MUMBAI: The Adani group-run Mumbai International Airport (MIAL), which operates the Chhatrapati Shivaji Maharaj International Airport, has proposed to steeply hike the user development fees (UDF) for both domestic as well as international passengers. While currently there is no UDF on domestic passengers, it wants to charge Rs 325 per domestic departures, and to massively increase the existing fee of Rs 187 per international passenger to Rs 650.
Adani Airports Holdings (AAHL) also said it will invest Rs 10,000 crore in the redevelop the terminal 1 of the city airport and other aeronautical and non-aeronautical infrastructure over the next five years.
The UDF hike proposal is subject to a consultation process before the Airports Economic Regulatory Authority (AERA), which approves and determines the final tariffs.
The AERA started the tariff revision proposal for MIAL last year and if implemented this will the first time that the Mumbai airport will propose a user development fee since the Adanis took over the airport in July 2021 from the GVK group which developed the airport in a PPP mode in 2010.
Adanis paid just Rs 1,685 crore for a 74% stake to GVK for the near-forced takeover. Of the total stake it owns, 50.5% came from the GVK Group, 23.5% from South African entities Bidvest (13.5%) and Airports Company of South Africa (10%).
In a statement, AAHL said Tuesday proposed an about 35% reduction in airline landing charges and parking charges to offset the hike in UDF. The move is to strike a balance between infrastructure enhancement and sustain world-class airport operations, the company claimed.
"This reduction is expected to positively impact airfares from Mumbai, enabling airlines to manage costs more efficiently and maintain competitive ticket prices," the statement said.
User development fees are directly borne by passengers, while other aeronautical charges are collected from airlines, which fix their fares based on their operating costs.
AAHL manages seven airports in Mumbai, Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram and is also developing the Navi Mumbai airport. Barring the Mumbai facility all the other six are gained from the privatization move of the government.
The company added the current yield per passenger (YPP) at the city airport, which is the second largest in the country after the Delhi airport, stands at Rs 285 and if its proposal to hike UDF is accepted the YPP will rise to around Rs 332, representing an 18% increase, which is in line with consultation paper issued by AERA last week (on March 10).
"Over the next five years, the airport will invest Rs 10,000 crore to create infrastructure and recover a total revenue of Rs 7,600 crore from an expected 229 million passengers, which translates to a balanced approach in revenue recovery. The new tariff structure proposes to strategically shift the revenue mix, with an increase in UDF while reducing landing and parking charges by 35%," the company said.
As part of the proposed Rs 10,000-crore capex planned for the airport, AAHL will redevelop Terminal 1 to enhance structural integrity, capacity, and seamless travel. Terminal 1A and 1B were built 30 and 60 years, respectively.
The Terminal 1 is likely to be shut down for reconstruction from November 2025 and the redevelopment plan involves demolishing the current structure and replacing it with a modern one.
The entire renovation project is expected to take about three years, with the new terminal anticipated to be ready by 2028-29. Once completed, the new T1 will can handle 20 million passengers annually, 42% more than the current capacity, it said.
AAHL also proposes to expand capacity of the Terminal 2 by adding self-baggage drop systems, a new hand baggage screening (CTIX) and full-body scanners to streamline security checks and improve passenger flow.
The company also said upgrades to airside infrastructure such as runway maintenance, improvements on the apron & taxiway among are also underway. AAHL also said the airport is actively transitioning to electric vehicles, enhancing energy-efficiency, strengthening water conservation, and accelerating efforts to achieve net zero emissions by 2029.
The regulator AERA sets a five-year revenue target for an airport, based on operating costs, depreciation, non-aeronautical revenues, and taxes, along with the associated charges for the airport operator. The airport operator has cited higher capex, debt servicing amid continued losses, as reasons for the proposed increase in tariff.