AERA calls for stakeholders consultation next week on Mumbai Airport UDF hike

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.

The Airports Economic Regulatory Authority of India (AERA) has called for a stakeholders consultation meeting on the proposed hike in user development fees (UDF) by Adani Airport owned Mumbai International Airport (MIAL).

A stakeholder’s consultation meeting is scheduled on April 2, while the last dates for submitting comments and counter-comments are April 10 and April 13, respectively. After taking feedback, the regulator will announce the new tariffs, likely by the end of April.

The meeting is part of AERA's consultation process for putting a new tariff structure in place for the Chhatrapati Shivaji Maharaj International Airport (CSMIA) in Mumbai by the end of April and roll out the new tariff.

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 wants to charge Rs 325 per domestic departures, 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 last month.

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.

"This reduction is expected to positively impact airfares from Mumbai, enabling airlines to manage costs more efficiently and maintain competitive ticket prices," the company said in a statement on March 18.

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 also developed the Navi Mumbai airport. Currently, AAHL manages seven airports at Mumbai, Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram.

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.

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.

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 Consultation Paper issued by AERA on 10 March 2025.

"Over the next five years, the airport will invest Rs 10,000 crore in 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 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 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.