Five Years After Privatisation, Adani Group and AERA Remain at Odds Over Airport Tariffs

Adani Airports Holdings Ltd and Airports Economic Regulatory Authority of India Lock Horns Over Airport Charges

A legal tussle is brewing between Adani Airports Holdings Ltd (AAHL), the operator of six airports privatised by the government, and the Airports Economic Regulatory Authority of India (AERA) over airport charges. The dispute, which is being played out in the Supreme Court, could have far-reaching implications for passengers and airlines using these airports.

Background of the Dispute

The six airports, which include Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati, and Thiruvananthapuram, were awarded to the Adani Group in 2019 and operationalised between 2021 and 2022 under long-term concession agreements with the Airports Authority of India (AAI). The Adani Group took over operations of these airports nearly five years ago, but the tariff certainty that the airports had expected soon after privatisation has yet to materialise.

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The Issue at Hand

The core issue at hand is the treatment of non-aeronautical revenues earned at airports while calculating tariffs payable by airlines and passengers. Non-aeronautical revenues include retail, lounges, food courts, parking, advertising, and other commercial activities. The Airports Economic Regulatory Authority of India (AERA) has been locked in a legal battle with the Adani Airports Holdings Ltd (AAHL) over how these revenues should be treated while calculating tariffs.

The Hybrid Till Model

Under the hybrid till model used by AERA, 30 percent of non-aeronautical revenues are used to subsidise aeronautical charges imposed on airlines and passengers. The regulator has taken the view that the arrangement between AAHL and its holding company, under which AAHL operates certain non-aero businesses and pays the airports either a minimum guaranteed fee or a percentage revenue share, understates the true commercial earning potential of the airports.

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TDSAT Ruling in Favour of Adani Airports

The dispute eventually moved to the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) in 2024, where the Adani-operated airports challenged multiple tariff orders issued by AERA. In September 2025, TDSAT ruled in favour of the airports on several key issues, including the treatment of non-aero revenues under the MSA structure. The tribunal accepted Adani airports' argument that the Master Service Agreement structure had been implemented through a competitive and transparent bidding process during the Covid-19 period.

AERA Challenges TDSAT Order in Supreme Court

However, AERA has challenged the TDSAT order before the Supreme Court, and the final outcome remains "monitorable". The Supreme Court is expected to take up the matter in July, as per the court's website.

Implications for Passengers and Airlines

The outcome of the dispute could likely determine if passengers and airlines using these six airports have to pay a higher fee. The dispute has been ongoing for several years, and the lack of tariff certainty has been a key monitorable risk for the Adani airport platform.

Credit Rating Agencies' Concerns

Credit rating agencies have repeatedly flagged the issue as a key monitorable risk for the Adani airport platform because tariff assumptions directly affect cash flows, debt servicing capability, and long-term airport economics. CRISIL, in a recent rating note, said "regulatory uncertainty" and differences over admissibility of non-aeronautical revenues remained a risk for the airports' debt service coverage ratio.