Lok Sabha Question No. 299 (STARRED), answered on 2025-03-20
Subject: User Development Fee
Ministry: CIVIL AVIATION
Asked by: Prof. Varsha Eknath Gaikwad, Smt. Supriya Sule

## GOVERNMENT OF INDIA

## MINISTRY OF CIVIL AVIATION

## Lok Sabha

STARRED QUESTION NO. : 299

( TO BE ANSWERED ON THE  20th March 2025 )

## USER DEVELOPMENT FEE

## 299.    PROF VARSHA EKNATH GAIKWAD SMT SUPRIYA SULE

Will the Minister of CIVIL AVIATION

be pleased to state:-

- (a)  the  percentage  of  the  increased  User  Development  Fee  and other charges that are reinvested into improving airport infrastructure and facilities;
- (b)  whether  the  Government  has  issued  any  guidelines  to  ensure that these revenues are directed towards passenger-centric improvements rather than private profit maximization and if so, the details thereof along with the mechanism in place to ensure it;
- (c) whether there is transparency in the collection and utilization of passenger  fees  for  development  of  airports  and  if  so,  the  details thereof;
- (d)  whether  the  Government  or  the  Airports  Economic  Regulatory Authority  publishes  reports  on  the  manner  of  spending  passenger fees and if so, the details thereof;
- (e) the steps taken by the Government to ensure that private airport operators maintain financial accountability regarding these revenues;
- (f) whether the passengers have observed noticeable improvements in  airport  infrastructure  and  services  in  return  for  the  increased airport charges and if so, the details thereof; and
- (g)  the  key  enhancements  made  across  major  private  and  public
- airports during the last three years?

## ANSWER

Minister of CIVIL AVIATION      (Shri Kinjarapu Rammohan Naidu)

- (a) to (g): A statement is laid on the table of the House.

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STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (A)  TO (G)  OF  LOK  SABHA  STARRED  QUESTION  NO.  299*  FOR REPLY ON 20.03.2025 REGARDING "USER DEVELOPMENT FEE"  ASKED BY PROF. VARSHA EKNATH GAIKWAD AND SMT. SUPRIYA SULE; (a): User Development Fee (UDF) and other  charges are part of the overall Airport  Charges for the  aeronautical  services  rendered  at  the  Major  Airports for  the  provision  of  passenger  amenities,  services,  and facilities  as  well  as  for  the  development,  management, maintenance, operation, and expansion of the airport.  As per  the  provisions  of  the  AERA  Act  2008  and  Tariff Guidelines, 2011, the Airports Economic Regulatory Authority (AERA) determines such tariffs including UDF for the  aeronautical  services provided  at  the  Major  Airports. These Airport Charges including UDF are meant to recover the efficient cost of running airport operation, as well as to  recover  a  reasonable  return  on  the  capex  infused  for aeronautical  assets  created  for  expansion/  upgradation/ modernization  of airport infrastructure  and  passenger facilities in order to ensure economic and viable operations  of  the  airport.  In  other  words,  UDF  and  other aeronautical charges  enables  the airport operator to recover  his  target  revenue  required  for  providing  airport services  and  not  for  creating  any  surplus  funds  in  the hands of the airport operator.;  (b) to (e): The Government of  India  established  the  Airports  Economic  Regulatory Authority of India (AERA) in 2009 under an Act of Parliament  as  an  independent  economic  tariff  regulator. AERA is responsible for determining tariffs for aeronautical  services  at  major  airports,  including  User Development  Fees  (UDF),  landing  charges,  and  parking fees  considering  the  following  factors:    (i)  Return  on Investment  (RoI)  for  aeronautical  assets    (ii)Operating expenditure  (iii)Depreciation  (iv) Taxes   AERA regulates aeronautical  tariffs  using  a ' cost  plus ' mechanism  for  a control period of five years, ensuring  a  fair  balance between the interests of airport operators and passengers. UDF and other charges are allowed by AERA to  airport  operators  for  recovering  their  investment  for upgradation/modernization or new infrastructure development  at  the  respective  airports  to  meet  both current  and  future  passenger  demand.  Therefore,  these charges  are  in  lieu  of  investment  made  by  the  airport operators for development of airport infrastructure/aeronautical  assets  and  operation  of  the airport only.;   Furthermore, to maintain transparency and encourage stakeholder participation, AERA conducts extensive  consultations  while  determining  airport  tariffs. It  publishes  a  draft  consultation  paper  on  its  website, detailing its regulatory approach and the financial aspects of  the  respective  airport.  This  framework  ensures  that passenger fees are utilized effectively for airport development while upholding financial accountability and promoting sustainable growth in the aviation sector.;   (f) &  (g):  Airport  infrastructure  has  significantly  improved across  the  country.  In  the  past  3  years  several  new terminal buildings have been inaugurated at major airports, including Chennai, Bangalore, Port Blair, Lucknow,  Jaipur,  Tiruchirappalli,  Pune  etc.  and  major expansion /  upgrades  at  Delhi,  Hyderabad  etc.,  featuring enhancements such as additional runways, new taxiways, and increased terminal capacities to accommodate growing  passenger  traffic.;      Further,  development  and upgradation  of  airports  by  way  of  capital  investment  at Indian airports have received appreciation from the passengers globally which is reflected from the improvement in the ranking of both PPP and AAI airports in their respective categories in the Airport Service Quality  (ASQ)  ratings  published  by  the  Airports  Council International and Skytrax Research Awards.

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