Background

In recent years, air travel in India has undergone dramatic shifts, not only in terms of passenger volume and post-pandemic recovery, but also in how airports are owned, operated, and financed. At the centre of this transformation stands the Adani Group, which, over the past five years, has become a dominant private operator in the country’s aviation sector. This transition has brought to light several contentious issues, none more prominent than the steep increases in the Airport User Development Fee (UDF) levied on passengers. Let’s try to unravel how UDF has evolved, how Adani Airports’ business strategy has influenced these charges, and what implications this has for Indian passengers, airport infrastructure, and the future of privatised aviation in India.

What is the UDF Charge?

The User Development Fee, or UDF, is a passenger fee imposed at various Indian airports on both departing and arriving passengers. The logic behind the UDF is simple – it allows airport operators to fund capital-intensive infrastructure projects such as new terminals, upgraded runways, expanded lounges, and modern amenities. These upgrades are often part of a longer-term master plan that requires hundreds or even thousands of crores in investments. Unlike many other passenger service fees bundled into air tickets, UDFs are more transparent; they are itemised and regulated by the Airport Economic Regulatory Authority (AERA), an autonomous body under the Ministry of Civil Aviation. However, in practice, the transparency and fairness of UDF hikes have come under scrutiny, especially since privatisation efforts have ramped up in recent years.

Why is the UDF Increasing?

In 2019, the Government of India, through the Airports Authority of India (AAI), auctioned six major airports for private operation – Ahmedabad, Lucknow, Mangaluru, Jaipur, Thiruvananthapuram, and Guwahati. This marked a significant policy shift in how India approached public infrastructure, pivoting sharply toward privatisation even as major airports like Delhi and Mumbai had already been operating under public-private partnership models. The Adani Group emerged as the highest bidder for all six airports, surprising many analysts and raising eyebrows in policy circles. Its winning bids were often based on per-passenger fee commitments that significantly outstripped those of its rivals. For example, in Ahmedabad, Adani proposed INR 177 per passenger to AAI, whereas the second-highest bid was just INR 85. Critics immediately flagged this as a potentially unsustainable model, wherein the operator might need to recover costs from end-users, but through indirect means, notably via increased UDF and non-aeronautical charges like parking and retail. True to those concerns, what followed over the next three years was a sweeping series of UDF hikes at Adani-operated airports.

Where has the UDF increased?

Ahmedabad, which serves millions of domestic and international travellers annually, saw one of the most significant UDF spikes. Between 2020 and 2024, the domestic departure UDF at Sardar Vallabhbhai Patel International Airport rose nearly 900%, from INR 85 to INR 450. For international travellers, the UDF jumped to INR 880. This occurred even as passengers reported minimal improvement in services, citing overcrowded check-in counters, insufficient security lanes, and basic sanitation issues. These complaints laid bare a dissonance between the increased fee burden on passengers and the quality of services delivered. This disparity has fueled widespread criticism, not only on social media but also in regulatory circles and consumer rights platforms.

Thiruvananthapuram International Airport, another facility now under Adani’s control, provides a similarly stark example. Starting July 1, 2024, AERA approved a 50% hike in UDF for departing domestic passengers, from INR 506 to INR 770, and introduced a new fee for arriving passengers at INR 330. For international travellers, the fee structure was even more burdensome – an INR 1,540 charge for departures and an INR 660 charge for arrivals. Airlines warned that such fee hikes could divert traffic to nearby Kochi or international hubs like Dubai and Singapore. Airport authorities defended the move, citing necessary capital expenditure, including runway lighting, expanded terminal areas, and improved airside safety. However, the backlash was intense. Local industry groups argued that high UDFs could stifle regional tourism and weaken the economic integration of southern India.

Mangaluru Airport followed suit, albeit with a more gradual rollout. In 2022, AERA approved a staggered increase, taking the domestic UDF from INR 150 to INR 725 over three years and international from INR 825 to INR 1,200. Arrival UDFs were also introduced, with a phased ramp-up. Jaipur Airport, another Adani facility, saw domestic UDFs increase to INR 805 for departures and INR 345 for arrivals, even as international departure fees slightly declined. In Mumbai, Terminal 2’s operator, Mumbai International Airport Ltd (MIAL), also largely under Adani’s umbrella, announced a new class-based UDF from May 2025. Economy passengers will pay INR 615, while business class passengers will pay INR 695, with international charges adjusted upward accordingly. This marks the first time a tiered UDF model based on passenger class has been implemented in India.

