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Bangalore International Aiport ( BIAL ) : how its hurting Passengers on UDF
Written By Sanjeev - 25 October, 2013
BIAL Bangalore Analysis Aviation Bangalore International Airport
BIAL files criminal complaint against KFA, Vijay Mallya
Airlines accused of defaulting on payment to airport operator : That to Passenger who paid as UDF Amount
Liquor baron Vijay Mallya-owned Kingfisher Airlines (KFA) landed in more trouble with the Bangalore International Airport Limited (BIAL) filing a private criminal complaint in a magistrate court at Devanahalli in Bangalore Rural district seeking clearance of Rs 208 crore dues.
“We moved the magistrate court in Devanahalli on October 21 filing a private criminal complaint against KFA, Vijay Mallya, chairman and managing director, Sanjay Agarwal, chief executive officer, A Raghunathan, chief financial officer and Bharath Raghavan, company secretary, ” the BIAL lawyer Siddarth told Deccan Herald.
The BIAL sought action under IPC sections 403 ( dishonest misappropriation of property), 406 (criminal breach of trust), 409 ( criminal breach of trust by public servant, or by banker, merchant or agent), 120 B (criminal conspiracy), 418 (cheating) and 430 (mischief) and direction to the Devanahalli police to probe the matter.
While the BIAL lawyers claimed that they registered an FIR with the police on Thursday, DCP (North-East) T Suresh said the police are yet to receive an official order from the court and would act accordingly once the report is received.
User development fee
The Director General of Civil Aviation had issued a circular on September 22, 2008 directing the airlines to collect user development fees (UDF) and passenger service fees (PSF) under the provisions of the Airports Economic Regulatory Authority of India Act, 2008. The circular also directed the private airliners to remit the money to the airport operator (BIAL).
The KFA collected Rs 260 per domestic passenger from July 1, 2009 and Rs 1,070 per international passenger from September 3, 2008. The UDF was collected till September 30, 2012 and PSF till March 25, 2012, the days when the airlines stopped operations. As per the directions, the airlines had to remit the money with the BIAL, but failed to do so. Instead, the airlines used the money to clear its other dues, the BIAL alleged.
The KFA remitted some money during the initial stage and stopped it later. The BIAL’s financial audit is underway and the exact amount owed by the KFA would be known shortly, sources said.
http://www.deccanherald.com/content/365132/bial-files-criminal-complaint-against.html
So its no surprising that either Capt. Gopinath, Rajiv Chandrashekar, H N Ananthakumar, PC Mohan, Venkayia Naidu who are representing Bangalore in Center and GOK, GOI thru AAI who are share holders in BIAL as 26% keeping quite on the amount collected from Passengers as UDF is not remitted to BIAL.
So either of these MP's or Govt of GOK or GOI have any issue in increased UDF charges. Passengers are cows, milk them as much as the policy.
COMMENTS
Look at Hyderabad Airport UDF is zero from 1st April
Sanjeev - 19 March, 2014 - 10:53
Similar type of PPP project at other state AP, that airport will have ZERO UDF.
Wait and see what AERA will pass the order for BIAL and Bangalore people will be happy to pay hgher UDF to help BIAL promoters to milk the passengers
Airport real estate was to cushion UDF, but it isn’t
Sanjeev - 24 March, 2014 - 19:42
BIAL move to hike user charges draws attention to anomaly
The land available for commercial development in Kempegowda International Airport (KIA) has become contentious with some stakeholders urging the Airport Economic Regulatory Authority (AERA) to consider its value before reviewing the current user development fee (UDF) paid by passengers.
At present, the GVK-led Bangalore International Airport Ltd. (BIAL) is charging an UDF of Rs. 260 from departing domestic travellers and Rs. 1,070 from international passengers. It has approached AERA seeking an increase in UDF and tariff for other services to fund its future expansion plan. In response, AERA initiated a consultation process.
Revenue models
As per the submission made by the State government to AERA, BIAL has been given 4,008 acres with the aim of catering to 50 million passengers (5 crore) per annum. At least 720 acres are available for non-aeronautical, or commercial, activities.
In the present arrangement, all revenue from aeronautical services is considered for determining user charges. This is the single till model originally proposed by AERA. Now, AERA is open to a hybrid till model under which all revenue from aeronautical and 40 per cent from non-aeronautical services will be considered.
BIAL’s take
The airport operator has said AERA does not have jurisdiction over real estate activities. It has argued that as per the land lease deed with the State government, it is free to utilise the land for aeronautical and non-aeronautical activities. It has also cited the concession agreement and the State support agreement to substantiate its claim.
The objection
After AERA released the consultation paper last week, Federation of Indian Airlines (FIA) and Bangalore Political Action Committee (B.PAC) raised the issue of land development for determining UDF.
"Since BIAL has not submitted any concrete proposal for bridging the funding gap through monetisation of land, real estate deposits or any other instruments, the aeronautical tariff (including UDF) cannot be determined for capital expenditure funding," FIA said.
B.PAC has said that the land for non-aeronautical purpose is not earning any revenue, which could benefit the travelling public. It wants the government to take over the land, develop it and cross subsidise UDF.
Government stand
Vandita Sharma, Principal Secretary, Infrastructure Development Department has written to AERA stating "the government (which holds 13 per cent stake in BIAL) has no issue with the stand taken by AERA that whatever revenue BIAL may generate from commercial exploitation of the excess land should be entirely ploughed back into the airport project." She, however, has said that deducting upfront the market value of the land used for commercial development from regulatory asset base (RAB) might result in skewed cash flow.
Expert says
"BIAL is not announcing its real estate plan because AERA would treat it as part of the airport’s revenue (the single till model considers all revenue from aero and non-aero services), which could even bring down UDF or even eliminate it fully, thus benefitting passengers," an aviation expert with knowledge on the consultation paper, claimed.
