Logistics

Airports Economic Regulatory Authority to determine various charges for more airports

Our Bureau New Delhi | Updated on March 24, 2021

Aviation regulator will be able to to determine the tariff for a group of airports which, in turn, will encourage development of smaller airports

In an effort to facilitate privatisation of the smaller airports, the Government on Wednesday introduced a Bill to amend Airports Economic Regulatory Authority of India of India Act 2008.

The government intends to “amend the definition of ‘major airport’ so as extend its scope to determine the tariff for a group of airports also, which will encourage development of smaller airports.” This amendment will extend its scope for the regulator to determine the tariff for a group of airports also, which in-turn will encourage development of smaller airports.

Under the present Act, “major airport” has been defined to mean any airport which has, or is designated to have, annual passenger in excess of three and a half million. However, it does not provide for determination of tariff for a group of airports.

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JV & Leasing

Airports Authority of India (AAI) owns 137 airports in the country out of which, AAI has formed Joint Venture in seven airports. Recently, AAI, awarded six airports namely Ahmedabad in Gujarat, Jaipur in Rajasthan, Lucknow in Uttar Pradesh, Guwahati in Assam, Thiruvananthapuram in Kerala and Mangaluru in Karnataka for Operations, Management and Development under Public Private Partnership (PPP) for a period of 50 years.

In September 2019, AAI board approved leasing of another six airports namely Bhubaneshwar, Varanasi, Amritsar, Raipur, Indore and Trichy for undertaking operations, management and development through PPP. A suggestion was made to club each of these airports with nearby smaller airports for the purpose of joint development.

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Accordingly, the Government decided to club or pair airports having profitable and non-profitable airports which could be offered in public-private partnership mode as a package to the prospective bidders.

Smaller, non-profitable airports

According to the statement of objects and reasons of the Bill, the airports, where currently the traffic potential is low and loss making are not expected to attract reasonable competitive bids. Developing a greater number of airports through public-private partnership mode would expand air connectivity to relatively remote and far-flung areas. “This approach would develop not only the high traffic volume profitable airports but also the low traffic volume non-profitable airports,” the statement said.

The Airports Economic Regulatory Authority of India Act, 2008 provides for the establishment of an Airports Economic Regulatory Authority to regulate tariff and other charges for the aeronautical services rendered at airports and to monitor performance standards of airports

Being an independent regulator for protection of the interests of airports, airlines and passengers, the Regulatory Authority has, since its inception, been determining the tariffs of aeronautical charges at major airports in the country.

Published on March 24, 2021

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