Proposed Delhi airport tariff hike to make airfares only marginally costlier, says operator DIAL | Business News
Delhi International Airport Ltd (DIAL), the operator of India’s largest airport—Delhi’s Indira Gandhi International Airport (IGIA)—expects its proposed hike in tariffs to lead to just 1.5-2 per cent inflation in domestic airfares for passengers using the airport, DIAL’s Chief Executive Officer Videh Kumar Jaipuriar told reporters Wednesday. The impact on international fares is projected to be under 1 per cent as average international airfares are significantly higher than domestic fares, per DIAL’s projections.
The Airports Economic Regulatory Authority of India (AERA) is currently in the process of determining the aeronautical tariff for IGIA for the five-year period ending March 31, 2029. As part of the exercise, DIAL had submitted a proposed tariff card as per which charges would be significantly higher than the prevailing rates. The proposal led to speculation that the new tariffs, if approved by AERA, could make flying from and to the Delhi airport costlier.
DIAL, however, claims that the impact on airfares is expected to be only marginal. According to the operator, hiking the tariffs is necessary for it to remain financially viable and continue to invest in the airport, given that the business is capex and debt heavy. To be sure, AERA will have the final say in the tariffs, and stakeholder consultations are on as part of the tariff determining exercise.
Aeronautical charges include levies like user development fee (UDF), which is paid directly by passengers, and airline levies like landing and parking charges that the carriers pay, but these charges do indirectly impact airfares.
DIAL has proposed differentiated user charges for economy and business class passengers, with the latter liable to pay more. Similarly, it has also proposed charging higher for flights operating during peak morning and evening hours than those operating at other times. This is the first instance in India of an airport operator seeking different tariffs based on class of travel and time of travel. DIAL has also proposed to charge a separate UDF for passengers flying to Delhi. Currently, on departing passengers are required to pay the UDF.
Currently, the effective tariff from passengers that goes directly to the airport is around Rs 129 per departing passenger, whether domestic or international. The proposed tariff card submitted by DIAL pegs the UDF at Rs 405-610 per flyer for domestic flights in 2025-26 (FY26) and FY27, and then at Rs 210-315 for FY28 and FY29. For domestic flyers landing at Delhi, the proposed UDF is Rs 140-210 per flyer in FY26 and FY27, followed by Rs 80-115 for FY28 and FY29.
For international flights, the UDF is proposed to be significantly higher—at Rs 810-1,620 per departing passenger for FY26 and FY27, followed by Rs 430-860 for FY28 and FY29. For arriving international passengers, the levy is proposed at Rs 280-570 for FY26 and FY27, and Rs 150-300 for FY28 and FY29.
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While the proposed UDF hikes are evidently steep, DIAL’s projections show that the proposed tariff hikes would lead to a minimal impact on airfares. Jaipuriar said that DIAL’s average yield per passenger (YPP) would rise to Rs 370, up from the current YPP of Rs 145, but the impact on airfares would be marginal at best as airport levies are a small component of the fare.
According to Jaipuriar, DIAL has invested heavily in developing the IGIA over the past two decades, which has led to extremely high debt for the operator. DIAL has accumulated losses of close to Rs 2,900 crore, with interest outgo on debt being the biggest cost that has kept profitability at bay. This is primarily because such large infrastructure projects require massive
Borrowings and front loading of capital expenditure. Operationally, however, DIAL has not been in losses.
DIAL claims that in the absence of the proposed tariff hike, it may be forced to borrow more to service its existing debt obligations. The operator, according to Jaipuriar, is sitting on a debt of over Rs 14,000 crore and is also seeing erosion in its equity. These factors, if not addressed, could lead to a hit to the DIAL’s credit ratings and increase its cost of borrowing.
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Over the past nearly two decades, DIAL has invested around Rs 30,000 crore in the IGIA, while another Rs 25,000 crore have gone to the government-owned Airports Authority of India (AAI) as per the revenue sharing arrangement between DIAL and AAI, Jaipuriar said.
