2019 – Posted in: Daily News – Tags: Airport authority of India

AIRPORTS ECONOMIC REGULATORY AUTHORITY OF INDIA (AMENDMENT) BILL, 2019

For: Preliminary & Mains

Topics covered: About the bill, Why was AERA created, Role of AERA

The Rajya Sabha passed a bill allowing the AERA to bid out any new airport at a pre-determined tariff structure.

16 airports will be in the purview of Airports Economic Regulatory Authority of India (AERA).
Currently, there are 32 major airports with an annual capacity to handle fifteen lakh passengers come under the purview of Airports Economic Regulatory Authority of India.

The definition of major airports would be changed to any aerodrome which has or is designated to have an annual passenger capacity of thirty-five lakh.
It bill amends the Airports Economic Regulatory Authority of India Act, 2008.
The Act established the AERA.
The Bill adds that AERA will not determine: (i) the tariff, (ii) tariff structures, or (iii) the development fees, in certain cases.

The AERA is a regulator that has the powers to set the tariffs charged at airports.

Under the Act, AERA is responsible for determining:

(i) the tariff for aeronautical services at different airports every five years

(ii) the development fees of major airports

(iii) the passengers’ service fee.

A few years back, private players started operating civilian airports.
Typically, airports run the risk of becoming a monopoly because cities usually have one civilian airport which controls all aeronautical services in that area.
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 AERA Act, 2008 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.
In 2018-19, there were 32 such airports.
As of June 2019, 27 of these are being regulated by AERA (AERA also regulates tariffs at the Kannur airport which was used by 89,127 passengers in 2018-19).
For the remaining airports, tariffs are determined by the Airports Authority of India (AAI), which is a body under the Ministry of Civil Aviation that also operates airports.

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