These dramatic fee hikes have prompted larger questions about the underlying economics of airport privatisation in India. When Adani won the airport bids, its financial projections included optimistic assumptions about non-aero revenues, money earned from food courts, parking lots, advertising, and duty-free stores. AERA, in several cases, pushed back on these projections, suspecting they were overly bullish and possibly designed to justify steep UDFs. In Mumbai, AERA explicitly rejected the operator’s initial projection of INR 20,000 crore in non-aeronautical revenue over five years, trimming it down by over 30%. This meant that a larger portion of capital recovery had to be sourced from UDFs and airline charges, transferring more of the burden onto passengers and carriers.

Is the UDF increase fair?

To be fair, airport modernisation is undeniably expensive, and India’s civil aviation infrastructure desperately needs upgrades. Passenger traffic is expected to double by 2030, with Tier-2 and Tier-3 cities becoming increasingly critical nodes in the national air network. Airports that were designed to serve 2 million passengers are now servicing four or five times that number. Terminal congestion, runway saturation, poor baggage handling systems, and the absence of multimodal connectivity have plagued the traveller experience. In this context, private capital, along with efficient execution, offers a path to rapid expansion and modernisation. Adani Group’s defenders argue that it has delivered on deadlines, completed key structural work on time, and introduced new design elements like facial recognition-based entry and paperless boarding. Still, many passengers have reported that basic services have stagnated or worsened. Issues such as limited check-in counters, poor signage, unhygienic toilets, and crowded baggage claim areas have become commonplace complaints across Adani-run facilities. If passengers are paying 300-900% more than they did five years ago, they understandably expect commensurate improvement in service delivery. Unfortunately, UDF hikes seem to be outpacing actual upgrades in infrastructure and service quality, raising concerns about the fairness and timing of such increases.

Another source of contention has been the growing trend of awarding airport commercial contracts like retail outlets, food courts, and logistics services to Adani-linked entities. This internal cross-dealing may create pricing inefficiencies and limit competition, ultimately resulting in higher prices for passengers. AERA has flagged such practices, noting the risk of over-consolidation and conflict of interest. It is unclear, however, whether current regulations provide sufficient safeguards to ensure transparency and fair market practices in such instances.

What steps should the AERA take?

So what can be done to balance the need for infrastructure investment with the passenger’s right to affordable and comfortable travel? Several measures can help. First, AERA could make UDF hikes conditional on measurable service improvements. For example, an increase in UDF might only be permitted if terminal congestion drops by a certain percentage or if passenger satisfaction scores cross a predefined threshold. This would make UDF performance-linked rather than projection-linked, aligning incentives more closely with passenger welfare. Second, more transparency is needed in how UDF revenue is allocated. If 30% is going toward terminal expansion and 20% toward digital infrastructure, passengers should know that. Third, bidding processes for airport contracts, both aeronautical and non-aeronautical, should be independently audited to ensure there is no favouritism or monopoly-building behaviour. A diverse marketplace within airports can help improve pricing, quality, and consumer choice. Additionally, AERA should consider imposing annual caps on UDF increases, say, no more than 10-15% per year, rather than allowing sporadic, steep spikes that catch passengers and airlines off guard. Also, airports could be required to conduct public consultations before proposing UDF revisions, thereby including frequent travellers, airlines, and local economic stakeholders in the decision-making process. Finally, there should be a national benchmarking system comparing UDFs across similar-sized airports and correlating them with passenger satisfaction scores. If an airport charges more but offers less, its operator should face penalties or at least be subject to a more stringent audit.

The Way Forward

While the rationale for UDFs is clear and the need for upgraded aviation infrastructure is beyond dispute, how these fees have ballooned under private operators, particularly the Adani Group, raises valid concerns. High UDFs, especially in the absence of visible service improvements, feel like an unjust tax on travellers. If India is to build world-class airports, it must also build world-class regulation and accountability. That means not just tracking profits and investments, but ensuring that passengers who ultimately pay the price, are treated not merely as consumers, but as critical stakeholders in the future of Indian aviation.

References

1. Outlook Traveller – Explained: User Development Fees And What It Means For Air Travellers
2. CNBC TV18 – Adani’s winning bids for six airports: Former privatisation panel head explains key policy changes
3. Times of India – From May 16, flyers to pay more for tickets as user fee for Mumbai airport hiked
4. CNBC TV18 – Concerns raised over UDF hike across airports, Air India CEO says it could impact passenger demand
5. Image by storyset on Freepik

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