India - Realty slump may make flying costlier

NEW DELHI: The current slump in the realty business could make flying out of Delhi more expensive. The improbable correlation between the two has come up in a letter from the GMR-led Delhi International Airport Pvt Ltd (DIAL) to the aviation ministry. DIAL's case is simple - it had planned to fund the Rs 8,975-crore airport project (Phase I) by raising Rs 2,739 crore from real estate projects within the larger airport area, specifically from a hotel district, by charging security deposits from successful bidders. Now, with the real estate business taking a beating, DIAL sent a letter on Tuesday to the ministry in which it said much less was expected to come from the hotel district - in fact, it could be just Rs 1,200 crore to Rs 1,400 crore. To cover the shortfall of nearly Rs 1,500 crore, the consortia has sought permission to charge Rs 1,000 and Rs 300 (excluding taxes) from each outgoing international and domestic flyer as development fee for three years from January 1, 2009, to December 31, 2011. In addition, DIAL has sought a user development fee (UDF) for 12 years - January 1, 2012, to December 31, 2023, - from outgoing passengers. Passengers flying out of the new Hyderabad and Bangalore airports also pay a UDF as one of the ways to recover the investments made by the private developers. So in all, flying out of Delhi may entail an extra cost for 15 years from next January if the government accepts DIAL's proposal. DIAL's shortfall from the 45-acre hospitality district is due to a number of reasons. When the plan was floated last year, the consortia had decided to take six years' annual lease rental as refundable security deposit from successful bidders selected to build nearly 3,000 rooms across all categories - budget to super luxury.