Why your next flight from Delhi or Mumbai could be dramatically more expensive

Delhi airport

Travellers flying from India’s two busiest aviation hubs could face steep increases in airport fees, following a protracted legal dispute that has left airport operators claiming over Rs 50,000 crore in under-recovered charges from a period over a decade ago.

The contentious issue stems from a recent order by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which has recalculated tariff formulas for the financial years 2009 to 2014. The ruling, as reported by ET, has created a massive financial liability that the private operators of Delhi’s Indira Gandhi International Airport and Mumbai’s Chhatrapati Shivaji Maharaj International Airport now seek to recoup.

This recovery would reportedly be achieved through elevated User Development Fees (UDF) charged to passengers, alongside increased landing and parking fees levied on airlines, costs that are ultimately expected to be passed on to consumers through higher airfares. Industry analysts warn this could dampen passenger growth, which has been robust in recent years.

The core disagreement centres on which airport assets should be factored into the tariff-setting process. The Airports Economic Regulatory Authority (AERA), which determines airport charges every five years, had considered only core aeronautical assets like runways and terminals for the 2009-2014 control period.

The airport operators — GMR Group for Delhi and the erstwhile GVK Group (now operated by Adani Group) for Mumbai during that timeframe — contended that the valuation should also include revenue-generating non-aeronautical assets such as lounges, car parks and duty-free shops. The TDSAT’s order has sided with this broader interpretation, leading to the substantial claimed shortfall.

Amid public concern over potential spikes in ticket prices, sources familiar with the proceedings have clarified that the Rs 50,000 crore sum, if approved for recovery, would not result in an immediate, dramatic hike.

“The Tribunal ruling itself had stated that 60% could be recovered from the airlines and 40% from the passengers,” a source was quoted as saying by The New Indian Express. “If the operators get a verdict in their favour, this would be implemented over a period of ten years and not instantly as is being misinterpreted. The UDF would only double over a period of time.”

This means the increased charges would be spread across two subsequent five-year regulatory periods, effectively smoothing the financial impact on passengers, though still resulting in a significant cumulative rise.

The AERA, alongside domestic and international airlines, is vigorously opposing the proposed hikes. The airlines argue that absorbing such costs would severely impact their financial health, especially in a competitive market. The regulator’s opposition sets the stage for a pivotal legal showdown, with the matter scheduled for a hearing before the Supreme Court on December 3.

Currently, UDF charges are a component of every ticket. At Delhi airport, domestic passengers pay Rs 129, while international economy and business class departures incur fees of Rs 650 and Rs 810, respectively. Mumbai airport charges Rs 175 for domestic flyers and Rs 615 for international passengers.

The TDSAT order represents the latest chapter in a long-running financial and regulatory tussle. While the Delhi airport implemented a separate UDF increase earlier this year, the current dispute is specifically tied to the historical tariff period from 2009-2014.