AERA’s New Rule Could Save RGIA Flyers Money
HYDERABAD: Hyderabad’s airport already charges passengers the steepest User Development Fee (UDF) in India — Rs 700 for domestic flyers and Rs 1,500 for those travelling internationally. That could soon change in the flyers’ favour, with a new tariff mechanism proposed by the Airports Economic Regulatory Authority (AERA) aimed at keeping fees from rising further.
At the heart of the proposal is a concept AERA is calling the User Pay Principle. Simply put, airports would only be allowed to charge users for infrastructure that is actually built, operational and in service — not for projects still on the drawing board. This is a departure from how tariffs are currently set, where airports can bake in expected capital spending for an entire five-year cycle, often resulting in fee hikes long before any new facility opens to the public.
For Rajiv Gandhi International Airport (RGIA), the timing is significant. The airport is in the middle of two expansion projects worth over Rs 9,000 crore — a new northern terminal designed to handle 20 million passengers annually, and a separate airside development featuring a new runway along with taxiways and aprons. Both are years away from completion, with commissioning unlikely before 2029-30. Under the earlier tariff system, passengers could have started paying toward these projects well before either was ready for use.
AERA’s reasoning centres on fairness. Charging passengers for facilities that don’t yet exist, the regulator said, creates cost allocation problems and runs counter to global aviation norms — pointing specifically to the International Civil Aviation Organization’s stance that airport fees should reflect services actually rendered.
There’s also a track record driving the change. According to AERA, multiple large-scale airport projects in the past faced delays, revisions or were shelved entirely, even after being written into tariff calculations upfront. The result: passengers sometimes ended up footing the bill for infrastructure that never came through, while airport operators still collected revenue tied to those unrealised plans.
AERA’s fix is a new evaluation method it’s calling the Incremental Annual Revenue Requirement (ARR) approach, meant specifically for large-scale expansion works. Instead of bundling future project costs into tariffs from day one, each major project would be assessed individually — its cost, funding structure and construction schedule — with fee revisions kicking in only once the project is finished and functional.
The proposal lands at a time when RGIA’s traffic keeps climbing. The airport now connects to 100 destinations — 74 within India and 26 abroad — and moved 30.48 million passengers through FY 2025-26, translating to more than 83,500 passengers and 569 flight movements every single day.
