are the big source for country's growth.
ReplyDelete