How flying from Delhi or Mumbai airports may soon get more expensive

A recalculation of airport asset values has left Delhi and Mumbai airports seeking major tariff recovery, which may raise the risk of steep fee hikes for flyers and higher operating costs for airlines

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Recently, a headline has shaken India’s aviation sector with allegations of two of the biggest private airports - Delhi International Airport Ltd (DIAL) and Mumbai International Airport Ltd (MIAL) - reportedly under-recovering as much as ₹50,000 crore from 2009-14. This gap could now be recovered from the travellers via steep increases in the User Development Fee (UDF), according to a report in The Economic Times.

 

These charges, if applied, will be steep, with fees potentially rising by as much as 22 times.

 

The trigger for the potential fee hike is a recent ruling by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which recalculated tariffs for the 2009-14 period and concluded that the two private airports had under-recovered more than ₹50,000 crore during those years.

 

The matter has returned to the Supreme Court, where the outcome will directly determine how much passengers end up paying.

What could revised airport fees look like?

 

Officials quoted by the report said UDF alone could rise 10 times in Delhi and 21-22 times in Mumbai. The potential increases could be:

Delhi Airport (DIAL):

• UDF for domestic passengers may rise from ₹129 to ₹1,261

• UDF for international passengers may rise from ₹650 to ₹6,356

Mumbai Airport (MIAL):

• UDF for domestic passengers: from ₹175 to ₹3,856

• UDF for international passengers: from ₹615 to ₹13,495

 

Airlines would also face higher landing and parking charges, costs that typically flow into ticket prices, potentially lifting overall fares.

 

Government officials quoted in the report expressed concern that passengers should not bear the burden of the long-running legal dispute, especially since airports operate as natural monopolies, leaving airlines with no choice but to pass higher charges on to travellers.

What the TDSAT order says

 

According to a disclosure report filed by GMR Airports Limited on July 2 this year, the DIAL had filed a review petition against the Supreme Court's July 2022 judgment. The court disposed of this review on December 4, 2023, directing TDSAT to re-examine the “limited issue” of the Hypothetical Regulatory Asset Base (HRAB) model computation.

 

Following the court’s direction, TDSAT issued a fresh judgment on July 1 this year and quashed the Airports Economic Regulatory Authority’s (AERA) earlier HRAB calculations. It directed AERA to recalculate HRAB afresh as on April 1, 2009 and instructed AERA to base this recalculation on the tariff-component values specified in the State Support Agreement between the government and DIAL.

 

TDSAT, which also adjudicates airport-tariff disputes, ruled that during FY09-14, the tariff calculations should have included both aeronautical and non-aeronautical assets. This marks a reversal of the tribunal’s earlier view.

Why was HRAB model adopted?

 

For that five-year period, tariff setting followed the HRAB model, adopted in 2009 by the AERA because historic data from the newly privatised Delhi and Mumbai airports was considered unreliable.

 

AERA had treated HRAB as applicable only to aeronautical assets (runways, terminals and operational facilities), and the tribunal had originally endorsed this position in 2018. The Supreme Court upheld that interpretation again in 2022.

 

However, the airport operators returned to the court with fresh material, including a 2011 Civil Aviation Ministry letter, prompting the apex court to remand the case back to TDSAT. In July, TDSAT reversed its previous stance and held that the non-aero asset base should have been included in the HRAB model from the start.

 

According to The Economic Times, this change produces a valuation gap of over ₹50,000 crore, which the tribunal says must now be recovered, primarily through higher UDF and increased airline landing and parking charges.

Why is the telecom tribunal involved in an airport-tariff issue?

 

TDSAT is a statutory tribunal that hears appeals against orders of sector regulators and the government. While it originally covered telecom disputes, Parliament later granted it jurisdiction over airport-tariff disputes from AERA.

 

AERA sets tariffs every five years, considering airport viability and efficiency, while TDSAT reviews appeals from airlines or airport operators. It does not set tariffs itself but examines whether AERA has correctly applied law, policy and concession agreements when approving fees such as UDF.

 

Over the years, operators and airlines have repeatedly challenged how AERA computed aeronautical charges and UDF, including asset valuation and till models.

What’s at stake for air travellers?

 

If the tribunal’s revised interpretation stands, the two airports would be entitled to recover about ₹50,000 crore from their first tariff cycle. Officials said that level of recovery would require a “manifold” escalation in both UDF and airline charges.

 

This is why the Civil Aviation Ministry has decided to back AERA entirely as the case proceeds in the Supreme Court, The Times of India reported. Officials emphasised that the consequences for passengers would be “immense” if the private operators’ claim is upheld.

When will the Supreme Court hear the case?

 

The matter has now returned to the Supreme Court, where a bench led by Justices Aravind Kumar and Nilay Vipinchandra Anjaria is scheduled to hear the case on December 3, The Economic Times reported.

 

The court will decide whether TDSAT’s reinterpretation of HRAB, including non-aero assets in the FY09-14 regulatory asset base, holds. Its judgment will determine whether the airports can recover the claimed amount and, consequently, whether passenger fees in Delhi and Mumbai will see the unprecedented increases as feared.