The Airports Economic Regulatory Authority of India Bill, 2007

Highlights of the Bill

• The Airports Economic Regulatory Authority of India Bill, 2007 establishes an independent regulator to determine tariffs charged by all major airports - those with annual passenger traffic higher than 15 lakh and any other airport notified by the government.

• The AERA shall consist of a chairperson and two other members. An additional member shall be nominated by the Ministry of Defence for matters involving a civil airport in a defence airfield.

• The AERA will be responsible for determining the tariff for aeronautical services at different airports every five years, the amount of development fees of major airports, the passengers service fee, and monitor performance standards of services.

• The Bill also establishes an Airports Economic Regulatory Authority Appellate Tribunal to adjudicate disputes among or between service providers and/or consumer groups. No civil court may entertain any suit over which the Tribunal has jurisdiction.

• Fines for non-compliance of orders of AERA or the Tribunal will be up to one lakh rupees for a first time offence, two lakh for subsequent offences, and up to two lakh per day for a continuing contravention.

Key Issues and Analysis

• AERA has the purview to regulate tariffs for only major airports. Of the 125 airports in India, 11 had over 15 lakh passengers in 2006-07.

• AERA has the power to regulate tariffs for ‘aeronautical services', and not for other services. For some of these services, the airport may have monopolistic power, which is not being regulated.

• AERA will set tariffs for airports every five years. Unlike some other countries, the Bill does not propose a mechanism to automatically adjust tariffs in the intermediate period to factor inflation etc.

• This Bill allows the Central Government to remove the chairperson or any member from office based on an inquiry by the government. In this case, the power to remove is much broader than in the case of some other regulators, such as the Telecom Regulatory Authority of India.

• AERA is given the power to determine development fees. However, the Bill does not define the term ‘development fees'.