The Hindu Business Line : Non-aeronautical service charges off regulator purview

New Delhi, Aug. 29 The view of the Ministry of Civil Aviation that the proposed Airports Economic Regulatory Authority (AERA) should not regulate non-aeronautical service charges, including charges for office space, food and beverages and car parking has been accepted by the Union Cabinet.

The Ministry felt that while core services on the aeronautical side such as aircraft landing, parking, communication among others are usually the monopoly of the airport operator, the non-aeronautical services are usually provided through concessionaires, appointed through open competitive bidding process.

Normally, there are competing outlets for most non-aeronautical services, and, therefore, these are not monopolistic, the Ministry pointed out.

This was among the suggestions put forward by the Ministry of Civil Aviation as amendments to the AERA Bill approved today.

The suggestion by the Ministry that the revenue generated by the airport through non-aeronautical charges may be taken as a relevant factor to determine aeronautical services has also been accepted.

“Major airports earn a bulk of their revenues through non-aeronautical services which help them moderate aeronautical charges,” sources said.

AERA will also have the mandate to determine the fuel throughput charges being levied at major airports. The Ministry said that it is necessary to bring this under AERA purview as the common system through which aviation turbine fuel will flow would be in the control of the airport operator. “As such, there is scope for monopolistic practice developing for determining throughput charges,” sources said.

The Ministry suo motu felt that ground handling services relating to aircraft, passengers and cargo and services relating to cargo facilities which tend to be monopolistic must be included in the AERA ambit.

The Bill states that AERA shall determine tariff for aeronautical services, decide on the monies to be charged as development fee, passenger service fees apart from monitoring the performance of major airports.

The Government considers airports which have or are designed to have annual passenger throughput of more than 1.5 million passengers as major airports.

At the moment, there are 11 such airports which together generate almost 85 per cent of the revenues and passenger movements.

The remaining 78 operational airports handle less than 15 per cent of the passenger traffic and generate minimal revenues and therefore the Ministry felt that economic regulations of smaller airports would only lead to cumbersome procedures without commensurate regulatory benefits.

“At any time, however, if it is felt that an airport with less than 1.5 million passengers needs to be brought within the AERA ambit, the Government would be well within its powers to notify such an airport as a major airport,” the Ministry spokesperson said.

The Bill is now expected to be introduced during the forthcoming session of the Lok Sabha and if cleared will be notified in three-months, a Civil Aviation Ministry spokesperson said.

Related Stories:
New Hyderabad airport : Low-cost airlines fret over ground handling charges

More Stories on : Airlines | Policy | Regulatory Bodies & Rulings

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page