Airports Economic Regulatory Authority of India 

 

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Topics covered: About Airports Economic Regulatory Authority of India

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News Flash

AERA regulates tariffs and other charges for aeronautical services provided at civilian airports with annual traffic above 15 lakh passengers.

It also monitors the performance standard of services across these airports.

 

Background

In July 2019, Rajya Sabha passed the Airports Economic Regulatory Authority of India (Amendment) Bill, 2019. The Bill amends the Airports Economic Regulatory Authority of India Act, 2008. The Act established the Airports Economic Regulatory Authority of India (AERA).

 

Why was AERA created?

A few years back, private players started operating civilian airports, which turns the risk of becoming a monopoly. To ensure that private airport operators do not misuse their monopoly, the need for an independent tariff regulator in the airport sector was felt. Consequently, the Airports Economic Regulatory Authority of India Act, 2008 (AERA Act) was passed which set up AERA.

AERA regulates tariffs and other charges (development fee and passenger service fee) for aeronautical services (air traffic management, landing and parking of aircraft, ground handling services) at major airports.  Major airports include civilian airports with annual traffic above 15 lakh passengers.

 

What changes are being proposed in the Bill?

The Bill seeks to do two things:

Definition of major airports: Currently, the AERA Act defines a major airport as one with annual passenger traffic over 15 lakh, or any other airports as notified by the central government.  The Bill increases the threshold of annual passenger traffic for major airports to over 35 lakh.

 

Tariff determination by AERA: Under the Act, AERA is responsible for determining the: (i) tariff for aeronautical services every five years, (ii) development fees, and (iii) passengers service fee.  It can also amend the tariffs in the interim period.

The Bill adds that AERA will not determine: (i) tariff, (ii) tariff structures, or (iii) development fees, in certain cases.  These cases include those where such tariff amounts were a part of the bid document on the basis of which the airport operations were awarded.  AERA will be consulted (by the concessioning authority, the Ministry of Civil Aviation) before incorporating such tariffs in the bid document, and such tariffs must be notified.

 

Source: PRS India

 

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