Domestic air travellers at the Delhi and Mumbai airports face the risk of sharply higher passenger charges as a dispute over the calculation of the Hypothetical Regulatory Asset Base (HRAB) has moved to the Supreme Court. 

The matter concerns how tariff components such as the User Development Fee (UDF) should be computed, and whether airport operators can recover significantly larger sums from passengers.

The Airports Economic Regulatory Authority of India (AERA) has cautioned that the July ruling by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) could impose a financial burden exceeding ₹50,000 crore, recoverable through tariffs and UDF.

Meanwhile, sources told businessline, that the Centre has now decided to support AERA’s position, with the Ministry of Civil Aviation (MoCA) confirming that its stance is intended to address concerns over such tariff shocks. The Supreme Court will hear the matter on December 3, 2025.

Why is this issue important for passengers?

Because the outcome of the HRAB (Hypothetical Regulatory Asset Base) dispute could sharply increase the UDF paid by travellers at the Delhi and Mumbai airports. 

As per industry assessments, domestic UDF at Delhi airport could rise from ₹129 to ₹1,261 — nearly a 900 per cent increase. At Mumbai airport, the charge may rise from ₹175 to ₹3,856 — more than a 2,100 per cent jump.

What is HRAB and why is it central to airport charges?

The dispute revolves around how the HRAB should be computed. HRAB is used by AERA to determine aeronautical tariffs and UDF at airports governed under the Regulatory Asset Base (RAB) system.

The issue dates back to 2012–13, when Delhi International Airport Ltd (DIAL) and Mumbai International Airport Ltd (MIAL) challenged AERA’s HRAB calculations in tariff orders. Both airports operate under public-private partnership agreements and are regulated by AERA for their tariff-setting process.

However, for the first year of the first control period (2009–14), assets transferred by the Airports Authority of India (AAI) to the private operators were assessed using HRAB as defined in the State Support Agreement between the government and the operators. 

The scope of HRAB — whether it should include only aeronautical assets or also account for non-aeronautical components — became the core point of friction.

How did TDSAT get involved?

The involvement of Telecom Disputes Settlement and Appellate Tribunal (TDSAT) is essentially owing to the fact that, over time, its jurisdiction has been extended from telecommunication disputes to cover other vital sectors including broadcasting ad cable services, airport tariff matters and cyber issues including appeals against orders of the adjudicating officer under the Information Technology Act.

TDSAT has been central to the tariff dispute at several stages. In 2018, the tribunal upheld AERA’s interpretation that HRAB applied solely to aeronautical assets. The Supreme Court agreed in 2022 but directed TDSAT to revisit a Ministry of Civil Aviation letter dated May 24, 2011, which DIAL and MIAL argued supported their position.

MoCA later clarified during the remanded proceedings that the 2011 letter did not endorse the operators’ interpretation and did not contain any reference to including non-aeronautical revenue in HRAB calculations.

Nevertheless, in July 2025, TDSAT rejected AERA’s HRAB methodology and ordered a fresh recalculation of tariffs. This opened the possibility for airports to recover substantially higher sums from passengers, setting the stage for escalated user fees.

Why has the matter reached the Supreme Court again?

AERA maintains that the tribunal’s 2025 ruling is factually unfounded, legally untenable, and beyond the remit defined by the Supreme Court when it remanded the matter in 2023. The regulator filed an appeal before the Supreme Court on July 31, 2025.

Meanwhile, DIAL and MIAL have filed counter-affidavits asserting that MoCA’s decision not to appeal indicates acceptance of the tribunal’s interpretation. 

Sources told businessline, that the Ministry has rejected this claim and is now supporting AERA’s position before the court.

Sources indicated that the clarity in MoCA’s stand is expected to assist AERA’s arguments when the case is heard on December 3.

What happens next?

The upcoming Supreme Court hearing will determine whether the tribunal’s recalculation order stands or whether AERA’s methodology for HRAB will be upheld. The outcome will directly influence tariff levels and UDF for millions of passengers using the Delhi and Mumbai airports.

Published on December 2, 2025