UDF Doesn't Cause High Airfares: AERA Chairperson

New Delhi, Feb 28 (PTI) Airports Economic Regulatory Authority (AERA) Chairperson SKG Rahate has mentioned that it is not right to say the user development fee (UDF) charged by airports plays a significant role in exorbitant airfares.

The comments were made during a stakeholders' consultation meeting related to Delhi airport tariffs held on February 17.

AERA is reviewing the tariff proposal submitted by Delhi airport operator DIAL for the fourth control period -- FY2024-25 to FY2028-29.

Delhi International Airport Ltd (DIAL) has proposed differential UDF pricing for embarking and disembarking passengers.

The domestic UDF would be charged separately for peak and off-peak hours, while the international UDF would be charged separately for economy and business class passengers.

During the meeting, a query was raised by non-profit group CUTS' Vijay Singh on whether exorbitant airfares are due to high UDF charged by airports.

In response, Rahate said the AERA Act only provides for regulating airport charges, whereas airfare in the country is de-regulated.

"The query related to the exorbitant airfares actually does not fall under the ambit of AERA. Also, it is not right to say that UDF plays a significant role in the exorbitant airfares.

"Actually, the average UDF at the 29 airports presently under the purview of AERA during the FY2023-24 was Rs 472 per passenger," he said.

According to the minutes of the meeting put out on the AERA website, the chairperson also said the regulator takes into consideration the interest of passengers and all the stakeholders while deciding the aeronautical charges at major airports to ensure that airports are run in an economic, viable and safe way for providing quality services to the travelling passengers.

In recent times, there have been concerns about rising airfares in certain routes.

Among the stakeholders at the meeting, Air India's Amit Pandey indicated that the UDF has increased exorbitantly, while another representative of the airline said that front loading of aeronautical charges in FY26 and FY27 will lead to a huge increase in landing, parking and UDF, leading to significant negative impact.

UDF is considered as a revenue-enhancing measure to bridge any revenue shortfall so that the airport operator concerned can get a fair share of return on investment.

At the meeting, IndiGo's Rajan Malhotra sought moderation of the overall quantum of the cost and the manner in which it is loaded across the years.

While raising certain issues, SpiceJet's Poonam Yadhav said DIAL has underestimated non-aeronautical revenue and urged AERA to look into it as that might impact aeronautical charges in the future, as per the minutes of the meeting.

International Air Transport Association's (IATA) Amitabh Khosla said the pricing proposal submitted by DIAL is discriminatory and against the relevant provisions of ICAO related to the principle of non-discrimination of charges.

Meanwhile, on February 26, DIAL CEO Videh Kumar Jaipuriar said the proposed tariff hike at the Delhi airport will result in a 1.5 to 2 per cent increase in domestic airfares for passengers.