Hyderabad Airport User Development Fee Cut by Over 30% Under New AERA Tariff Order

The Airports Economic Regulatory Authority of India (AERA) has issued a new tariff order for Hyderabad’s Rajiv Gandhi International Airport, cutting the user development fee (UDF) for departing domestic flyers by more than 30%. The revised regulatory structure links capital expenditure recovery directly to project operationalisation and introduces lower rates for both domestic and international operations across the airport’s control period.

What Happened

Under the revised framework announced by AERA, the domestic user development fee for outbound travellers from Rajiv Gandhi International Airport will drop from the current ₹750 to ₹515. This established figure is lower than the ₹580 per departing passenger originally requested by the airport operator.

For departing international passengers, AERA set the UDF at ₹1,030, marking a reduction from the prevailing ₹1,500 charge. The airport operator had sought a rate of ₹1,150 for this category.

In addition to passenger fees, the aviation regulator lowered aircraft landing fees for the upcoming tariff period. Domestic flight landings are capped at ₹435 per metric tonne, while international flight landing charges are set at ₹630 per metric tonne.

Key Highlights

• Domestic UDF reduction: Dropped by more than 30%, decreasing from ₹750 to ₹515 per departing passenger.
• International UDF adjustment: Reduced from ₹1,500 to ₹1,030 per departing passenger.
• Landing fees lowered: Set at ₹435 per metric tonne for domestic flights and ₹630 per metric tonne for international services.
• Effective timeframe: The regulatory tariff order takes effect on September 1, 2026, and remains operational through March 31, 2031.
• Revenue requirement assessment: While the airport operator submitted an Aggregate Revenue Requirement (ARR) of ₹27,851 crore, AERA approved a baseline ARR of ₹11,683.49 crore.
• Passenger yield benchmark: The regulator established a baseline yield per passenger (YPP) of ₹426.39 to govern UDF, landing charges, and aircraft parking levies.

Why This Matters

The revised order introduces an incremental Aggregate Revenue Requirement (ARR) calculation mechanism. Through this framework, the recovery of project expenditure through airport fees is explicitly tied to the physical completion and commissioning of major infrastructure assets.

This structural change aims to stop passengers from funding large-scale capital works before those assets are operational. High-value developments, including new runways, terminal buildings, and taxiways slated for commissioning during the latter half of the 2026–2031 cycle, will only factor into cost recoveries once brought into service.

What to Watch Next

The new rates are scheduled to take effect across Hyderabad’s Rajiv Gandhi International Airport on September 1, 2026. The framework will oversee tariff levels, passenger levies, and aircraft parking and landing charges through March 31, 2031, with project commissioning milestones dictating future incremental cost recoveries.

Frequently Asked Questions

When will the revised charges come into effect?

The tariff order determined by AERA will become effective on September 1, 2026, and run until March 31, 2031.

How much will passengers pay under the new UDF rates?

Departing domestic passengers will pay a UDF of ₹515 (down from ₹750), while departing international passengers will pay ₹1,030 (down from ₹1,500).

What is the new ARR approach introduced by AERA?

AERA has introduced an incremental ARR system that links the recovery of airport development costs directly to the actual commissioning and completion of infrastructure projects, rather than billing passengers upfront.

Source: Based on reporting from The Hindu.