No respite from steep user fee at Bengaluru airport as AERA allows Rs 550 for domestic, Rs 1,500 for international passengers till March 2026

Bengaluru airport

Airports Economic Regulatory Authority of India (AERA) has allowed Bengaluru’s Kempegowda International Airport (KIA) to continue levying its existing aeronautical charges, including the steep user development fee (UDF), till March 31, 2026.

Under the tariff card applicable from April to December 2025 - which will now remain in force for the January-March 2026 quarter as well - UDF is fixed at Rs 550 per domestic embarking passenger and Rs 1,500 per international embarking passenger. Landing charges stand at Rs 715 per tonne (up to 100 metric tonnes) for international flights and Rs 510 per tonne for domestic flights, with higher slabs applicable for heavier aircraft.

Lower Q4 tariffs not implemented

As per AERA’s amendment order dated November 14, 2015, UDF rates, landing, parking and UDF rates approved for April-December 2025 will continue till the end of FY 2025-26. This effectively means that the lower tariff levels originally proposed for January-March 2026 quarter - including a reduced UDF of Rs 385 for domestic and Rs 1,050 for international passengers - will not be implemented.

AERA clarified that BIAL will continue charging the existing rates till March 31, 2026, through this amendment to its August 28, 2021, tariff order.

Why AERA allowed status quo

The decision follows a letter from Bangalore International Airport Ltd (BIAL) dated September 24, 2025, in which the airport operator urged the regulator to maintain tariffs for the fourth quarter of FY 2025-26.

BIAL cited significant capital expenditure requirements as it develops Bengaluru into a hub airport and expands capacity from 51.5 million passengers per annum (MPPA) to 80 MPPA by 2031. It also flagged under-recovery of aeronautical revenue during the third control period, attributing it to a higher share of transfer passengers, which yield lower per-passenger revenue.

The operator further pointed to a likely decline in traffic during FY 2025-26 to around 46 million passengers, compared with the earlier projection of 49.4 million.

AERA’s rationale

In its amendment order, AERA noted that while overall passenger and cargo traffic were broadly in line with projections, the growing proportion of transit passengers had depressed aeronautical revenues, leading to under-recovery.

Allowing the continuation of existing tariffs in the final quarter of FY 2025-26 would help partially offset this revenue gap and reduce associated carrying costs, the regulator said. This, in turn, could help moderate airport charges in the upcoming fourth control period, despite substantial capital expenditure and past revenue shortfalls.

AERA added that BIAL has already submitted its Multi-Year Tariff Proposal (MYTP) for the fourth control period (FY 2026-27 to FY 2030-31), and PricewaterhouseCoopers has been appointed as the independent consultant to examine the proposal.

 Passengers oppose the move

The decision has drawn criticism from regular air passengers. “KIA has seen very good growth in passenger volumes and cargo over the last few years. Non-aeronautical commercial revenue has also picked up inside and outside the terminals. Considering these aspects, it is natural that UDF reduction should have followed the August 2021 order. It is surprising that AERA has allowed the same UDF to continue,” said Sanjeev Dyamannavar, who regularly participates in AERA consultations on airport tariffs in Bengaluru.

“With the Karnataka government exploring a second airport for Bengaluru, BIAL also needs to be sensitive to the impact of high UDF on passengers. AERA should complete the fourth control period consultation and reduce the UDF,” he added.

BIAL’s capex plan

For the fourth control period, BIAL has proposed capital expenditure of around Rs18,600 crore for terminal expansion, airside and landside infrastructure, and related works. The investments are aimed at catering to projected traffic of 72 MPPA by FY 2030-31.

A Bangalore International Airport Limited (BIAL) spokesperson in a statement said: "The continuation of the existing UDF is fully in accordance with AERA's prevailing tariff order and established regulatory practice".

"Under the tariff framework, any temporary adjustment to charges is typically considered only in the final quarter of a control period. This allows airports to submit their Multi-Year Tariff Proposal (MYTP) in a timely manner, provides the regulator sufficient time to undertake due diligence and notify tariffs for the next control period, and ensures that there is no risk of over-recovery", it said.

"BIAL has submitted its MYTP for the upcoming financial year well in advance. Based on the current assessment, there has been no over-recovery at KIA Bengaluru. In the absence of any regulatory basis for a reduction at this stage, AERA has therefore continued the existing UDF for the concluding quarter of the current financial year (FY 2025-26)", it adds.