The Airports Economic Regulatory Authority (AERA) is expected to reject a proposal by Mumbai International Airport Limited (MIAL) to include legal expenses as part of its “operating costs” in the calculation of aeronautical tariffs for the fourth control period, which extends through the financial year 2028–29. According to sources quoted by Business Standard, AERA is unlikely to accept the inclusion of such legal costs, citing regulatory norms and the need to maintain a fair and transparent tariff-setting mechanism.
Aeronautical tariffs, which include landing and parking charges, as well as the User Development Fee (UDF), are critical sources of revenue for airport operators. These charges are paid by airlines and passengers, and their rates are reviewed and approved by AERA for each control period. The inclusion of specific costs under operating expenses plays a vital role in determining the level of tariffs that airport operators are allowed to charge.
The Adani Group-led MIAL, which operates Chhatrapati Shivaji Maharaj International Airport in Mumbai, had approached the regulator with a request to factor in its legal expenses as a component of operational costs. This request, if approved, would have allowed MIAL to pass on a portion of its legal expenditures to passengers and airlines through higher tariffs.
However, sources indicate that AERA is inclined to reject this request, as it does not consider legal expenses to be a standard part of operational costs for tariff computation purposes. The regulator is said to be particularly cautious about allowing any cost recovery that could place an undue burden on stakeholders, especially in a post-pandemic environment where the aviation industry is still recovering.
This stance reflects AERA’s broader approach of ensuring that airport charges remain justifiable, reasonable, and do not inflate unnecessarily due to the inclusion of discretionary or non-essential costs. By excluding legal expenses from the tariff calculation, AERA aims to uphold the integrity of its cost-based regulatory framework and protect the interests of passengers and airlines alike.
For MIAL, the likely rejection may mean it will have to absorb its legal costs without recouping them through regulated revenue streams. While this may not have a significant immediate financial impact, it does limit the airport operator’s ability to recover a wider range of costs, which could influence future financial planning and operations.
The outcome of AERA’s decision will also be closely watched by other airport operators across India, as it may set a precedent for how similar cost inclusions are handled in the future.
