A parliamentary committee will inspect the IGI Airport run by GMR Group-led Delhi International Airport Ltd (DIAL) amid allegations that private airport operators are charging exorbitantly high user development fees (UDF) from passengers, sources said.
DIAL manages and operates the national capital’s IGI Airport under a public-private partnership (PPP) model.
Accordingly, the Parliament’s Public Accounts Committee, led by senior Congress MP KC Venugopal, will inspect the airport on Thursday.
The parliamentary committee is investigating allegations that high UDF leads to cost escalation of airlines, which is ultimately borne by passengers as high airfares.
In January, PAC had asked for a response from the Ministry of Civil Aviation on how UDF is calculated and awarded.
The committee’s visit, sources said, is expected to bring transparency and accountability to the pricing mechanisms of private airport operators.
Industry estimates show that DIAL’s average landing, parking, and UDF charges per domestic passenger are about ₹145, while Mumbai airport charges ₹375 per passenger, Bengaluru ₹478, Chennai ₹535, and Kolkata ₹637.
The inspection assumes significance as the Airports Economic Regulatory Authority of India (AERA) is considering a proposal by DIAL for a new tariff plan. The tariff cycle is five years, starting from April 1, 2024, to March 31, 2029.
Variable fee structure
Notably, DIAL has proposed higher aeronautical and non-aeronautical charges through a variable fee structure to recover expenses borne to build additional infrastructure.
The variable tariff structure proposes variable fee based on travel class and time of departure or arrival.
As per the proposal, the average aeronautical charges along with the UDF at the airport will rise to ₹370 from the current ₹145 per domestic economy class passenger.
The proposal calls for a higher UDF charge for international business class travellers compared to economy class passengers.
Peak flying hours
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.
In addition to the UDF changes, the airport operator has also proposed increases to landing and parking charges for aircraft using the airport facility.
Recently, the Chief Executive of DIAL, Videh Kumar Jaipuriar, said the proposed tariff charges will barely impact economy class domestic airfares.
“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 had 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.”
The operator has also highlighted its financial struggles, revealing that it 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.
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.
Demand depressor
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.”
The tariff plan revision takes place once every five years. AERA’s final order for tariff determination is expected in March 2025.