A file image of Thiruvananthapuram International Airport
| Photo Credit: Special arrangement

Slamming the “arbitrary” User Development Fee (UDF) charged by several airport operators across the country, Parliament’s Public Accounts Committee (PAC) on Wednesday (January 22, 2025) directed the Airport Economic Regulatory Authority (AERA) to give a detailed reply in writing, within 15-days on the criteria used to calculate it, the total revenue earned and the corresponding amenities and infrastructure made for the passengers using this revenue.

The members also pulled up the Directorate General of Civil Aviation (DGCA) for showing laxity in tariff regulation. 

It was the first meeting of the PAC headed by senior Congress leader K.C. Venugopal on the subject, “Levy and regulation of fees, tariffs, user charges etc. on public infrastructure and other public utilities”.

The UDF is levied on passengers and is part of airline ticket fare. The fee is collected by the airline and passed on to the airport operator. According to sources, the members across the party lines, raised the issue of high UDF especially in the context of increasing number of airports being operated by private entities. They asked AERA to explain how the UDF is calculated.

The members also pointed out that the consultative committee of which the public representatives are also part of have been dysfunctional. “The oral replies by the AERA representatives were less than convincing,” a member said. 

At the end of the discussion, the panel directed AERA to submit written replies within 15-days on the total revenue earned through UDF, the criteria for calculating it and the corresponding infrastructure and amenities built for the passengers. Questions were also raised whether the 2008 legislation that established AERA has outdated its utility and whether it needs to be suitably amended for the present demands. The AERA has been asked to submit a reply to this too. 

Thiruvananthapuram airport

In June last year, the AERA raised the UDF for Adani-controlled Thiruvananthapuram airport by 50%, from ₹506 to ₹770 for departing domestic travellers, with further annual hikes. A UDF of ₹330 for arriving passengers was introduced for the first time, and landing charges for aircraft tripled. Kerala MPs sought a review in Parliament. 

The Hindu reported on March 19 that the AERA criticised Adani Airports Holdings Limited for under-projecting non-aeronautical revenue, which helps subsidise passenger and airline costs, noting it was lower than pre-privatisation levels despite the pandemic. In its final tariff order the AERA revised the airport’s non-aero revenue projections from ₹102 crore to ₹392 crore. 

The panel also discussed at length the exorbitant air fares, especially in select sectors during the festivals and holidays. The panel, according to sources, pulled up the DGCA, accusing them of being lax in monitoring the fares. “To shrug off responsibility claiming that the fares are regulated by the market will not do. It is the government’s responsibility to ensure that the passengers are not fleeced,” an Opposition member said. 

The DGCA has a Tariff Monitoring Unit that monitors airfares on certain routes on a monthly basis to ensure that the airlines do not charge airfares outside a range declared by them. The panel has asked the DGCA too to give written replies on the measures they have taken by this unit.