COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

User fee scrapping dries up funds, forcelands Karipur airport project

The Kerala high court judgement against the collection of users's fund fee at the Karipur airport at Kozhikode is likely to derail the ambitious expansion plan of the airport.

The Malabar International Airports Development Society has already discontinued the collection of users's fee of Rs 500 following Justice K A Abdul Gafoor's order terming the fee as improper.

MIADS sources at Kozhikode said that the State Bank of Travancore, which was authorised to collect the fee from each international passenger boarding flights at the airport, has been asked to discontinue the collection in view of the court direction.

The MIADS is in a dilemma. The expansion work is half-complete. It has no other sources of income, but still needs Rs 600 million more. It also has to pay back about Rs.700 million to Housing and Urban Development Corporation for having taken a loan to fund runway extension (which is almost complete). The expanded runway is to become operational soon, monsoons permitting.

HUDCO had advanced the loan on the condition that the MIADS will meet the interest and the Airports Authority of India the principal. The state government had offered guarantee.

Now that there are no user-charges, the cash-strapped state government may have to foot the HUDCO bill. Consequently, it may not release any further funds for the project.

MIADS has for its chairman the chief minister of Kerala. It took up the project after the AAI refused to consider the expansion until 2004. The society took the plunge as it was confident of raising resources from the public, including the non-resident Indians.

An MIADS delegation, which visited the Middle East, had to return almost empty-handed. All that the society could collect from the public was Rs 35 million.

The society had approached HUDCO as the last resort. The agency offered the loan at 16.5 per cent. The society had made the commitment solely on the strength of the user fund. The proposal to collect the fee from the passengers was cleared by the Centre.

The Gulf-bound passengers felt the pinch, what with the higher fare charged by Indian Airlines, the carrier with no competition in the south-western region.

Air-India and other foreign airlines, which fly big aircraft, kept off Kozhikode because of unsafe topography. Indian Airlines flies 32 international 'heavy-load' flights a week.

The scrapping of user fee now is likely to grind the expansion work to an abrupt halt. The state government which is already saddled with loan repayment, is unlikely to pump in the Rs 600 million needed to complete the work. The AAI has no plan either to fund the expansion.

The MIADS had tried to tap Indian Airlines and Air-India as alternate sources. Air-India excused itself since it has already commited itself to Nedumbasserry airport coming up at Kochi. Indian Airlines was also not very keen, though Karipur is the highest revenue grosser for the airline. It had earned Rs.1.5 billion from the Kozhikode operations last year.

The MIADS now fears that escalation in project cost is likely, from Rs 900 million at conception to, maybe, Rs 1.5 billion. The figure rose to Rs.1.25 billion when work commenced. The Nayanar government is not very keen on the expansion project because it is concentrating more on the proposed airport at Kannur.