The Airports Economic Regulatory Authority of India (AERA) has announced a steep reduction in the user development fee (UDF) at the Bengaluru international airport for the five-year control period lasting until March 2031.
Under the revised structure, the UDF for departing domestic passengers has been fixed at Rs 300 per passenger. This is lower than the existing fee of Rs 550 and also below the Rs 450 proposed by the airport operator, Bangalore International Airport Ltd (BIAL). For departing international passengers, the UDF has been set at Rs 997, down from the existing Rs 1,500 and the operator's proposed Rs 1,215.
Additionally, the UDF for disembarking passengers has been fixed at Rs 125 for domestic and Rs 426 for international travelers. Landing charges have also been rationalized to Rs 442 per Metric Tonne (MT) for domestic flights and Rs 652 per MT for international flights.
Domestic passengers account for approximately 84 percent of the total passenger traffic at the Bengaluru airport. While the fourth control period spans from April 1, 2026, to March 31, 2031, the revised UDF rates will be levied starting September 1, 2026.
For the first time, AERA has implemented an incremental Average Revenue Requirement (ARR) framework. Under this approach, the costs borne by the airport operator for identified high-value capital expenditure projects—such as the ECT, T2 Phase 2 Terminal, and T2 Phase 2 Apron, scheduled for the fourth year (2029-30)—will not be loaded into the tariffs from the first year of the control period.
Instead, these costs will be recovered through an incremental tariff only after the respective assets are completed, commissioned, and put to use. AERA stated that this approach is intended to align tariff recovery with actual infrastructure availability and protect users from premature charges for assets that are not yet operational, while encouraging the operator to execute projects on time.
For the fourth control period, BIAL had proposed a baseline ARR of Rs 41,398.93 crore (Rs 35,252.08 crore in present value terms), whereas AERA considered a baseline ARR of Rs 14,604.31 crore (Rs 11,751.55 crore in present value terms). This translates to a baseline Yield per Passenger of Rs 390.42.
"The implementation of the incremental ARR framework by AERA represents a notable shift in infrastructure tariff regulation in India. By linking fee recovery directly to the completion of high-value capital projects, the regulator ensures a balanced approach that protects consumers from paying for unbuilt assets while providing clear accountability for airport operators. This structural change helps maintain affordability for domestic air travelers as traffic volumes grow." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
