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THE AIRPORTS ECONOMIC REGULATORY AUTHORITY OF INDIA (AMENDMENT) BILL 2021

 The aviation sector of India is one of the fastest growing in the world.  Domestic traffic in India has more than doubled, from around 61 million in FY14 to around 137 million in FY20, a year-on-year increase of more than 14%. By the year FY25, it is predicted to have grown from the third largest domestic aviation market to the third largest overall, including both domestic and international traffic.[1]

The Airport Economic Regulatory Authority of India (Amendment) Bill, 2021, was introduced in the Lok Sabha on March 24, 2021, with the goal of establishing airports. Tariffs and other charges for aeronautical services given at airports to regulated by the Economic Regulatory Authority, which also monitors airport performance standards and other related issues.

STATEMENT OF OBJECT AND REASONS

The Airports Economic Regulatory Authority of India Act, 2008 establishes an Airports Economic Regulatory Authority to regulate tariffs and other charges for aeronautical services rendered at airports, as well as to monitor airport performance standards and for other matters related to or incidental to airports.

The Airports Economic Regulatory Authority of India has been setting the tariffs of aeronautical charges at major airports in India since its foundation as an independent regulator for the protection of airports, airlines, and passengers. The term “major airport” has been defined under the said Act to mean any airport that has, or any other airport that the Central Government may designate as such by notification, with an annual passenger throughput in excess of three and a half million. It does not, however, allow for the creation of a tariff for a group of airports.

Airports with minimal traffic potential and that are currently losing money are unlikely to attract competitive bids. Expanding air connection to relatively rural and far-flung places will require new airports to be built through public-private partnerships. This strategy would help not only successful airports with high traffic volumes, but also non-profitable airports with low traffic volumes. As a result, the government has chosen to group or pair airports with profitable and non-profitable airports that might be offered as a package to potential bidders in a public-private partnership manner.

As a result, the Airports Economic Regulatory Authority of India (Amendment) Bill, 2021 intends to change the definition of “major airport” to include a group of airports in determining tariffs, so encouraging the development of smaller airports.

The Bill seeks to achieve the above objectives.

OBJECTIVES

  1. Airports with minimal tariff potential and a loss-making history are not expected to attract reasonable competitive offers.
  • Expanding air connection to relatively rural and far-flung places will require new airports to be built through public-private partnerships. This strategy would help not only profitable airports with large tariff volumes, but also non-profitable airports with low tariff volumes. (For the fiscal year 2018-19, there are 102 airports that are losing money.) – Annexure-I)
  • As a result, the government has decided to group or pair airports with profitable and non-profitable airports that might be offered as a package to potential bidders in a public-private partnership manner.

BACKGROUND

The Airports Economic Regulatory Authority of India (AERA) was founded as a statutory agency of the Indian government on May 12, 2009. The Airports Economic Regulatory Authority of India Act, 2008 was enacted by the Indian Parliament. The Act’s provisions went into effect in September of 2009. The Airports Economic Regulatory Authority would be established under the Act to control tariffs and other charges for aeronautical services delivered at airports, as well as to monitor airport performance requirements.

The term “major airport” is defined in the Act as any airport that has, or is designated to have, an annual passenger throughout of more than three and a half million, or any other airport that the Central Government may designate as such by notification. It does not, however, allow for the creation of a tariff for a group of airports.

As on date[2] there are 28 major airports in India, namely:- 1. Indira Gandhi International Airport, Delhi 2. Chatrapati Sivaji International Airport, Mumbai 3. Chennai International Airport 4. Sardar Vallabhbhai Patel International Airport, Ahmedabad 5. Trivandrum International Airport, Thiruvananthapuram 6. Lokpriya Gopinath Bordoloi International Airport, Guwahati 7. Goa International Airport, Goa 8. Srinagar International Airport, Srinagar 9. Kempagowda International Airport, Bengaluru  10. Rajiv Gandhi International Airport, Hyderabad  11. Cochin International Airport, Kochi 12. Netaji Subhas Chandra Bose International Airport, Kolkatta 13. Calicut International Airport, Kozhikode 14. Chaudhary Charan Singh International Airport, Lucknow 15. Jaipur International Airport, Jaipur 16. Pune Airport, Pune 17. Bagdogra Airtport, Bagdogra 18. Kannur International Airport, Kannur  19. Biju Patnaik International Airport, Bhubaneswar 20. Jay Prakash Narayan International Airport, Patna 21. Devi Ahilya Bai Holkar Airport, Indore 22. Visakhapatnam Airport, Visakhapatnam 23. Mangaluru Airport, Mangaluru 24. Coimbatore International Airport, Coimbatore 25. Chandigarh International Airport, Chandigarh 26.  Dr. Babasaheb Ambedkar International Airport, Nagpur 27.Varanasi Airport, Varanasi  28.  Amritsar Airport, Amritsar. Airport Authority of India (AAI) manages a total of 137 airports which include 24 International airports.

SALIENT FEATURE

As a result, the Airport Economic Regulatory Authority of India (Amendment) Bill, 2021 proposes to change the definition of “major airport” to include a group of airports in determining tariffs, hence encouraging the construction of smaller airports.

The table below shows the key revisions to the Principal Act of 2008 and their comparison to proposed amendments for 2021.

Section and Clause in The Airports Economic Regulatory Authority of India Act, 2008 (27 of 2008)Provisions in The Airports Economic Regulatory Authority of India Act, 2008 (27 of 2008)Provisions in proposed amendment Bill of 2021.
Section 2, Clause(i)“any other airport”“or a group of airports” shall be inserted after the words “any other airport”

Benefits of the proposed Amendment Bill

The Amendment is intended to expand its reach to include determining the tariff for a group of airports, which will help minor airports grow.

AUTHOR-

ANKITA JAGATRAMKA

3RD YEAR BBA,LL.B.

IFIM LAW SCHOOL.


[1]  Economic Survey 2020-21

[2] https://www.civilaviation.gov.in/sites/default/files/MoCA_Annual_Report_2018_19.pdf

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