New Delhi: The Supreme Court on Tuesday said airport operators in New Delhi and Mumbai cannot levy development fees on passengers unless the charges are approved by the airports regulator.

The aviation ministry in 2009 had allowed operators of the New Delhi and Mumbai airports to charge a development fee from passengers from April 2009 till 2012 to partly fund modernization of the airports.

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Overseas fliers were asked to pay 1,300 and domestic passengers were to pay 200 every time they flew from New Delhi. In Mumbai, the fees were 600 and 100. This would have allowed the operators to collect 1,827 crore in Delhi and 1,543 crore in Mumbai.

India’s Airport Economic Regulatory Authority (Aera) has approved of the charges at Delhi airport, but is yet to clear the fees levied in Mumbai. The modernization of Mumbai airport will be completed in 2012 and the project costs will be finalized then.

Shares of the operator companies fell after the apex court’s decision. GMR Infrastructure Ltd, which leads the groups that runs the Delhi airport, dropped 3.4% to 38.4, its lowest close since 28 March. GVK Power and Infrastructure Ltd, which heads the consortium operating the Mumbai, airport slid 4.8% to 25, its steepest decline since 7 March.

The court’s ruling places a question mark on 1,530 crore the aviation ministry allowed the Mumbai airport operator to collect from passengers till 2012.

“Aera would have to pass an appropriate order for continuation of the ADF (airport development fee) at Mumbai airport," Mumbai International Airport Pvt. Ltd said in an emailed response.

A bench comprising justices R.V. Raveendran and A.K. Patnaik ruled in favour of the Consumer Online Foundation, a non-governmental organization that had filed a public interest case against the levy of the fees on passengers.

The court reasoned that the fee could only be levied by the Airports Authority of India (AAI) under the law and not by private companies such as the GMR and GVK, since it was in the nature of a tax.

The court directed that the fees collected at Delhi airport be used only for development under the oversight of AAI, which holds a 26% state in Delhi International Airport Ltd.

The court also said fees collected so far need not be refunded as it would be an impossible task to reach all the affected passengers.

The International Air Transport Association, an international grouping of airlines, said the judgement was consumer friendly.

“We welcome the decision by the Supreme Court. The ADF is essentially a tool for pre-financing of airport development projects. It increases the costs of air travel while passengers are made to pay for facilities that they do not use," spokesman Albert Tjoeng said. “Today’s development is a step in the right direction for Indian aviation."

Bloomberg contributed to this story.