New India Flier Tax Causing Delays At New Airports

by Lorys Charalambous, Tax-News.com, Cyprus

27 August 2008

It has emerged that the imposition of a new tax on passengers is leading to congestion and delays at new airports which were built to help improve the experience of air travellers in India.

The user development fee, or UDF, which has been applicable since 22nd August, is a new departure charge added to the cost of tickets for domestic and some international flights, and has been devised to help private airport developers recover the cost of building new airports.

However, worried about rising fuel costs and falling demand, airlines are currently refusing to add the charge onto tickets, meaning that passengers are now forced to pay the levy separately at the airport, which has led to lengthy check-in queues and general passenger frustration.

"We are not in favour of levying a UDF as this would further dent traffic," Jet Airways CEO Wolfgang Prock-Schaeur was quoted as saying by the Times of India, noting also that short haul traffic out of Hyderabad and Bangalore has already suffered.

"If developers want this fee, they'll have to collect it themselves for the time being," he added.

To confuse matters further, since the government has only released guidance on what the charge should be, the UDF currently varies across India. The new airport at Hyderabad, which opened in March, is charging a fee of R375 per ticket (USD8.55) for internal flights, as per the government advice. International passengers however are being charged a UDF of R1,000. Meanwhile, the new international airport at Bangalore is charging R1,070 for international passengers, but has yet to levy a fee for domestic passengers.

Only infants under the age of 2 years and airline crew on duty are exempted from the User Development Fee, which is in addition to a passenger service fee of R225 that covers security and airport infrastructure costs.

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