Adani prepares to raise airport user development fee

CH NEWS, MANGALURU Adani Airports, which manages the airport, has proposed to nearly double the User Development Fee (UDF) by FY31 to raise funds for a massive Rs 4,200 crore investment plan for the airport's infrastructure. Currently, domestic and international passengers departing from Mangalore airport are being charged a UDF fee of Rs 735 and Rs 1,120, respectively. Subject to the final approval of the regulatory authority, these rates are proposed to be increased to Rs 890 and Rs 1,360 respectively from December 1, 2026. Thereafter, the rate is to be increased in a phased manner, with the aim of increasing the domestic departure fee to Rs 1,440, an increase of 96 percent and the international departure fee to Rs 2,210, an increase of 97 percent by March 2031. According to the proposed revision, the fares will increase by 20 to 22 percent each in the first three phases, and by 10 percent in the final phase in 2031.
However, Mangalore International Airport Limited (MgIAL) has maintained that this capital investment (Capex) is essential to upgrade the airport's infrastructure and handle future passenger traffic. Speaking on this, in a letter to the Airports Economic Regulatory Authority of India (AERA) on October 7, Madhur Arora, the official signatory of MgIAL, mentioned that, it is necessary to ensure economically viable operation of the airport while complying with Section 13 of the AERA Act." The airport master plan has been formulated to have the capacity to handle 5 million (50 lakh) passengers annually by 2035. A total capital investment of Rs 4,205.87 crore has been estimated for the period 2027–2031. MgIAL has sought a fair rate of return of 14.73 per cent on its controlled asset basis (RAB). Mangaluru is one of the six airports (Mangalore, Ahmedabad, Lucknow, Jaipur, Guwahati, Thiruvananthapuram) privatised by the government in 2020 and 2021, all of which were managed by the Adani Group. Ankur Singhal, a policy analyst and founder of Bospin Consulting, said, Airport development is necessary, but major capital investments should be made in a phased manner as per the needs of passengers. Excessive charges will be a huge burden on air passengers and airlines. Fare collection should be coupled with timely completion of the project and good service, he said.