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GMR Group-led DIAL, which manages and operates India’s largest airport, recently requested the AERA to double the user development fee (UDF) for international business and first-class travellers compared to economy and premium economy over the next four years.
It has also sought higher UDF for all domestic passengers flying during peak hours -- 5 am-8:55 am and 5 pm-8:55 pm.
Ticket prices of passengers travelling to and from Delhi airport will rise by no more than 1.5 per cent if the Airports Economic Regulatory Authority (AERA) approves the tariff proposal submitted by Delhi International Airport Limited (DIAL), the latter’s chief executive officer (CEO) Videh Kumar Jaipuriar said on Wednesday.
GMR Group-led DIAL, which manages and operates India’s largest airport, recently requested the AERA to double the user development fee (UDF) for international business and first-class travellers compared to economy and premium economy over the next four years.
It has also sought higher UDF for all domestic passengers flying during peak hours -- 5 am-8:55 am and 5 pm-8:55 pm.
At a press conference, Jaipuriar said: “We have analysed the profile of passengers that travel via our airport. About 60-65 per cent of people are either visiting friends or relatives or going for holidays. They don’t have to take an early morning flight at 8 am to reach the office. It is generally office goers or corporate travellers who need to travel during peak hours. Their fares are paid by their respective companies. This is why we have kept a variable tariff based on peak hours.”
“Peak hour travellers would pay higher UDF, subsidising the travel of people who travel between 9 am and 5 pm,” he added.
When asked what additional services will business class passengers get for paying higher UDF than economy class passengers, he said: “They are already getting additional services by having a separate check-in facility, and a separate security line and a separate boarding line. These are the services that the airport provides.”
He said that the UDF currently accounts for about 1.5 per cent of the average domestic ticket price, which will rise to three per cent if the proposed hike is approved by AERA.
“Overall, the average domestic ticket price will increase by no more than 1.5-2 per cent, while international fares will rise by 0.5-1 per cent,” the CEO added.
Variable tariffs are a common international practice, with airports like Heathrow in London, Charles de Gaulle in Paris, Singapore Airport, and Munich Airport implementing them.
The criteria for such tariffs vary, including factors like time of travel, congestion fees, and whether the flight is domestic or international, he stated.
In India, the new Goa airport in Mopa already offers discounted tariffs to airlines operating beyond a certain number of flights. The goal of introducing this concept is to ultimately benefit the common traveller, he asserted.
However, he admitted that this is the first time an airline in India has asked for variable tariffs based on class and time of travel.
He expressed confidence that the new tariff proposal would help DIAL return to profitability.
“We have incurred consistent losses, with an accumulated loss of Rs 2,900 crore between 2006 and 2024. We were able to pay a dividend in just one year,” he said.
DIAL has completed key airside developments, and he noted that infrastructure investments typically take 15-20 years to yield returns. Over time, interest costs are also expected to decline.
“All of this has been factored into the new tariff proposal, and we believe it will help us turn profitable,” he added.
Jaipuriar also gave information about the construction and revamp work going on at the airport.
The upgrade will focus on three key areas -- revamping the old Terminal 2 (T2), upgrading Runway 10/28 to support low-visibility operations from both ends before next winter, and converting one pier of the T3 to accommodate international flights amid rising demand.
The canopy at Terminal 1 of Delhi Airport had collapsed on June 28 last year during heavy rain, killing 45-year-old cab driver Ramesh Kumar and injuring at least eight others.
Jaipuriar said that T1 terminal's repair will be completed by March 15, and operations are expected to begin in April, subject to approvals from security agencies.
The upgraded terminal will have a capacity of 40 million passengers per year, allowing the complete relocation of T2’s 15 million passengers to T1.
Once this transition is complete, T2 will be closed for about four months for apron refurbishment, terminal flooring upgrades, washroom renovations, and boarding bridge replacements.
On Terminal 3 (T3), Jaipuriar said its capacity is currently 45-50 million passengers per year. About 10 million passengers of T3 will gradually shift to T1 due to pier conversion.
Until now, all departing international passengers at India's largest airport have paid a flat Rs 129 as UDF on their basic ticket price.
In its proposal to AERA, DIAL has proposed that such business and first-class passengers should pay Rs 1,620 as UDF in 2025-26 and 2026-27, and Rs 860 in 2027-28 and 2028-29.
For departing international economy and premium economy travellers, the proposed UDF is Rs 810 in 2025-26 and 2026-27, and down to Rs 430 in 2027-28 and 2028-29.
Currently, all departing domestic passengers, like their international counterparts, pay a flat Rs 129 as UDF.
DIAL now proposes that domestic passengers flying during peak hours pay Rs 610 in 2025-26 and 2026-27, and Rs 315 in 2027-28 and 2028-29.
For non-peak hours, the proposed UDF is Rs 405 in 2025-26 and 2026-27, down to Rs 210 in 2027-28 and 2028-29.
Feature Presentation: Rajesh Alva/Rediff.com
