Delhi airport fee hike for business-class flyers sparks fairness debate

Starting April 16, business-class passengers flying international from Delhi airport will have to pay more. In a first such move by an Indian airport, the Airports Economic Regulatory Authority (AERA) has accepted the proposal of Delhi International Airport Ltd (DIAL), the airport’s operator, to allow it to charge a higher user development fee (UDF) based on the class one flies.  

The decision, announced on March 28, has sparked an intense debate over whether such aeronautical charges are fair. During discussions with AERA, the International Air Transport Association (IATA) had strongly opposed the DIAL’s proposal for class-based and peak hour-based UDF, calling it “unnecessarily complex and discriminatory”.  

According to AERA, passengers leaving on international flights in economy class will have to pay a UDF of ₹650, while international business class passengers will be charged ₹810. Those arriving at the Delhi airport on an international flight will also have to pay a UDF that wasn’t charged earlier: ₹275 for economy class and ₹345 for business class. 

However, the regulator denied GMR Group-led DIAL's request to impose a higher UDF on domestic business class passengers compared to domestic economy passengers. AERA also outright rejected DIAL's proposal to implement higher, peak-hour UDF on passengers travelling between 5 am and 8:55 am, and 5 pm and 8:55 pm. 

In February, DIAL stated that the increase would raise final airfares by no more than 1.5 per cent on average. IATA, however, contended that restructuring charges in this manner violates the non-discrimination policies of the International Civil Aviation Organisation (ICAO) and breaches DIAL’s Operation, Maintenance, and Development Agreement (OMDA) with the Airports Authority of India (AAI).

 

IATA’s objections 

During discussions with AERA, IATA argued that DIAL's proposal unfairly differentiates charges based on factors such as travel time (peak versus non-peak) and class (economy versus business), disproportionately affecting certain operators and passengers. The association stressed that increasing charges during peak hours would not necessarily shift airline operations to off-peak times since flight schedules are dictated by passenger demand and complex scheduling constraints. 

IATA also pointed out that non-aeronautical revenues, such as retail and food sales, are naturally higher during peak hours, which should, in theory, result in lower — not higher — UDF during those periods. 

Another major concern raised was the potential impact on airport slot allocation. IATA cautioned that DIAL’s proposed tariff system could compromise transparency, giving DIAL excessive control over slot determination. The Ministry of Civil Aviation’s slot allocation guidelines emphasise neutral, transparent, and non-discriminatory practices, which, IATA argued, the new UDF structure would undermine. 

While IATA opposed the changes, major Indian airlines such as SpiceJet, IndiGo, and Air India, all IATA members, did not explicitly voice their stance on differential UDFs before AERA. 

DIAL’s justification 

DIAL defended its proposal to AERA on the grounds that charging different fees for peak and non-peak passengers aligns with global norms and encourages optimal airport resource utilisation. The operator stated that airport infrastructure worldwide is designed around peak-hour demand, following ICAO and inter-ministerial group (IMG) standards. 

DIAL also pointed out that differential pricing based on demand is a widely accepted international practice. It cited examples such as Singapore Changi Airport, which offers up to 40 per cent discounts on landing charges during off-peak hours. Similarly, Hong Kong Airport has been levying higher charges on business-class passengers since 2016, and Manchester Airport applies peak-hour surcharges, it said. 

Rejecting allegations of the practice being discriminatory, the operator maintained that higher charges for peak hours are justified and necessary, including for infrastructure development and debt servicing. 

Defending its rationale behind imposing different UDFs on first- and business-class passengers, DIAL argued that premium travellers receive additional facilities such as dedicated lanes for check-in, security, immigration, and boarding. 

The operator insisted that such a pricing structure does not contradict ICAO regulations, but instead helps ease the financial burden on economy-class travellers, including families and students.  

Support flies in 

DIAL’s proposal has received backing from other private airport operators.  

Adani Airport Holdings Ltd, which manages seven airports, called it beneficial for all stakeholders and crucial for financial viability. 

Bangalore International Airport Ltd (BIAL), which operates Bengaluru Airport, also supported the tariff proposal. “We fully support the rate card proposed by DIAL as it considers peak and off-peak airport usage, which is key to maximising infrastructure efficiency. Additionally, differentiating UDF for economy and business-class passengers aligns pricing with facilities provided at the airport,” BIAL told AERA. 

The operator of the upcoming Noida Airport, which will compete with Delhi airport when its commercial flight operations begin later this year, also said that it supports DIAL’s tariff proposal “in principle”. 

The Association of Private Airport Operators, too, echoed this sentiment, and urged AERA to approve the plan to safeguard Delhi airport operator’s financial viability and credit rating, which is crucial for refinancing its loans. 

AERA’s final call 

While AERA has approved the revised UDFs, setting charges at ₹650 for international economy passengers and ₹810 for international business class passengers, these rates are significantly lower than DIAL’s original proposal. The operator had suggested a UDF of ₹810 for international economy passengers in 2025-26 and 2026-27, reducing it to Rs 430 in the following two years. For international business class passengers, DIAL had proposed ₹1,620 in 2025-26 and 2026-27, dropping to ₹860 in 2027-28 and 2028-29. 

AERA justified the class-based differentiation, citing the additional as well as premium services provided to business-class passengers, which are unavailable to economy passengers. The regulator pointed out that such pricing structures are common at international airports, including Hong Kong, where fees vary based on travel class and distance.  

However, it rejected the proposal for peak-hour-based UDF, agreeing with IATA that such a model would pose operational challenges. It acknowledged that time-based tariffs are a new concept in India and could be difficult to implement, especially since airport operators themselves allocate airline slots. 

Furthermore, AERA opted to retain the current UDF of ₹129 for domestic departing passengers, who account for the majority of air traffic. The regulator determined that further bifurcation into peak and non-peak rates would be impractical due to implementation complexities, including necessary modifications to airport and airline IT systems and invoicing systems. It also expressed uncertainty about airlines’ readiness for such changes on short notice. 

For now, DIAL has scored a partial victory. 

CLASS ACT

  *  From April 16, international business- class passengers departing from Delhi airport will pay ₹810 as user development fee (UDF), while economy-class passengers will pay ₹650

 

*  For the first time, arriving international passengers will also pay UDF: ₹275 for economy, ₹345 for business class

 

*  The International Air Transport Association has opposed class-based and peak hour-based UDF, calling it discriminatory and a violation of global aviation norms

 

*  Delhi airport operator DIAL argues that premium passengers receive added services, justifying higher fees; cites global examples of similar pricing

 

*  The Airports Economic Regulatory Authority has approved the class-based UDF but rejected peak-hour pricing, citing operational challenges