The Base Fare and Fuel Surcharge
The price of any ticket starts with the base fare, which is the airline's charge for transporting you from point A to B. This is the figure that airlines use in promotional materials, but it's only a fraction of the total cost. Added to this is the fuel
surcharge, often denoted as YQ on your ticket. This component covers the cost of Aviation Turbine Fuel (ATF), which is the single largest operating expense for an airline, often accounting for 35-45% of their total costs. Unlike many other countries, India levies high taxes on ATF, making it one of the most expensive places in the world to fuel a plane. The government also sometimes imposes windfall taxes on ATF exports, which can influence domestic supply and pricing dynamics. Together, the base fare and fuel surcharge make up the portion of the ticket price that goes directly to the airline.
Airport Fees: UDF, ADF and PSF
A significant portion of your ticket price goes towards fees collected on behalf of airport operators. The most common are the User Development Fee (UDF) and the Airport Development Fee (ADF). The UDF is charged to passengers to fund the ongoing operations, maintenance, and development of an airport, including terminals, runways, and baggage systems. The ADF, where applicable, is typically used to finance major upgrades or the construction of new airports. These fees are not uniform; they are set by the Airports Economic Regulatory Authority (AERA) and vary significantly from one airport to another. For example, Mumbai airport has different UDF rates for domestic, international economy, and international business class passengers. Additionally, there is a Passenger Service Fee (PSF), which covers security services like screening, and is often bundled into the UDF at many airports.
Government Taxes: The GST Component
The Goods and Services Tax (GST) is another mandatory addition to your airfare. In India, GST on air travel is applied based on the class of service. Economy class tickets attract a 5% GST rate. However, for premium classes such as Premium Economy, Business, and First Class, a higher GST rate of 18% is levied. This tax applies to both domestic flights and international flights that originate in India. It's calculated on the sum of the base fare and the fuel surcharge. Interestingly, while the UDF and ADF are part of your ticket cost, they are generally exempt from GST. This two-tiered tax system was designed to keep economy travel relatively affordable while taxing premium services at a higher rate.
The Rise of Ancillary Charges
The final layers of cost are ancillary fees, also known as add-ons. These are charges for services that were once bundled into the ticket price but are now sold separately. This includes fees for checked baggage beyond the standard allowance, seat selection, in-flight meals, and priority boarding. These charges have become a critical revenue stream for airlines, particularly low-cost carriers. While these add-ons are optional, some have become a point of contention. For instance, following widespread passenger complaints about being charged for even basic seat choices, India's aviation regulator, the DGCA, mandated in March 2026 that airlines must offer at least 60% of their seats for free selection. However, even if you avoid all other extras, cancellation or ticket change fees also attract a steep 18% GST.
