A controversial and widely unpopular Airport Development Fee (ADF) levied on domestic and international passengers flying out of Delhi and Mumbai airports will end on December 31, 2012. Minister for Civil Aviation, Ajit Singh, has directed Delhi International Airport Ltd (DIAL) and Mumbai International Airport Ltd (MIAL) to abolish Airport Development Fee at the two airports from January 1, 2013.

But there is a twist. The shortfall presented by eliminating the Airport Development Fee will now need to be recouped in other ways by the respective airport authorities.

The Airport Development Fee is just one of two fees currently imposed on passenger plane tickets for flights departing from either airport, the other being a User Development Fee (UDF) is charged. The Airport Development Fee is levied to meet the cash flow requirements during renovation or modernization of an airport project whereas a User Development Fee is charged for using the completed facility.

The Airport Development Fee at Delhi Indira Gandhi International Airport is Rs 200 per domestic passenger and Rs 1,300 per international passenger. Passengers flying from Mumbai Chhatrapati Shivaji International Airport are charged Rs 100 per domestic flights and Rs 600 per international flight.

With the elimination of the Airport Development Fee, Delhi and Mumbai airports will need to fund the shortfall in revenue presently earned through the ADF. Airlines will be hit with a combination of hikes in landing and parking charges while ticketed passengers will see an increase in the User Development Fee.

Passengers unaware of the various taxes will likely not see much of a change in fare prices.