Flights to & fro Delhi become cheaper by 000s? Not really

Delhi will ideally see their flight fares drop with immediate effect because of a new revision in the tariffs for the use of the airport for the passengers as well as the airlines, which drops the concept of User Development Fees for people flying into the airport altogether.

As per the Government order, issued last Friday, flyers are not going to have to pay a User Development Fees altogether when you are getting a flight into Delhi Airport. This was anyways a useless concept because airports around the world charge outgoing passengers and not incoming passengers. But, DIAL had the rights to charge between INR 207 to INR 415 on each arriving passenger on domestic flights. International passengers arriving from outside the country would pay anywhere between INR 462 to INR 933 for arriving at Delhi.

For flying out of Delhi, while the earlier charges were up to INR 1130 ex taxes, they are much lower now. Take for example my recent flight out of Delhi on SpiceJet which had INR 564 (inclusive of taxes) for a domestic segment to Mumbai. Delhi got to charge between INR 245 to INR 490 for passengers departing from Delhi.

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Here is an example of the amounts paid to Delhi airport for handling an international round trip, to the tune of INR 2400 in this case. DIAL could charge anywhere between INR 565 to INR 1131 for departing passengers from Delhi, ex taxes.

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Domestic passengers will pay INR 10 and International Passengers will pay INR 45 here on. DIAL used to charge between ₹245 and ₹490 as UDF on each departing passenger and .

International passengers departing from Delhi airport were charged ₹565-₹1,131 and arriving passengers had to shell out ₹462-₹933.

For airlines as well, the landing and parking charges for planes fall between 43% and 61%, depending on the type of aircraft. This should theoretically bring prices down further, but it remains to be seen if these will be passed on to the customers.

Impact

A ticket between Delhi & London (roundtrip) had a component of about INR 2500 for Delhi Airport’s use. It will now be about INR 50 only. On the Delhi Mumbai round trips, while the charges were about INR 1050, now they go down to about INR 12.

These lower charges were due to come in as early as April 2014, but the airport did not implement the order till so far on some or the other legal recourse.

What if you’ve already paid?

It is currently unclear about how the amount collected by the airlines for paying to the airport for future flights would be treated. For instance, me and my wife currently hold a few tickets to Delhi and back which have these amounts on them.

But there may be a red herring…

Airports also charge fees to airlines in another manner called the CUTE fees (Common User Terminals) fees. The term is a misnomer, as this is the fee charged to the airline for use of common areas of the airport relevant to the airline. For instance, Jet Airways and Indigo may rent various number of check-in counters from the airport for all day operations at the airport. While British Airways for example sake may only come in twice a day and use counters for three to four hours, so they don’t need to rent terminals for the whole day.

These CUTE charges seem to have gone up. Earlier in the year, the CUTE charges were at INR 125 per economy passenger on 9W (these are for two pax below)

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For instance, here are the CUTE charges for a ticket later in July 2017, where CUTE is at INR 525.

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Bottomline

I’m not really sure how this is working out for the passengers at this moment. First and foremost, how will existing UDF be treated? On a round trip, that would be a substantial amount at least at INR 700 plus per head and should be refunded to the passengers. And then, have airlines or the airports tried to pocket the UDF amount as CUTE fees now? I’m not sure what is the end game of this.

(HT: Bhuwan Agrawal)

Comments

  1. Yes, i am pretty sure there will be no reduction.

    On a separate note, I noticed Jet Airways has increased convenience free from INR 105 a year back to INR 250 now, which is an insane (138%).

  2. whoever gets an opportunity to over charge ( i will not use the term cheat) doesnot leave it. any way it is free market.

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