The national capital-based IGI Airport’s proposed new tariff plan will minimally impact airfares while adding future-ready infrastructure to support international traffic growth, a senior airport official said on Wednesday.
Accordingly, the Chief Executive of Delhi International Airport Ltd (DIAL) Videh Kumar Jaipuriar said the proposed tariff charges will barely impact economy class domestic airfares.
The airport operator (DIAL) manages and operates the national capital’s IGI Airport under a public-private partnership (PPP) model.
Currently, the Airports Economic Regulatory Authority of India (AERA) is considering this proposal meant for the fourth control period. The tariff cycle is five years, starting from April 1, 2024, to March 31, 2029.
Notably, DIAL has proposed higher aeronautical and non-aeronautical charges through a variable fee structure to recover expenses borne to build additional infrastructure.
The tariff structure proposes variable fees based on travel class and time of departure or arrival.
As per the proposal, the average aeronautical charges along with the user development fee (UDF) per domestic economy class passenger at the airport will rise to ₹370 from the current landing, parking, and UDF charges of about ₹145.
Business-class vs economy-class
“We expect the new tariff card to have a 1 to 1.5 per cent impact on domestic economy class airfares. The economy class international airfares will be impacted even less by 0.5 per cent,” he said.
“The proposed tariff card based on a variable tariff structure is in line with international practices. The proposed charges will enable us to create infrastructure that will support the sector’s international traffic growth.”
According to Jaipuriar, the economy-class travellers will be charged a lower UDF than business-class flyers, and the move will help decongest the airport during peak hours and offer affordable fares during non-peak hours.
“We have been charging the same UDF since 2006. The proposed rise is still among the lowest in India and internationally in terms of UDF charges,” Jaipuriar said.
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At present, industry estimates show that Mumbai airport charges ₹375 per passenger, Bangalore ₹478, Chennai ₹535, and Kolkata ₹637.
Under the proposed tariff plan, the airport operator plans to front-load funds for infrastructure development by charging higher UDF rates during 2025-26 and 2026-27, followed by lower rates in subsequent years.
The proposal calls for a higher UDF charge for international business class travellers compared to economy class passengers.
For domestic flights, different rates will apply depending on whether passengers travel during peak or non-peak hours. The peak flying hours have been designated as 5:00 am-8:55 am and 5:00 pm-8:55 pm.
The proposed UDF rates for domestic passengers during peak hours will range from ₹315 to ₹610 for embarking passengers and ₹115 to ₹210 for disembarking passengers.
In contrast, international economy class travellers will be charged between ₹430 and ₹810, while business class passengers will face fees ranging from ₹860 to ₹1,620.
Besides, the disembarking international passengers will be charged a UDF of ₹280 (economy) and ₹570 (business class).
In addition to the UDF changes, the airport operator has also proposed increases to landing and parking charges for aircraft using the airport facility.
‘Hike crucial to beat losses’
Jaipuriar noted that the additional revenue generated from the UDF hike will be crucial for the airport’s further development, particularly as it prepares to handle a growing number of international operations.
The operator has also highlighted its financial struggles, revealing that the airport operator has been incurring significant losses.
Estimated losses for the current financial year are expected to exceed ₹1,500 crore. The company has invested heavily in the Phase 3A expansion project, with capital expenditures totalling over ₹12,500 crore, largely financed through borrowings.
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As of December 2024, DIAL’s outstanding debt stands at over ₹15,000 crore, with a significant bond repayment of $522 million due in October 2026.
On the other hand, the domestic airline industry has opposed the proposed tariff hike, citing the move as a “demand depressor”.
The industry has termed the proposed tariff structure as “excessively complex” and “onerous on both passengers and airlines”.
At a recent stakeholders meet organised by AERA, IndiGo, Air India, and airline associations, including IATA (International Air Transport Association) and the FIA (Federation of Indian Airlines) opposed DIAL’s proposal.
The tariff plan revision takes place once every five years. AERA’s final order for tariff determination is expected in March 2025.
