In recent news, the Airports Economic Regulatory Authority of India (AERA) Amendment Bill, 2021 has been passed by the Lok Sabha. The bill was introduced initially in March 2021 and was then referred to a parliamentary standing committee on transport, tourism, and culture for review. The committee approved the bill without making any changes. Through this amendment, modifications would be made to the Airports Economic Regulatory Authority of India Act, 2008.
Key Provisions Under the Bill
One of the primary provisions under this amendment is related to the definition of a major airport. The bill proposes broadening this definition to encompass a group of airports. As per the 2008 Act, an airport is considered a major airport if it witnesses annual passenger traffic upwards of 35 lakh. However, with the passing of the new bill, the central government will have the authority to designate any airport as a major airport through a formal notification.
Tariff Regulations
Another significant provision of the bill pertains to tariff regulation. Post the implementation of the bill, AERA will hold the responsibility to regulate tariff along with other charges for aeronautical services not only for major airports but also for a group of airports accounting for annual passenger traffic exceeding 35 lakhs.
Profitable Clubbing: A Potential Game-Changer
Through the proposed amendment, a provision of profitable clubbing has been introduced. This provision implies that the government can combine profitable and non-profitable airports and offer them as a package to bidders. This step aims to create an investment-friendly environment for investors under the PPP (Public-Private Partnership) model.
Significance of the Amendment Bill
This bill is primarily targeted at expansion of air connectivity to relatively remote areas, thereby promoting the UDAN regional connectivity scheme. Moreover, it also holds potential to spur development of smaller airports.
Addressing Concerns
Despite the benefits, a major concern associated with this bill is the lack of clear criteria for deciding which airports should be clubbed together to qualify under the newly proposed definition of ‘a group of airports’.
Background of Airports Economic Regulatory Authority of India
Originally, the Airports Authority of India (AAI) was responsible for managing and running airports. Over time, changes were made to civil aviation policy, allowing private players to operate airports. This was done to enhance service quality. In light of the potential risk of monopoly associated with airports, the need for an independent tariff regulator in the airport sector was identified.
About AERA
The Airports Economic Regulatory Authority of India Act was passed in 2008, leading to the establishment of AERA as a statutory body. The primary intent behind this was to have an independent regulator with transparent rules to safeguard the interests of both service providers and consumers.
Role and Functions of AERA
AERA holds the responsibility to regulate tariffs and other charges such as a development fee and passenger service fee for aeronautical services at major airports. These services entail air traffic management, aircraft landing and parking, along with ground handling services.