New passenger-friendly tariff formula for airports cuts user fee at Bengaluru by 33%

For the first time, the airport tariff regulator has applied a new formula at Bengaluru airport, cutting the passenger fee by 33% from ₹450 to ₹300 and ensuring travellers pay only for commissioned infrastructure available for use, rather than large projects such as runways and passenger buildings to be built in the future. 

The new formula comes amid scrutiny of the Airports Economic Regulatory Authority (AERA) by a Parliamentary panel earlier this year over recent increases in airport user charges, which also raised questions about how the fees were being calculated.

On August 20, 2026, the Airports Economic Regulatory Authority (AERA) issued the tariff order for Bengaluru’s Kempegowda International Airport’s fourth five-year tariff cycle, setting the charges payable by airlines and passengers to recover the airport’s capital expenditure. The tariff order will come into effect on September 1, 2026 and will be applicable until March, 2031.

Passengers departing from Bengaluru airport will now pay a User Development Fee (UDF) of ₹300, down from ₹550 earlier. Passengers arriving at the airport will pay ₹125. International passengers departing from the airport will pay Rs 997, and those landing will pay Rs 426. The fee for disembarking passengers is being introduced at Bengaluru in line with tariff orders for other airports. Bengaluru’s proposal before AERA suggested a UDF of ₹450. This fee is a component of airfares collected by airlines. Further, landing charges levied on airlines that also impact airfares have also been rationalised.

The formula implemented is called the incremental Aggregate Revenue Requirement. This framework links the recovery of costs through airport charges with the actual date of completion, commissioning and putting to use of a few identified high-value capex projects, such as new terminal buildings, runways, and taxiways, which are likely to become operational only in the latter half of the tariff cycle.

“As the airport tariff is based on the user-pay principle, linking recovery of costs with commissioning of projects ensures that travellers only pay for the infrastructure that is ready for use by them,” explained SKG Rahate, Chairman, AERA, to The Hindu. It also ensures there is no over-recovery and incentivises airports to implement their projects in a timely manner and avoid delays, he added. A similar tariff plan is likely to be ordered by the authority for Hyderabad airport as well.

The official clarified that only major infrastructure projects will be covered under the new formula, while projects related to sustainability and maintenance will be excluded.

The new formula means that while Bengaluru airport had cited an Aggregate Revenue Requirement (ARR) of ₹41,393.8 crore for cost recovery, the new baseline has been set at ₹14,604.31 crore, resulting in a baseline UDF of ₹390, according to AERA.

During consultations, airports raised concerns that the new approach could affect their cash flows and result in a tariff shock when costs are recovered over a shorter period rather than spread across the five-year tariff cycle. AERA, however, said it would take the risk of such tariff spikes into account while implementing the new formula.

Airlines that also pay landing and parking charges to the airports have welcomed the new move, and the International Air Transport Association (IATA) has expressed its support and stated that “it is important that the timing of cost recovery remains linked to the point at which users can derive actual benefit from the infrastructure being funded”. It has added that this was also in line with tariff regimes in Europe, including the UK.