New Delhi, Feb 28: The Airports Economic Regulatory Authority (AERA) Chairperson, SKG Rahate, has dismissed claims that the User Development Fee (UDF) charged by airports significantly contributes to soaring airfares. His remarks came during a stakeholder consultation meeting on February 17, which focused on the tariff review for Delhi airport.
AERA is currently examining a tariff proposal submitted by Delhi International Airport Ltd (DIAL) for the fourth control period, spanning FY2024-25 to FY2028-29. As part of the proposal, DIAL has suggested differential UDF pricing for departing and arriving passengers. The domestic UDF would vary based on peak and off-peak hours, while international UDF charges would differ for economy and business class travelers.
During the meeting, Vijay Singh from the non-profit group CUTS questioned whether high UDF rates were driving up airfares. In response, Rahate clarified that AERA is only responsible for regulating airport charges, while airfares in India remain deregulated.
"The issue of high airfares does not fall under AERA’s jurisdiction. Moreover, it is incorrect to assume that UDF has a significant impact on airfare. The average UDF across the 29 AERA-regulated airports in FY2023-24 stood at ₹472 per passenger," Rahate stated.
The meeting minutes, published on the AERA website, highlighted that the regulatory body considers passenger interests while determining aeronautical charges to ensure the economic viability, safety, and quality of airport services.
Stakeholders Raise Concerns Over Tariff Proposals
The discussion saw mixed reactions from airline representatives and industry bodies. Air India's Amit Pandey noted that UDF charges have risen substantially, while another airline representative warned that front-loading aeronautical charges in FY26 and FY27 could lead to a sharp increase in landing, parking, and UDF fees, negatively impacting operations.IndiGo's Rajan Malhotra called for a balanced approach to cost structuring over the years. Meanwhile, SpiceJet's Poonam Yadhav pointed out that DIAL had underestimated its non-aeronautical revenue, which could affect future aeronautical charges.
Adding to the criticism, International Air Transport Association’s (IATA) Amitabh Khosla deemed DIAL’s pricing proposal discriminatory, arguing it contradicts International Civil Aviation Organization (ICAO) principles on charge non-discrimination.
DIAL CEO Estimates Airfare Impact
In a separate statement on February 26, DIAL CEO Videh Kumar Jaipuriar defended the proposed tariff revisions, estimating that they would lead to a marginal 1.5 to 2% increase in domestic airfares.As AERA continues reviewing the tariff proposal, industry stakeholders and passengers await the final decision on airport charges, which could influence future travel costs at Delhi airport.