The government has authorised the Civil Aviation Authority of Nepal (Caan) to raise an extra Rs 1,000 in airport development tax per passenger in addition to existing Rs 1,130 being levied as passenger service charge on international flights departing from the TIA.

On March 1, the government had allowed the Nepal Tourism Board (NTB) to hike tourism service fee to Rs 1,130 from Rs 565 from foreigners.

From Thursday on, a tourist flying out of the TIA will have to pay Rs 3,260—almost double the charges compared to July. Nepali travellers will have to pay Rs 2,130 in taxes and fees and Rs 2,921 for all travellers flying out to the South Asian destinations.

Caan, which collects Rs 1.70 billion a year from passenger service charge at present, is expected to raise an additional Rs 1.40 billion following the enforcement of the development tax.

The development taxes collected from air travellers will be injected into projects to improve facilities at the TIA. Caan, whose total revenue stood at Rs 3.5 billion last year, has provisioned bonus to its staffers after a net profit of Rs 1.09 billion. The latest government decision will boost its revenue to around Rs 5.50 billion. The TIA generates more than 90 percent of Caan’s income.

Ratish Chandra Lal Suman, Caan director general, said the authority has come up with a massive investment plan to improve services and infrastructure at the country’s sole international airport that often comes under heavy criticism for its poor services. “We will be investing more than Rs 5 billion from the development tax at the TIA in five years,” Suman said. “Facilitation projects like complete automated baggage handling system, Airway Bridge will be launched next year.” Caan expects to raise more than Rs 7 billion from outbound travellers in five years. The projection is based on present passenger movement and expected future growth. On April 21, 2013, the Caan board had approved to impose the development tax on travellers departing from the TIA to raise funds to repay its loans and finance the ongoing improvement projects.

While approving the plan for the next five years, the Finance Ministry has directed Caan not to spend this fund on its administration cost or salaries and benefits of its employees. The ministry has instead asked Caan to set up a separate fund mechanism or bank account to be used for improving TIA facilities. “The fund will not be used even to repay our loans,” assured Suman.

“As per the government directives, we will not utilise the fund raised from the development tax to repay loans,” he said. “However, the existing fund raised for travellers facilitation will be used to repay loans of TIA including other planned regional international airports in Bhairahawa and Pokhara.”

The Asian Development Bank (ADB) has provided Caan $70 million in loan for the airport upgradation. Caan is reconstructing the TIA runway pavement and taxiway at a cost $28 million from the next fiscal year, based on a report of Ayesa Ingenieria of Spain. Repeated occurrences of cracks on the TIA’s 3,050-metre runway have affected smooth operation of aircraft since 2011.

The recent study has suggested to remove the damaged asphalt layers of the foundation and relay of lower layers of the runway. As much as 20 metres of the 45-metre width runway need to be repaired.

Except for a 9.7 percent growth in 2005, the international air passenger volume has witnessed a double-digit growth in the past 10 years. The TIA recorded the highest growth of 20.2 percent in 2010. The passenger volume is projected to cross 3.91m by 2015.