The stand of the Karnataka government, the expert felt, is not in the interest of the travelling public.
Real estate at airport
The non-aeronautical activities at KIA involve development of Airport City, which includes a Centre of Excellence, a knowledge-based hub with the focus on the aviation industry, an IT-ITES SEZ, a business district and a Central Area to house a multi-modal hub and a parking zone. The BIAL website says that all these are expected to be ready by 2020. However, during the inauguration of T1 terminal in December 2013, BIAL managing director G.V. Sanjay Reddy told reporters that the areas for real estate development had not been identified.
Are U happy to pay UDF for following developments in BIAL
Sanjeev - 19 March, 2014 - 12:28
UDF from Passengers collected by BIAL includes followng :
1. Rs 47 Crore due from King fisher airlines which was not paid by KF to BIAL, Will be recovered from Honest & Sincere Passengers. Because passengers have enjoyed thru King Fisher Calender & Poor owner of KF is from Bangalore, its OK for Bangaloreans to pay for the same.
2. Rs 138 Crore spent by BIAL / L&T to construct Trumphet Flyover ( where as NHAI estaimated Rs 40 Crore for the same ) will be completely recovered from Air passengers only along with Toll to be to be paid by Air Passengers to Navyug Toll on NH-7 of NHAI
3. Rs 300 Crore ( Rs 75 Crore for interest + Rs 225 Crore for compensation ) to L&T by BIAL failure to complet Airport hotel, Because BIAL could not spare extra 2 Acres of land ( out of 4000 Acres ) to L&T to get 300 rooms as per agreement. Also UDF inclueds payment of legal charges which BIAL will be hiring top lawyers to fight this battel
4. Extra land which BIAL will be forced to pay to GOK as rent after 5 years of free period. As BIAL promoters did not had time to develop real estate business becuse they were busy in exchanging shares in 1000 crores, and they forgot the interest of passengers.
5. As promoters of BIAL are inexperienced in Airport business, so to mitigate their risk of making profit of 20% of their investment, thru UDF they will be allowed to make profit.
6. To recover Construction cost of Rs 20 Crore for VIP area and runing cost of VIP area : Thru UDF this will be recovered, becuase our VIP's / MPs/ MLAs do not pay for their Air Tickets, so recover from Honest & Sincere Passengers.
Looking to GVK to get Airport Hotel with their past experience
Sanjeev - 21 March, 2014 - 06:54
GVK group which is major share holder in the Bangalore airport, should get the much needed Airport hotel operational without having to burden the Airport revenues.
Here GVK with TATAs : TAJGVK are already operating SIX FIVE STAR Hotel business in Hyderabad, Chandigarh and Chennai since 1999 which is 15 years :
TAJGVK Hotels & Resorts Limited (TAJGVK) is a joint venture, formed through a Strategic Alliance, between the Indian Hotels Company Limited (IHCL) and the Hyderabad based GVK Group in the year 1999/00.
GVK in the interest of Bangalore Airport should make this Airport Hotel operational even with 151 rooms which are ready to open.
Total dispute with BIAL - L&T was for extra 2.10 acers of land within BIAL due to Hotel height reduced from 45 Mtrs to 30.36.
Now same TAJGVK are planning to construct Five star hotel near Yelahanka on 6 acres of land which is very close to National Highway NH-7 by building bridge.
See the details on page 8 of the TAJGVK annual report :
http://www.tajgvk.in/i/annual-report-2012-13.pdf
Now their is new company called : Bangaluru Airport & Infrastructure Developers Pvt Ltd
AERA consultation paper on UDF for BIAL
Sanjeev - 19 March, 2014 - 10:47
Consultation paper which was released on 24th Jan'2014 by AERA authority.
http://aera.gov.in/consultationcat.php?cat=197
Stake holder coments released on 14th March'2014 by AEAR authority
http://aera.gov.in/writereaddata/event/243.pdf
Now AERA has in the process of recomendng UDF with 30% or 40 % shared Till for BIAL.
All the Airlines British Airways, Cathy Pacific, Lufthansa, Federation of Indian Airlines, IATA, BPAC Bangalore have questioned on the following :
1. Authenticity of BIAL's expenditure on Capital and Airport running which are very much inflated.
2. Also BIAL has changed its stand on revenue / income generated of Aeronautical - Nonaerunatical and now BIAL is showing 90% Aero Vs 10% Non Aero, where as earlier in June'2013, BIAL had shown Non Aero revnue arround 30%.
3. BIAL failure to develop real estate business when compared to Hyderabad Airport which has well developed non-aero business
4. Allowing Rs 47 Crore default / non payment by King Fisher Airlines and recovering same getting recovered from the Passengers thru UDF
5. Trumphet Flyover costing Rs 137 Crore ( as against NHAI Rs 40 Crore estimation ) getting recoverd 100% thru the UDF from passengers only apart from the Toll what we pay to Navyug
6. Manpower beeing charged to BIAL account, where as actually employees working at other projects executed by GVK
7. Failure to bring equity for future expansion of Terminal-2 by the airport promoters.
Looks like BIAL is in the line after NICE n Bangalore.
Its failue of GOK and GOI as share holders having 26% stake to protect the Govt investment, Airport and Passengers.
Looks like this beeing white corruption ( govt offically allowing ) where as Minning was black corruption
Its surprising to see big shots in Bangalore, Karnataka keeping quite which is most surprising. That means Bangalorens have learnt to leave with all mess either garbage, traffic, NICE road, BBMP Bankrupt, Lake encroachment, exhorbitant toll of Electronic city flyover and BIAL
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