Regulator Reviews MIAL’s Proposal to Revise User Development Fees
The Airports Economic Regulatory Authority of India (AERA) has scheduled a stakeholders consultation meeting on April 2 to discuss the proposed hike in user development fees (UDF) at Chhatrapati Shivaji Maharaj International Airport (CSMIA), Mumbai. The move comes after Mumbai International Airport Ltd. (MIAL), which is operated by Adani Airport Holdings Ltd. (AAHL), submitted a revised proposal seeking an increase in UDF for both domestic and international passengers.
Following the meeting, AERA has set deadlines for stakeholders to submit comments by April 10 and counter-comments by April 13. The regulator is expected to finalize and announce the new tariffs by the end of April 2025.
AERA’s stakeholder consultation on UDF hike scheduled for April 2.
Final tariffs for Mumbai Airport expected to be announced by the end of April.
MIAL proposes UDF increases for both domestic and international travelers.
Breakdown of MIAL’s UDF Hike Proposal
Under its revised proposal, MIAL has suggested the introduction of a ₹325 UDF charge for domestic passengers, which was previously zero, and an increase in UDF for international passengers from ₹187 to ₹650 per departure.
This proposal comes after AERA rejected MIAL’s earlier demand for a 675% increase in UDF for international passengers (from ₹187 to ₹1,450). Instead, AERA suggested a more moderate 18% increase, taking into account capital expenditure rationalization for key projects, including an airside tunnel and corporate office building.
New proposed UDF for domestic passengers: ₹325 per departure (previously ₹0).
New proposed UDF for international passengers: ₹650 per departure (previously ₹187).
AERA rejected MIAL’s initial proposal of a 675% UDF increase.
Balancing Passenger Fees with Lower Airline Charges
To mitigate the impact of increased UDF charges on passengers, MIAL has proposed a 35% reduction in airline landing and parking fees. According to MIAL, this adjustment will help airlines manage costs more efficiently, potentially ensuring that ticket prices remain competitive despite the UDF hike.
The company stated that lower aeronautical charges could have a positive impact on airfare, as airlines would not need to pass on the full burden of increased UDF fees to passengers.
MIAL proposes a 35% cut in airline landing and parking fees.
Move expected to help airlines maintain competitive ticket pricing.
AERA’s revenue model balances infrastructure expansion with affordability.
₹10,000 Crore Infrastructure Investment Plan for Mumbai Airport
MIAL has outlined an ambitious ₹10,000 crore capital expenditure plan over the next five years, aimed at upgrading Mumbai Airport’s infrastructure. The redevelopment of Terminal 1 (T1) will be a key part of this investment. The current terminal, which has sections built 30 to 60 years ago, is set for demolition and will be replaced with a modernized facility.
The new Terminal 1 is expected to increase capacity by 42%, allowing Mumbai Airport to handle 20 million passengers annually once completed in 2028-2029.
In addition, MIAL plans to enhance Terminal 2 (T2) by introducing:
Self-baggage drop systems for quicker check-ins.
CTIX hand baggage screening to streamline security processes.
Full-body scanners for improved safety and efficiency.
₹10,000 crore investment planned for Mumbai Airport infrastructure.
Terminal 1 to be demolished and rebuilt, reopening by 2028-2029.
Terminal 2 upgrades include self-baggage drop and advanced security screening.
Revenue Recovery and Future Growth Projections
MIAL projects that over the next five years, the airport will recover ₹7,600 crore in revenue from an expected 229 million passengers. The revised tariff structure strategically shifts the revenue mix, increasing UDF while reducing airline charges.
Adani Airports also highlighted that Mumbai Airport’s current yield per passenger (YPP) is ₹285, and if its UDF proposal is accepted, YPP will rise to ₹332, reflecting an 18% increase, in alignment with AERA’s consultation paper issued on March 10, 2025.
Projected ₹7,600 crore revenue recovery over five years.
New tariff structure aims to balance passenger fees and airline costs.
Yield per passenger expected to rise from ₹285 to ₹332.
AERA’s Role in Regulating Major Airports
AERA is responsible for setting tariffs for major airports across India. Any airport handling over 3.5 million passengers annually is classified as a major airport and falls under AERA’s jurisdiction.
For Mumbai Airport, AERA will assess operating costs, capital investment, depreciation, non-aeronautical revenue, and taxation to determine a fair and sustainable tariff model. The regulator will also consider feedback from airlines, passengers, and other stakeholders before finalizing the new charges.
AERA regulates tariffs for airports handling over 3.5 million passengers annually.
Revenue model factors in operating costs, infrastructure investments, and taxation.
Final tariff structure will be based on stakeholder feedback.
Impact on Mumbai’s Aviation Landscape
The proposed UDF hike and infrastructure development plan come at a critical time for Mumbai’s aviation sector, which is experiencing rising passenger traffic and increased operational demand.
With Adani Airport Holdings Ltd. (AAHL) managing seven airports across India—including Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati, and Thiruvananthapuram—the upcoming developments at Mumbai Airport could serve as a blueprint for future upgrades at other major airports under its portfolio.
Moreover, with Navi Mumbai International Airport (another Adani-led project) set to open in the coming years, the coordination between Mumbai’s two key airports will be crucial in shaping the city’s aviation future.
Mumbai Airport sees increasing passenger traffic and infrastructure demands.
Adani Airports’ management spans seven major Indian airports.
Coordination with upcoming Navi Mumbai Airport will be key to long-term growth.
