Adani Airports proposes introduction of UDF for domestic flights at Mumbai International Airport

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The Adani Group-run Mumbai International Airport Limited which operates the Chhatrapati Shivaji Maharaj International Airport (CSMIA) in Mumbai has proposed to increase user development fees for domestic and international departures by introducing a User Development Fee (UDF) of Rs 325 per domestic passenger, where previously no UDF was charged.

In its tariff proposal, the Adani Enterprises arm proposed hike in UDF from Rs 187 to Rs 650 per passenger for international flights. This proposal is subject to a consultation process before the Airports Economic Regulatory Authority (AERA) approves and determines the final tariffs.

To offset the hike in UDF Adani Airports has proposed to reduce airline landing and parking charges by about 35 percent, in order to strike a balance between infrastructure enhancement and sustain world-class airport operations.

"This reduction is expected to positively impact airfares from Mumbai, enabling airlines to manage costs more efficiently and maintain competitive ticket prices," the company said in a statement on March 18.

Adani Airport Holdings Ltd (AAHL) manages seven airports and also developed the Navi Mumbai airport. Currently, AAHL manages seven airports at Mumbai, Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram.

User development fees are directly borne by passengers, while other aeronautical charges are collected from airlines, which fix their fares based on their operating costs. The company added that the current Yield Per Passenger (YPP) at CSMIA stands at Rs 285 and if its proposal to hike UDF is accepted by AERA the YPP of CSMIA will rise to approximately Rs 332, representing an 18 percent increase, which is in line with Consultation Paper issued by AERA on 10 March 2025.

"Over the next five years, the airport will invest Rs 10,000 crore in creation of airport infrastructure and recover a total revenue of Rs 7,600 crore from an expected 229 million passengers, which translates to a balanced approach in revenue recovery. The new tariff structure proposes to strategically shift the revenue mix, with an increase in UDF while reducing landing and parking charges by 35 percent," the company said.

As part of the proposed Rs 10,000 crore capital expenditure planned for MIAL, AAHL will redevelop Terminal 1 at CSMIA to enhance structural integrity, capacity, and seamless travel. Terminal 1A and 1B were built 30 and 60 years, respectively, AAHL said in the statement.

Mumbai airport’s domestic terminal 1 in Vile Parle is likely to be shut down for reconstruction from November 2024. The redevelopment plan will involve demolishing the current structure and replacing it with a modern one.

The entire renovation project is expected to take about three years, with the new terminal anticipated to be ready by 2028-2029. Once completed, the new Terminal 1 will have the capacity to handle 20 million passengers annually, a significant 42 percent increase from its current capacity.

AAHL also proposed to expand capacity of MIAL's Terminal 2 (T2) by adding self-baggage drop systems, CTIX hand baggage screening, and full-body scanners to streamline security checks and improve passenger flow.

The company also said that upgrades to airside infrastructure such as runway maintenance, improvements on the apron & taxiway among are also underway at CSMIA. AAHL also added that CSMIA is actively transitioning to electric vehicles, enhancing energy-efficient operations, strengthening water conservation measures, and accelerating efforts to achieve net zero emissions by 2029.

The tariff revision proposals for MIAL started in 2024 by AERA. This will be the first time Mumbai Airport will propose a user development fee under Adani Airports’ management.

Tariff revisions typically happen once every five years. The new set of tariff revisions were expected to come from 2024, but were delayed due to the general elections in India last year and an ongoing dispute between Delhi International Airport Ltd (DIAL) and MIAL over royalty payments from non-aeronautical services to AERA in the Telecom Disputes Settlement and Appellate Tribunal (TDSAT).

Regulator AERA sets a five-year revenue target for the airport, based on operating costs, depreciation, non-aeronautical revenues, and taxes, along with the associated charges for the airport operator. The airport operator has cited higher capex, debt servicing amid continued losses, as reasons for the proposed increase in tariff.

At 3:25 pm on March 18, Adani Enterprises' shares on BSE were trading 2.3 percent higher at Rs 2,305 apiece.