AERA to take a call on Delhi Airport tariff plan after consultation by March-end

New tariffs for Delhi Airport

Tariff revision proposals for GMR-owned Delhi International Airport Ltd (DIAL) are currently being evaluated by the Airports Economic Regulatory Authority (AERA) and the regulator is likely to take a call on  it by the end of March, multiple government officials told Moneycontrol.

"The current tariff was supposed to end on March 31, 2024. However, they were first pushed to September 30, 2024, and now till March 31, 2025. AERA has begun the process of tariff revisions and has received a proposal from DIAL which will be considered and a new tariff structure will be approved likely before the next financial year 2025-26," a senior government official told Moneycontrol.

DIAL last week submitted a proposal to the AERA, under which it has proposed charging international business and first-class passengers double the user development fee (UDF) compared to international economy and premium economy travellers over the next four financial years.

Last month Saurabh Chawla, Executive Director, Finance and Strategy, GMR Airports, told analysts during a post-earnings call that he expects the final tariff order to be notified by the regulator in the first quarter of 2025-26.

"The process is taking longer than anticipated, primarily due to additional review processes within the regulatory framework," Chawla said, adding that the airport is "closely monitoring the situation."

According to the tariff document, an international passenger travelling in business class will pay Rs 570 as User Development Fee from April 2025 double that of an economy or premium economy passenger who will pay Rs 280.

Currently, both domestic and international passengers pay a flat Rs 128 as UDF on their base ticket price. Delhi airport made revenues worth Rs 152.48 crore in fiscal 2024 from UDF.

The proposal by DIAL also suggests raising landing and parking fees for passengers traveling during peak hours, while those flying outside peak hours will incur lower charges.

Similarly, the airport is also looking to raise landing fees for narrow-body aircraft from Rs 188 to Rs 300 per metric tonne and to Rs 430 per metric tonne from Rs 210 per metric tonne for wide-body planes.

Tariff revisions typically happen once every five years. The new set of tariff revisions were expected to come from 2024, but were delayed due to the general elections in India last year and an ongoing dispute between DIAL and Mumbai International Airport Ltd (MIAL) over royalty payments from non-aeronautical services to AERA in the Telecom Disputes Settlement and Appellate Tribunal (TDSAT).

The tariff revisions come at a time when DIAL has significant capital expenditure (capex) planned for upcoming infrastructure projects. The recently completed terminal expansion at terminal 1 of Delhi necessitates higher revenue to recoup costs, and DIAL’s application specifically targets these expenses, S&P global had said in a report in December 2024.

Delhi Airport — the country's busiest — has incurred a capex in excess of Rs 12,500 crore for its major renovation and expansion of Terminal 1 infrastructure. A considerable portion of this is from borrowings.

As of December 2024, DIAL has outstanding debt exceeding Rs 15,000 crore, including a bond series of $522 million maturing in October 2026.

The Economic Survey 2024-25, tabled in Parliament on January 31, also pointed out that the Indian airport operators have spent around Rs 82,500 crore in the last five years as capital expenditure to create infrastructure, and develop the aircraft Maintenance, Repair and Operations (MRO) industry to support growth.

Delhi airport, the largest airport in India, had reported a footfall of 7.2 crore passengers in 2023-24 and has catered to 5.86 crore passengers in the first nine months of 2024-25, the company said in an investor presentation on January 28. The airport has seen passenger traffic numbers surpass pre-COVID numbers in both FY24 and FY25.

The tariff review also coincides with the expected operationalisation of secondary airports in Noida in 2025. These new airports could introduce competition and impact user-development fees at established airports.

India’s regulatory framework generally allows airports to recover reasonable investment costs, increasing the likelihood of approval, S&P Global said in its report.

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, debt servicing amid continued losses, as reasons for the proposed increase in tariff.

Delhi Airport has made losses in recent quarters and projects further losses exceeding Rs 1,500 crore for the current fiscal.

In the next four years, the average aero revenue per passenger is projected at Rs 370, with Rs 346 for fiscal 2026 and Rs 360 for fiscal 2027.

Given this revenue and expected traffic, DIAL is likely to incur losses in these two years as well, it said. Due to these losses, Delhi Airport may face credit rating issues, making it difficult to raise additional debt to meet repayment obligations due in October 2026, it stated in its submission to AERA.

Delhi Airport has submitted both its consultation paper as well as the tariff plan to AERA, and is now released for public review. A stakeholder’s consultation meeting is scheduled on February 17, while the last date for submitting comments and counter-comments is March 3 and March 13, respectively. After taking feedback, the regulator will announce the new tariffs.