The Airports Economic Regulatory Authority of India (Amendment) Bill, 2021, represents a significant legislative step aimed at enhancing the aviation infrastructure in India, particularly focusing on the development of smaller airports and improving air connectivity across longer distances within the country. Passed by both houses of the Parliament, this amendment is poised to redefine how airports, especially those with lower traffic volumes, are managed and developed, addressing the needs of Tier-II and Tier-III cities.
Expansion of ‘Major Airport’ Definition
One of the key changes introduced by the Airports Economic Regulatory Authority of India (Amendment) Bill, 2021, is the expansion of the definition of a ‘major airport’. Previously, a ‘major airport’ was defined based on specific criteria such as passenger traffic. The amendment allows for the tariff determination of a ‘group of airports’ which enables the authorities to combine profitable and non-profitable airports for tariff setting purposes. This grouping mechanism is designed to cross-subsidize smaller airports that may not generate sufficient revenue on their own, thus supporting their operational and infrastructural development.
Focus on Developing Unprofitable Airports
A significant challenge in the aviation sector has been the sustainability of airports with low traffic volumes. These airports often struggle to cover their operational costs and require financial support to remain functional. The amendment bill directly addresses this issue by aiming to develop these unprofitable airports. By allowing the revenue generated from more profitable airports to be used in supporting smaller ones, the bill ensures that lesser-used airports can improve their facilities and services, potentially increasing their attractiveness to airlines and passengers.
Changes to Tariff Provisions for Single Airports
In addition to the provisions for grouping airports, the amendment also revises the tariff structure for single airports. The bill proposes changes that would enable a more balanced and equitable approach to tariff setting, taking into account the unique circumstances and financial viability of individual airports. This approach intends to create a more conducive environment for the growth of all airports, regardless of their size or passenger volume.
Utilization of Revenue for Tier-II and Tier-III Cities
An essential aspect of the bill is the focus on using the revenue generated from airport operations for the development of airports in Tier-II and Tier-III cities. These cities are considered crucial for the overall economic development of the country but often lack the necessary aviation infrastructure. By channeling funds into these areas, the government aims to facilitate better connectivity and foster regional development. This move is expected to have a positive impact on tourism, business travel, and the economy in these regions.
Implications for Air Connectivity and Economic Growth
The overarching goal of the Airports Economic Regulatory Authority of India (Amendment) Bill, 2021, is to enhance air connectivity, especially over long distances within India. By improving the infrastructure and financial health of smaller airports, the bill lays the groundwork for a more integrated and comprehensive national air travel network. Enhanced connectivity will not only make air travel more accessible to a broader segment of the population but will also stimulate economic growth by connecting different parts of the country more effectively.
The passage of this amendment bill marks a proactive step by the Indian government to address the disparities in airport development and operations. By adopting a more holistic approach to tariff determination and revenue allocation, the bill seeks to ensure that the benefits of the aviation sector are more evenly distributed, thereby contributing to the nation’s social and economic development.
