Govt considering hike in passenger service fee, domestic airfares may rise

Aug 19 2013, 14:00 IST
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Airfares are likely to rise, as govt is considering hike in passengers services fee. (AP) Airfares are likely to rise, as govt is considering hike in passengers services fee. (AP)
SummaryHowever, the jury is still out on who will foot the bill - passengers or govt.

Airfares in the domestic sector are likely to rise, as the government is considering a hike in the passenger services fee (PSF) charged on every domestic ticket.

The levy, used to fund the cost of providing security at airports, has not been increased since 2002.

The move to increase the PSF has been initiated as the collection of funds on this count has fallen well short of the cost of providing security at airports.

“In a note to be sent to the Cabinet Committee on Security, we have suggested two options to bridge this shortfall. One is to increase the PSF to recover the deficit and the other is of government funding the deficit,” said a senior civil aviation ministry official.

The annual expenditure in providing security at airports was around Rs 1,200 crore, while the money collected through PSF was estimated at about Rs 400 crore less than the spending on security.

The official added that the note does not give any number to the proposed increase in PSF, but only proposes that an increase be allowed to take care the deficit.

“The PSF has not been increased since 2002 and that makes a case for an increase, which would not be much, to bridge the deficit.”

Every domestic passenger pays Rs 130 to fund the security being provided at airports in the country. The money collected is deposited in the respective airport operator’s account.

The PSF collected from passengers departing from private airports goes into the account of the private operator and collections from passengers using Airports Authority of India airport goes into for the government-owned airport’s account.

This collections are primarily being used towards payment of the salaries of the Central Industrial Security Force personnel manning the airports and also used for providing baggage screening and other equipment at the airports.

The shortfall and surplus in the PSF is maintained airport-wise and any shortfall is bridged by the respective airport operator. Likewise, any surplus also goes to the respective airport operator, who can only use it for purposes of security.

The airports at Kochi, Mumbai, Hyderabad and Bangalore are the four that are not able to spend all the money from their PSF earnings currently.

A senior AAI official explained that Mumbai airport will also see a deficit after their new integrated terminal gets functional. “With the new terminal getting operational, the security costs at Mumbai airport will suddenly see a huge spike,” the official said.

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