Airports recover the costs of building new infrastructure, such as terminals and runways, from passengers and airlines even before the development is operational. India's airport tariff regulator, the Airports Economic Regulatory Authority of India (Aera), wants to change this practice. Mint breaks down the proposal and its implications:
What has Aera proposed to change?
Airports recover their investment through the user development fee (UDF), paid by passengers and through other charges, such as landing and parking fees, paid by airlines. Airlines usually pass these costs on to consumers in ticket prices.
Aera’s proposal does not change this process. It changes only one thing: large infrastructure projects would be included in airport tariffs only after they become operational.
So if a new runway is commissioned in the third year of the project, the UDF the passenger will be charged will be adjusted starting from the third year. Not earlier years. If the runway does not come up as promised or is delayed, the passenger will not be charged for it.
What are Bengaluru and Hyderabad airports proposing?
The Bengaluru airport, which is investing ₹18,635 crore between FY27 and FY31, has suggested lowering UDF and airline charges by 18% in the initial years, then gradually raising them as new infrastructure becomes operational, keeping tariffs broadly stable over the control period. They want to keep the UDF range-bound, so that even when hiked, it does not increase beyond a threshold.
The Hyderabad airport, which is investing nearly ₹14,000 crore in expansion until 2031, has proposed reducing UDF by 23% for departing domestic and international passengers. But it has sought to levy charges on domestic and international arrivals to offset the reduction. This way, the GMR-run airport’s revenue remains unaffected, but the burden of the UDF is shared.
Both proposals are yet to receive final regulatory approval.
Will your tickets become cheaper?
Not immediately.
Airport charges are only one part of an airline’s operating costs. Fuel, aircraft leasing, salaries and taxes also determine ticket prices.
However, the proposal means passengers may no longer pay the UDF or other airport charges for projects that are still under construction.
Once a new terminal or runway opens, airport charges may rise as operators begin recovering those investments. In other words, the proposal delays the recovery of costs—it does not eliminate them.
What are airport operators saying?
Airport operators are not convinced.
Fairfax-controlled Bangalore International Airport Ltd says recovering tariffs during construction is important because airports need steady cash flows to finance large projects and repay loans.
It argues that delaying tariff recovery could make financing more difficult.
GMR, which runs the Hyderabad airport, argued during a 6 July meeting that while it respects Aera’s proposed “user-pay” or incremental ARR (aggregate revenue requirement) principle, implementing it within the existing regulatory framework will create practical and financial challenges.
It said recovering costs only after large assets are commissioned could lead to a sharp increase in tariffs in the later years of the control period.
What are airlines and passenger groups saying?
Passenger groups have welcomed Aera’s proposal.
The Air Travellers Association (ATA) says passengers should pay only when infrastructure is ready, comparing it with paying toll only after a highway is opened. It also argues that airport assets, such as terminals, last for decades, so their costs should not be recovered over just one five-year tariff cycle.
Air India has taken a more balanced position. While supporting airport expansion, it has warned that revising the UDF several times in a year could confuse passengers and complicate airline operations.
Overall, Aera’s proposal seeks to shift the burden of paying for airport expansion closer to the time when passengers actually begin using the new infrastructure—a change that could reshape how India’s major airports are funded in the years ahead.
Which airports charge the highest UDF?
Domestic departing passengers currently pay widely different UDFs depending on the airport.
Among the highest are: Srinagar: ₹1,050, Lucknow: ₹950, Jaipur: ₹875, Patna: ₹865, Kannur and Bhubaneshwar: ₹850, Goa and Trivandrum: ₹840, Hyderabad: ₹750, Mangaluru: ₹735, Navi Mumbai: ₹620, Bengaluru: ₹550 and Noida International Airport: ₹490.
Among the lowest are: Delhi: ₹129; Mumbai: ₹175, and Chennai: ₹455.