IndiGo, Air India oppose steep new airport charges
new delhi, May 9 -- India's top two airlines, IndiGo and Air India, are resisting proposals by the country's newest airports to raise passenger charges, warning that higher tariffs could make flying more expensive and further slow traffic growth at a time when domestic demand is already weakening due to elevated jet fuel prices.
Adani-owned Navi Mumbai International Airport Ltd (NMIAL), which started operations in December, currently levies a user development fee (UDF) of Rs.620 on domestic departures and Rs.270 on arrivals, which will remain unchanged in FY27. These charges are already significantly higher than prevailing UDF levels at several airports in India.
It has proposed to raise the fee by 20% in FY28 and by 10% annually through FY30 - resulting in a total increase of about 45% over FY26 levels. A similar increase has been proposed for international passenger charges.
Noida International Airport (NIA), which is expected to begin operations on 15 June, has proposed domestic departure user development fee of Rs.653 in FY27, rising by about 41% by FY31. International departure charges are set to rise by roughly 45% over the same period, while arrival charges could increase by about 40%. Overall, the proposed annual increases range from 7% to 17% across domestic and international passengers, for both departures and arrivals.
The user development fee is a mandatory charge levied by airports to fund the expansion and modernisation of infrastructure, such as new terminals and runways. It is included in the airfare and collected by airlines on behalf of airport operators.
The two airlines, in their submissions to the Airports Economic Regulatory Authority (AERA), argued that tariffs must remain sustainable, warning that a steep increase in UDF could push up airfares and dampen demand. Mint has reviewed the submissions.
The proposed tariffs by the new airports are substantially higher than those levied at several existing airports.
Delhi airport's current domestic departure UDF for economy fares is Rs.129, which is about a fifth of the charge proposed at Navi Mumbai and Noida. Mumbai's Chhatrapati Shivaji Maharaj International Airport, also operated by Adani, charges a domestic departure fee of Rs.175. Bengaluru's domestic departure fee is Rs.550, while Kolkata airport has a tariff of Rs.547.
The ad-hoc departure UDF that NMIAL can charge is Rs.620, while Noida airport can charge Rs.490, minister of state for civil aviation Murlidhar Mohol said in response to a question in the Rajya Sabha on 9 February. The ad-hoc levy is a temporary UDF that airports are allowed to charge passengers until the regulator finalises the rates.
The Airports Economic Regulatory Authority (AERA), the regulatory body that determines airport tariffs, is reviewing the tariffs proposed by the two greenfield airports for their first five years. For airport operators, UDF, aircraft parking charges and landing fees are among the key revenue streams used to recover capital costs incurred during airport construction.
Since UDF is built into ticket prices, airlines argue that the proposed hikes could directly affect fares and weaken demand. Discussions and consultations between airport operators, airlines and other stakeholders, including the regulatory authority, have been underway since April.
The proposed charges could dampen passenger traffic, especially when airlines are grappling with geopolitical tensions, elevated jet fuel prices and rising operating costs, Air India said in its submission to AERA, which Mint reviewed....
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