Airfares at Delhi and Mumbai Airports Could Rise as GMR, Adani Win Tariff Battle

In a significant ruling that could have far-reaching implications for air travel in India, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has permitted GMR Airports Ltd and Adani Airport Holdings Ltd to include non-aeronautical revenues, such as retail, parking, and advertising, in the model used to determine airport tariffs. The decision, announced on July 1, overturns the Airport Economic Regulatory Authority’s (AERA) previous methodology, which excluded these revenues from the Hypothetical Regulatory Asset Base (HRAB) since 2012-13. This is expected to raise airport charges by around 6% over the next ten years, as reported by Mint.

GMR and Adani, which operate Delhi and Mumbai airports respectively, had been challenging AERA’s exclusion of non-aero revenues from the HRAB for nearly a decade. The legal battle came to an end after the Supreme Court directed the tribunal to reassess the HRAB based on a 2011 letter from the Ministry of Civil Aviation that supported a single-till revenue model, combining both aeronautical and non-aeronautical income.

Kotak Institutional Equities noted that the ruling could cost airlines like IndiGo up to 3.4% of their annual revenue, given the rise in airport charges. IndiGo posted Rs 80,803 crore in revenue for the fiscal year 2025. For GMR, the fiscal year 2025 saw a 19% rise in revenue to Rs 10,414 crore, with narrowing losses. Adani Airports, a subsidiary of Adani Enterprises, recorded a 27% increase in revenue to Rs 10,224 crore, with pre-tax losses reduced to Rs 5 crore.

The ruling also opens the door to recovering historic losses, estimated at Rs 17,500 crore for Delhi Airport, through future HRAB revisions via a “true-up” mechanism, according to a senior airport official. However, the TDSAT’s decision did not allow for retrospective recovery of these losses.

While the TDSAT’s decision has canceled the previous tariff orders for the period 2009-2014, analysts predict that this ruling could prompt a broader reassessment of tariff models across other private airports in India. This could lead to a more consistent approach to how airport charges are determined and potentially impact airfares across the country.

As GMR and Adani prepare to strengthen their revenues, passengers and airlines may need to brace for gradually rising costs over the next decade. The impact of this decision on the aviation industry and the traveling public will be closely monitored in the coming months and years.