Expansion of Indira Gandhi International Airport may hit the passengers hard

The country's busiest airport - Indira Gandhi International Airport (IGIA) in Delhi - is preparing for big expansion that will make it future ready. As per reports, the Delhi International Airport Limited (DIAL), a joint venture between GMR Group, Airports Authority of India (AAI), and others, is seeking environmental clearances to expand airport. The plan includes expanding the existing terminal used for domestic flights (terminal 1), building a new runway, and setting up of fourth terminal - terminal 4. The plan is expected to cost Rs 16,000 crore to DIAL. At present, IGIA has three runways and three terminals (out of which terminal 1 and terminal 3 are used).

The phased expansion will see the IGIA's capacity going up to 75 million by 2020, and further to 92 million by 2025, which is almost double to the total passengers - 55 million - handled by the airport last year. The plan also includes knocking down of Centaur Hotel and terminal 2 (after the expected expansion of terminal 1 in 2020).

Will the expansion of Delhi airport mean that passengers have to shell out more? Experts say that passengers might have to pay extra fare to fund the DIAL's expansion plan, at least that's what the history suggests.

Soon after the Delhi airport was modernized, the government allowed the airport operator to charge passengers ADF (airport development fees) and UDF (user development fees) from both domestic and international passengers arriving and departing from the airport.

The ADF, started in 2009, was primarily meant to fund the capital expenditure incurred by DIAL to expand and modernize the airport. UDF, on the other hand, is charged for the maintenance of the airport. It includes providing ongoing  facilities such as air-conditioning of terminals, staff expenses, cleaning costs, Wi-Fi services, among others.

While ADF charges were discontinued in 2015, the passengers still have to pay UDF. Currently, UDF charges at Delhi airport, ranging from Rs 250 to Rs 1500 per ticket, are one of the highest in the country. Surprisingly, UDF charges are standard for both terminals (terminal 1 and terminal 3) although the facilities available at these terminals vary widely.

The impending expansion is likely to increase the UDF charges further. That will not just translate into passengers spending more on tickets but can potentially make Delhi airport uncompetitive. Aviation consultancy CAPA says that "Indian airports need to remain competitive if they wish to promote themselves as hubs. Analysis of the revenue generated by airport operators from landing charges and passenger fees reveals that some of India's metro airports are relatively expensive compared with major hubs in the region such as Singapore and Dubai."

The expansion of airport to handle the growing passenger traffic is a step in the right direction. Nevertheless, it shouldn't fly in the face of the government's plan of making flying affordable for everyone.