Dubai to introduce airport departure tax from July 1

Dubai to introduce airport departure tax from July 1
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Published March 31st, 2016 - 07:00 GMT via SyndiGate.info

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Dubai International Airport has been the world's busiest airport since 2014, overtaking London Heathrow.  (Twitter)
Dubai International Airport has been the world's busiest airport since 2014, overtaking London Heathrow. (Twitter)
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Passengers flying out of Dubai will have to pay a charge of Dh35 for the use of airport facilities from July 1.

"Airlines operating in Dubai airports are tasked with collecting the fee while issuing tickets, whether in the UAE or outside the country, effective March 1, 2016, for flights departing Dubai's airports after 30 June 2016," a statement from Dubai Media Office said on Wednesday.

The exit fee resolution, approved by Shaikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Dubai Executive Council, is meant to help fund the infrastructure and expansion plans of Dubai Airports, one of the world's busiest.

From July 1, "every passenger leaving the UAE from any of Dubai's airports, including transit passengers, will be charged Dh35 as service fee for using airport facilities. Passengers below age 2 and cabin crew are exempted from the fee in addition to transit passengers whose arrival and departure flight number is the same," said the statement.

The collected fees will be transferred to Dubai Airports, and subsequently to the Dubai Government public treasury, the statement said. The proceeds from the exit fee will be used to improve Dubai's airport infrastructure and boost its capacity, which is set to reach 100 million passengers by 2023. The additional income will also support expansion projects such as the state-of-the-art Concourse D at Dubai International Airport, the expansion of Terminal 2 and the renovation of Terminal 1, the statement said.

It is the first time Dubai has announced a passenger exit fee, which is widely known as "user development fee" that is applicable at many airports worldwide.

Currently, airlines operating out of Dubai airports charge Dh75 fee towards passenger service and Dh5 towards security and safety service.

Prem Sagar, manager of Air India and Air India Express in Dubai and Sharjah, said user development fee is charged by some major airports across the world to fund expansion and upgrade of airport facilities. In India, airports in Delhi, Mumbai, Kochi and Hyderabad levy such fee. 

Saj Ahmad, chief analyst at the London-based StrategicAero Research, said with oil prices at eight-year record lows, airfares are highly fluid and competitive and a fee of Dh35 will not be enough to stifle demand to the point Emirates or flydubai is impacted. "However, if these innovative fees continue to escalate in years to come, there may be a propensity for airlines to either hike fares to cover costs or passengers will simply start using other airports. But in the interim, I don't see any negative hit on demand."

Atik Munshi, managing partner at Horwath Mak, said an additional passenger charge of Dh35 is not a figure that can deter any passenger from choosing Dubai Airport.

"The government has invested or is in the process of investing billions of dollars on the upgrading infrastructure. Any good facility comes at a cost and the consumer is well aware of this fact. To meet the 100-million passenger target of 2023, new facilities are required and part of such costs will be obviously passed to the consumer," said Munshi.

Dubai's main international airport, which had overtaken London Heathrow in 2014 to become the world's busiest airport, handled 78 million passengers in 2015.  The airport opened Concourse D this year, and expects to boost traffic to 85 million in 2016. Concourse D's opening in February has increased the airport's capacity to 90 million passengers a year. In January, 7.3 million people passed through the airport. Dubai's second airport, Al Maktoum International, has been designed to be the world's largest "airport of the future" with a capacity of 220 million passengers when fully operational.

By Isaac John

 

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