Pay by the mile! GMR proposes nearly doubling UDF at Bhogapuram airport, drawing IndiGo's ire
GMR Airports has proposed nearly doubling user development fees (UDF) at the new Bhogapuram airport in Andhra Pradesh over five years, while introducing distance-based charges for domestic passengers — a move experts say could make air travel more expensive and hurt passenger demand.
Under the proposal, domestic passengers would pay different fees depending on whether they are travelling up to 1,000 kilometers or beyond that distance. If approved, it would be India's first distance-based UDF structure. GMR says the proposed charges are necessary to recover its investment and financing costs, according to several communications reviewed by Mint.
The move could increase costs for passengers and make air travel less affordable, particularly in a price-sensitive market such as India, experts said. They also questioned whether passengers should bear the burden of recovering large airport infrastructure investments.
The distance-based UDF proposal is unfair for passengers, said G.S. Bawa, secretary general of the Air Travellers Association. “Passengers are already burdened by high airfares. Such proposals make flying less attractive. If allowed, private airports will soon start determining UDF based on body weight.”
The plan is before the Airports Economic Regulatory Authority of India (AERA), which sets airport charges at major airports. UDF is included in ticket prices and collected by airlines on behalf of airport operators.
Two slabs
GMR Visakhapatnam International Airport Ltd (GVIAL), a subsidiary of GMR Airports, has proposed two domestic passenger categories for the first control period, FY27 to FY31: journeys of up to 1,000 km and those beyond 1,000 km.
In FY27, departing passengers would pay ₹1,000 on shorter routes and ₹1,230 on longer ones. For arriving passengers, the proposed fees are ₹400 and ₹530, respectively. By FY31, departure fees would rise to ₹2,090 and ₹2,460, while arrival fees would increase to ₹890 and ₹1,050. This would mean the charges would more than double in some categories over five years.
International passengers would face a single slab. Their departure fee would rise from ₹1,720 in FY27 to ₹3,450 in FY31, while the arrival fee would increase from ₹750 to ₹1,500.
The proposal follows an interim order in which AERA set flat charges of ₹835 for domestic departures and ₹355 for arrivals.
The proposed charges at Bhogapuram are significantly higher than those at other major airports.
For FY27, AERA set Navi Mumbai International Airport's domestic UDF at ₹620 for departures and ₹270 for arrivals. Bengaluru's revised UDF, effective September, is ₹300 for departures and ₹125 for arrivals. Mumbai charges ₹175 for departures and ₹75 for arrivals.
IndiGo objects
IndiGo, the country's largest airline, has objected to the proposal, arguing that airport charges are already high and further increases would make flying less affordable.
“We would request AERA not to consider the airport operator's proposal to have different UDF rates based on distance,” IndiGo said in a 31 October submission to the regulator.
The airline said combined departure and arrival fees at Bhogapuram would be more than twice those at the old Visakhapatnam airport for domestic passengers, and more than three times for international passengers. “Higher airport charges tend to reduce demand, especially in the price-sensitive Indian market,” Malhotra wrote.
The objection comes as IndiGo chief executive Willie Walsh steps up his criticism of airport costs. “Airport charges are too high and so this market would do much better if we had lower taxes,” he said on 2 November. He has also described airports as “effective monopolies”.
GMR's case
In a 5 November response to AERA, GMR said the proposed fee structure was necessary to recover its total revenue requirement (ARR), or the revenue it is allowed to earn through regulated charges.
“The proposed UDF structure has been designed to ensure recovery of the approved ARR over the First Control Period,” it said. The company added that any reduction in UDF would require adjustments to other airport charges.
The stakes are high. The first phase of Bhogapuram airport, built at a cost of ₹5,640 crore according to the Centre's announcement before its opening, is designed to handle six million passengers a year. This is double the three million passengers handled by the old Visakhapatnam airport in FY26, around 4% of whom were international. Scheduled commercial flights at the old airport ended on 17 August 2026, after traffic shifted to Bhogapuram.
The proposal also comes as AERA changes its approach to capital expenditure recovery. In recent tariff revisions for Bengaluru and Hyderabad airports, the regulator allowed operators to recover the costs of specific expansion projects only after they were completed, approved and put to use. This differs from the earlier practice of including project costs in passenger charges upfront, even when projects were delayed.
Impact on GMR
The larger question is how private airport operators can recover substantial infrastructure investments without making air travel prohibitively expensive for passengers.
Mark D. Martin, founder and chief executive of Martin Consulting, said the regulator faces two questions: whether the airport's investment recovery is justified and why passengers should pay different fees based on distance.
“If the charges are too high, passengers will avoid short-distance travel, substituting it with alternatives like inter-city train travel,” he said. He added that higher fees could also undermine GMR's own passenger growth plans.