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AERA Introduces New Tariff Model at Bengaluru Airport, Lowering Domestic Passenger Fees to ₹300

The Airports Economic Regulatory Authority (AERA) has instituted a new tariff framework for Kempegowda International Airport in Bengaluru, reducing the User Development Fee (UDF) for domestic departures to ₹300. The regulatory decision follows an assessment under a newly applied model designed to ensure that air travellers only fund operational facilities rather than future construction projects.

What Happened

On August 20, 2026, AERA issued a tariff order for the fourth five-year control cycle of Bengaluru’s Kempegowda International Airport. Effective from September 1, 2026, to March 2031, the regulatory order establishes the charges payable by both airlines and passengers to offset airport capital investments.

Under the order, the domestic departure User Development Fee is set at ₹300, marking a 33% decrease from the airport operator’s proposed ₹450 fee and lower than the previous ₹550 charge. For arriving domestic travellers, a fee of ₹125 has been introduced. Outbound international passengers will be charged ₹997, while disembarking international passengers will pay ₹426. The disembarkation fee aligns Bengaluru with tariff structures applied at other domestic airports.

The regulator derived these rates using an “incremental Aggregate Revenue Requirement” (ARR) formula. While the airport operator had submitted an ARR proposal of ₹41,393.8 crore, AERA established a baseline requirement of ₹14,604.31 crore, yielding a baseline UDF calculation of ₹390 before the specific tiered rates were determined. In addition to passenger fees, landing charges levied on airlines were rationalised.

Key Highlights

  • Revised Domestic UDF: Departing domestic passengers will pay ₹300, down from ₹550 previously and 33% below the ₹450 requested by the operator.
  • Arrival Charges Instituted: Arriving domestic passengers will pay ₹125, while incoming international passengers will pay ₹426.
  • International Departure Rate: Outbound international travellers will pay ₹997.
  • Incremental Cost Model: Airport charges are tied to the actual commissioning and operational dates of capital assets rather than future projections.
  • Effective Timeline: The five-year tariff order takes effect on September 1, 2026, and runs through March 2031.
  • Industry Alignment: The framework applies exclusively to high-value infrastructure projects like terminals, runways, and taxiways, excluding routine maintenance and sustainability investments.

Why This Matters

The revised structure addresses how capital expenditures are recovered from airport users. Traditionally, charges could reflect anticipated capital outlays spanning an entire control cycle. The incremental ARR mechanism changes this by linking fee recovery directly to the specific dates when high-value assets—such as passenger terminals, runways, and taxiways—are commissioned and put into active service, particularly when those assets are scheduled for completion in the later stages of a cycle.

AERA Chairman SKG Rahate explained to The Hindu that the adjustment enforces a user-pay model, ensuring travellers pay strictly for infrastructure that is ready to use while preventing early over-recovery and encouraging timely construction. The change follows scrutiny earlier in the year by a Parliamentary panel examining recent increases in airport charges and the methods used to calculate them.

The move has received support from airline groups. The International Air Transport Association (IATA) endorsed the principle that cost recovery must coincide with users receiving actual utility from funded infrastructure, pointing out that this standard aligns with tariff systems operating in Europe and the United Kingdom. Conversely, airport operators expressed concern during regulatory consultations that deferring recovery could compress revenue into shorter windows, impact cash flow, and lead to tariff spikes when assets launch. AERA responded that it will account for the risk of sudden fee jumps during implementation.

What to Watch Next

Following the Bengaluru determination, AERA is likely to issue a comparable tariff order for Hyderabad airport under the same regulatory principles. Observers will also track the practical rollout of the revised fees in ticket pricing starting September 1, 2026, alongside AERA’s oversight of project timelines for major infrastructure assets.

Frequently Asked Questions

When do the new Bengaluru airport user fees take effect?

The new tariff schedule takes effect on September 1, 2026, and remains valid through March 2031.

What will domestic passengers pay under the new tariff order?

Departing domestic passengers will pay a User Development Fee of ₹300, while arriving domestic passengers will be charged ₹125.

How are international passenger charges affected?

Departing international passengers will pay ₹997, and arriving international passengers will pay ₹426.

Which infrastructure projects fall under the incremental ARR model?

The formula applies specifically to major, high-value capital expenditure projects such as new terminal buildings, runways, and taxiways. Maintenance and sustainability projects are excluded.

Source: Based on reporting published by The Hindu.