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Cochin International Airport to levy user's fee of Rs 500 per passenger

D Jose in Thiruvananthapuram

The Cochin International Airport Company Ltd or CIACL will introduce a user's fee for international passengers at the Nedumbasserry airport to help the company tide over its present financial crisis.

A decision to this effect was taken at the meeting of the board of directors of CIACL at Kochi on Monday. The idea is to collect Rs 500 from each passenger to ensure cash flow into the company for servicing the debts.

The proposal is bound to meet stiff resistance from the Keralites, working in the Gulf countries, who are the main users of the airport at present, and the travel and tour operators in the state.

During the meeting, two directors -- Yusuf Ali and N V George who represent passengers -- opposed the proposal. The meeting, however, went ahead with its decision after marking the dissent of the two directors in the minutes.

The decision was on the basis of suggestions made by PricewaterhouseCoopers or PwC, who have been appointed consultants to study the financial restructuring of the company.

Incidentally, the consultants had proposed user's fee of only Rs 250 per passenger.

The user's fee was one of the 28 suggestions it made to help the company get out of the fiscal quagmire it is in. PwC's suggestion to divest state's 51 per cent stake to infuse fresh capital into the company was, however, turned down by the board, sources informed. Government nominees on the board opposed the proposal, as the government would lose control over the company, sources added.

The board has, however, favoured the proposal to widen the capital base. It has appointed a three-member sub-committee headed by Kerala state chief secretary M Mohankumar to study the proposals made by PwC.

State finance secretary Vinod Rai and CIACL managing director Babu Rajiv are the other members of the committee.

Yet another significant suggestion by PwC is the conversion of some of the debts into equity to make debt-servicing more manageable. The Housing and Urban Development Corporation or HUDCO, which has lent Rs 450 million to the company, is said to be in favour of converting half of the debt into equity. The other major lenders include the State Bank of India or SBI.

CIACL sources say that the conversion of at least 50 per cent of the debts into equity would provide adequate elbowroom for the company to service the debts.

The travel circles in the state are sceptical over the board's decision to introduce the user's fee, as they fear that it would lead to diversion of passengers to other airports, where such a fee is not levied.

K V Muralidharan, president of the Kerala Travel Agents' Association, told the rediff.com that Kozhikode airport has been witnessing such a diversion due to continued collection of a similar user's fee from passengers.

He said that there was substantial diversion from Kozhikode to Kochi after the Nedumbasserry airport was commissioned. This is evident from the drop in the revenue from Rs 10 million a month last year to Rs 400,000 at present at the Kozhikode airport.

He said that several flights from Kozhikode to Gulf countries were not fully occupied due to this diversion. This traffic is bound to go to Thiruvananthapuram or Bombay, if the user's fee comes into force at Kochi.

The Kerala cabinet, meanwhile, has sought the central government's permission to impose a user's fee at Thiruvananthapuram for building a new terminal. Muralidharan fears that the state would lose considerable traffic in the event of the imposition of user's fee at Kochi and Thiruvananthapuram.

The passengers at Kozhikode are already agitated over the continued collection of user's fee. A section of the passengers there has decided not to pay the fee from May 31, which was the deadline fixed by the Airport Authority of India for completing the works on the expansion of the runway from 6000 ft to 9000 ft. However, the works are likely to be delayed beyond May 31.

The Calicut Airport Committee and the Malabar Chamber of Commerce have also voiced their protest over the continued collection of the user's fee.

A section of the Gulf bound passengers had challenged the collection of user's fee at Kozhikode airport in the Kerala High Court. The court, which initially granted a stay, is yet to dispose of the case. The Malabar International Airports Society, which collects the fee, has been maintaining a separate account for refund in case of such a directive by the High Court.

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