Tuesday, March 28, 2023
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Airports economic regulatory Bill gets LS nod, will ‘encourage development of smaller airports’

Airports Economic Regulatory Authority of India (Amendment) Bill proposes expanding the definition of 'major airports' that will help drive investment to smaller airports.

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New Delhi: The Lok Sabha Thursday passed the Airports Economic Regulatory Authority of India (Amendment) Bill to encourage the development of smaller airports in the country.

Passed amid a din surrounding the Pegasus scandal in the House, the Bill proposes an amendment to the Airports Economic Regulatory Authority of India (Amendment) Act, 2008, to extend the definition of “major airports”.

An extension of the definition will expand the scope of determining tariffs for smaller airports, thereby encouraging further investment in them.

The Bill was tabled by new Civil Aviation Minister Jyotiraditya Scindia, who hailed Prime Minister Narendra Modi for making air travel accessible for everyone.

“Prime Minister Modi is someone who truly democratized travel. In the midst of the spread of coronavirus and when there is sloganeering, our government is committed to the development of the poor and the farmers,” he said.

The Bill will now have to be passed by the Rajya Sabha.

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Amendment will help encourage development of smaller airports

The AERA Bill was first introduced in the Lok Sabha in March this year but was subsequently referred to a standing committee, which submitted its report on 22 July.

The report noted that tariffs for smaller airports will be unreasonably high if determined on a standalone basis.

“Therefore, an enabling provision for AERA to determine tariff for a group of airports is proposed by amending the definition of major airports. It would help encourage development of smaller airports,” the report stated.

At present, a “major airport” refers to one that has an annual passenger traffic of more than 35 lakh or any other airport specified by the central government.

The amendment proposes to replace the phrase “any other airports” with “group of airports”.

With this, the Bill seeks to group profitable airports with non-profitable ones so the latter are made more attractive for investment under the public-private partnership or PPP model.

According to the committee’s report, “The intention of the Government is to develop not only the high traffic volume profitable airports, but also the low traffic volume non-profitable airports.”

The AERA Bill was last amended in 2019 where the minimum annual traffic for an AERA-regulated airport was increased from 15 lakh to 35 lakh, reducing the number of airports under its ambit to 16 from 32.

According to PRS Legislative Research, a non-profit research institute, the change was made to ease pressure on AERA and to ensure that its efficiency remained intact.

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Role of AERA

With the advent of private players in the airport sector in 2006, there was a risk of monopoly by them. To counter this, the Airports Economic Regulatory Authority of India was established in 2008 under the AERA Act.

Before AERA came into existence, the Airports Authority of India — functioning under the civil aviation ministry — was in charge of monitoring services at airports.

However, several committees had pointed out a conflict of interest since AAI is also a regulatory body.

AERA is charged with regulating tariff and other charges for aeronautical services in airports and to also monitor the performance standards of airports.

Other charges of the body include development and passenger service fee, air traffic management, ground handling services, landing and parking of aircraft.

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