AERA approves MIAL proposal of class-based UDF for Mumbai airport passengers

AERA after carrying out a thorough examination of the proposals submitted by Mumbai International Airport Ltd (MIAL) arrived at a significantly lower Aggregate Revenue Requirement (ARR) for the Chhatrapati Shivaji Maharaj International Airport in Mumbai and has approved a 21.65 percent increase in existing airport charges, the regulator said in a statement on May 8.

Passengers flying in and out of the Mumbai International Airport will have to shell out up to Rs 695 as a user development fee from May 16, following the airport tariff regulator Airports Economic Regulatory Authority (AERA) allowing the airport operator to revise the fee.

While domestic passengers will pay upto Rs 175 as user development fee and Rs 75 for disembarking under the revised tariff plan of Mumbai airport for the for the May 16, 2025 to March 31, 2029 fourth control period, an embarking international business class passenger will have to shell out Rs 695 as against Rs 615 by the international embarking economy class passenger, as per AERA.

Each disembarking international business and economy class passenger will have to pay Rs 304 and Rs 260, respectively. The regulator further said the differential charges for economy and business class passengers align with the 'user pays' principle and reflect the enhanced passenger experience and expanded facilities available and used by international travellers.

“The landing and parking charges for the airlines have also been rationalised downwards and kept at reasonable levels, considering competitive airport charges at similar airports. This ensures that airline operations are not unduly burdened, and that operational efficiency is maintained,” AERA said in a statement.

AERA after carrying out a thorough examination of the proposals submitted by Mumbai International Airport Ltd (MIAL) arrived at a significantly lower Aggregate Revenue Requirement (ARR) for the Chhatrapati Shivaji Maharaj International Airport in Mumbai and has approved a 21.65 percent increase in existing airport charges, the regulator said in a statement on May 8.

AERA has also asked MIAL to review the date for demolition of Terminal 1 in consultation with the Civil Aviation Ministry. This follows stakeholder suggestions for a phase-wise demolition of the terminal. Initially, MIAL had proposed to close terminal 1 from October end for the purpose of redevelopment and that would require airlines to shift traffic to terminal 2 and the Navi Mumbai airport.

The AERA has the mandate to determine all tariffs for major airports in the country. An airport which has or is designated to have a capacity of 3.5 million passengers per annum or above falls in the category of major airports.

User development fees are directly borne by passengers, while other aeronautical charges are collected from airlines, which fix their fares based on their operating costs.

MIAL last month submitted a revised proposal to the AERA, under which it has proposed increasing the user development fees (UDF) for both domestic as well as international passengers.

While currently there is no UDF on domestic passengers, MIAL wanted to charge Rs 325 per domestic departure, and increase the existing fee of Rs 187 per international passenger to Rs 650.

AERA had turned down MIAL's first demand for a 675 percent increase in user fees (from Rs 187 per international passenger to Rs 1,450 international passenger) for a five-year period between 2024-2029 and had instead proposed only an 18 percent rise in fees, rationalising certain planned capital expenditure for an airside tunnel and corporate office building among others.

The authority’s proposals were open to stakeholder consultation and public comments in March 2025.

MIAL, as part of its revised plan, proposed to reduce airline landing and parking charges by about 35 percent, in order to strike a balance between infrastructure enhancement and sustain world-class airport operations, and help offset the proposed hike in UDF.

Regulator AERA sets a five-year revenue target for the airport, based on operating costs, depreciation, non-aeronautical revenues, and taxes, along with the associated charges for the airport operator. The airport operator has cited higher capex and debt servicing amid continued losses as reasons for the proposed increase in tariff.

Adani Airport Holdings Ltd (AAHL) manages seven airports and has also developed the Navi Mumbai airport. Currently, AAHL manages seven airports at Mumbai, Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram.

Adani Airport had added that the current Yield Per Passenger (YPP) at CSMIA stands at Rs 285, and if its proposal to hike UDF is accepted by AERA, the YPP of CSMIA will rise to approximately Rs 332, representing an 18 percent increase, which is in line with the Consultation Paper issued by AERA on 10 March 2025.

"Over the next five years, the airport will invest Rs 10,000 crore in the creation of airport infrastructure and recover a total revenue of Rs 7,600 crore from an expected 229 million passengers, which translates to a balanced approach in revenue recovery. The new tariff structure proposes to strategically shift the revenue mix, with an increase in UDF while reducing landing and parking charges by 35 percent," the company had said.

As part of the proposed Rs 10,000 crore capital expenditure planned for MIAL, AAHL will redevelop Terminal 1 at CSMIA to enhance structural integrity, capacity, and seamless travel. Terminal 1A and 1B were built 30 and 60 years ago, respectively, AAHL said in the statement.

Mumbai airport’s domestic Terminal 1 in Vile Parle is likely to be shut down for reconstruction from November 2025. The redevelopment plan will involve demolishing the current structure and replacing it with a modern one.

The entire renovation project is expected to take about three years, with the new terminal anticipated to be ready by 2028-2029. Once completed, the new Terminal 1 will have the capacity to handle 20 million passengers annually, a significant 42 percent increase from its current capacity.

AAHL also proposed to expand the capacity of MIAL's Terminal 2 (T2) by adding self-baggage drop systems, CTIX hand baggage screening, and full-body scanners to streamline security checks and improve passenger flow.