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Airport regulator AERA has reduced the User Development Fee (UDF) at Bengaluru airport to INR 300 for departing domestic passengers and INR 997 for departing international passengers for the current five-year control period. The revised charges will take effect from September 1, 2026. AERA has also introduced the incremental Average Revenue Requirement framework for the first time, allowing the airport operator to recover costs of major capital projects only after they are completed and commissioned. The regulator said the approach would prevent passengers from paying upfront for airport infrastructure that is not yet operational.
Airport regulator AERA has sharply reduced the User Development Fee (UDF) at Bengaluru international airport, fixing it at INR 300 for departing domestic passengers and INR 997 for departing international passengers for the five-year control period ending March 2031.
The revised UDF will be applicable from September 1, 2026. The domestic fee is lower than the existing INR 550 and the INR 450 proposed by airport operator Bangalore International Airport Ltd (BIAL). The international UDF has been fixed at INR 997, compared with the existing INR 1,500 and BIAL’s proposed INR 1,215.
AERA has also fixed landing charges at INR 442 per metric tonne for domestic flights and INR 652 per metric tonne for international flights during the control period. Domestic passengers account for around 84% of the total passenger traffic at Bengaluru airport.
For the first time, AERA has applied the incremental Average Revenue Requirement (ARR) framework, under which the cost of identified high-value capital expenditure projects can be recovered from passengers only after the projects are completed, commissioned and made available for use. Previously, such costs could be recovered through tariffs before the projects were completed.
The revised framework is intended to link tariff recovery more closely with the actual availability of airport infrastructure. AERA said it would also encourage the operator to complete major capital projects on time and reduce the risk of passengers and airlines paying higher tariffs if projects are delayed, deferred or not executed.
Under the framework, the cost of identified high-value projects will not be included in the airport tariff from the first year of the five-year control period. Instead, an incremental tariff will be introduced from the time the respective assets are completed, commissioned and put into use.
For the fourth control period, covering April 2026 to March 2031, BIAL had proposed a baseline ARR of INR 41,398.93 crore, or INR 35,252.08 crore in present value terms. AERA, however, considered a baseline ARR of INR 14,604.31 crore, equivalent to INR 11,751.55 crore in present value terms.
This resulted in a baseline yield per passenger of INR 390.42, which AERA apportioned between landing and parking charges, UDF and other airport charges.
The regulator has applied the incremental ARR approach to high-value projects at Bengaluru airport, including the ECT, T2 Phase 2 terminal and T2 Phase 2 apron. The incremental tariff recovery for these projects is scheduled to begin only after their completion and commissioning, with the projects considered for recovery from the fourth year of the control period, or 2029-30.
AERA said the nominal domestic UDF of INR 300 would help keep air travel more affordable for domestic passengers, who make up the majority of traffic at Bengaluru airport.
BIAL said the revised UDF rates would remain applicable from September 1 until August 2029. The tariff will subsequently be modified based on the completion of key projects, including Terminal 2 Phase 2 and related airside and landside facilities.
BIAL also said AERA has introduced UDF for both arriving and departing passengers under the new order. The airport operator said the combined domestic UDF under the new structure would be INR 425, compared with INR 550 currently charged to a departing domestic passenger. For international passengers, the combined UDF would be INR 1,423, compared with the existing INR 1,500 for a departing international passenger.
Source PTI
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