AERA Amendment Bill Passed By Lok Sabha, ‘Major Airport’ Redefined

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The Lok Sabha on Thursday passed the Airports Economic Regulatory Authority of India (AERA), Amendment Bill 2021 that proposes to amend the definition of “major airport” so as to extend its scope to determine the tariff for a group of airports.

The AERA Amendment Bill was tabled in Parliament by the new Civil Aviation Minister Jyotiraditya Scindia. Consequently, this amendment is termed as necessary to encourage the development of the smaller airports.

The AERA Amendment Bill, which was passed amid protests by the opposition parties over the Pegasus snooping issue. The AERA amendment bill was passed through a voice vote.

AERA Amendment to Become Act

First introduced in March 2021, the AERA Amendment Bill was subsequently referred to a parliamentary standing committee on transport, tourism and culture, which had approved it without any changes.

The committee tabled its report on the bill in Rajya Sabha on Thursday. The Bill will now have to be passed in Rajya Sabha to become an Act.

“The purpose of this amendment is to pair the smaller non-profitable airports with profitable airports as a combination/package to bidders to make it a viable combination for investment under PPP (public-private partnership) mode,” said Poonam Verma, partner, J Sagar Associates.

Ms. Verma added that this move is also likely to help in expanding the air connectivity to relatively remote areas and as a result, expediting the UDAN scheme.

“The amendment will allow AERA to regulate tariff and other charges for aeronautical services for not just major airport with annual passenger traffic of more than 3.5 million, but also a group of airports together,” she said.

Group of Airports

Ms. Verma added that there is a lack of clarity in the Bill regarding the criterion of deciding which airports will be clubbed together to qualify under ‘a group of airports’ definition, “whether it will be the passenger traffic of more than 3.5 million or some other factors too? This clarity needs to be brought in to achieve the objective of the Bill.”

The Airports Economic Regulatory Authority (AERA) of India (Amendment) Bill, 2021 was introduced in Lok Sabha on March 24, 2021. It seeks to amend the Airports Economic Regulatory Authority of India Act, 2008.

The 2008 Act established the Airport Economic Regulatory Authority (AERA). AERA regulates tariffs and other charges (such as airport development fees) for aeronautical services rendered at major airports in India.

Major Airports

The 2008 Act designates an airport as a major airport if it has an annual passenger traffic of at least 35 lakh. The central government may also designate any airport as a major airport by a notification. The Bill adds that the central government may group airports and notify the group as a major airport.

Once the Bill is passed by Parliament, the government will be able to club profitable and non-profitable airports as a package for privatisation.

Joint-Development

The Airports Authority of India (AAI) Board in its meeting in September 2019 approved leasing of six airports which include Bhubaneshwar, Varanasi, Amritsar, Raipur, Indore and Trichy. The government has proposed to club each of these airports with nearby smaller airports, which can be developed jointly.

The Airports Economic Regulatory Authority or AERA is a regulatory agency under Government of India to regulate tariff and other expenditure and fees for major airports.

AERA Domestic Mumbai-airport - Aviatorsbuzz
File photograph integrated Terminal 2 of Chhatrapati Shivaji Maharaj International Airport, Mumbai. Source: rediff.com

As per a report by Moneycontrol in March 2021, the government is looking to raise Rs. 20,000 crore in 2021-22 and is all set to sell its residual stake in Delhi, Mumbai, Bengaluru and Hyderabad airports. Furthermore, the government has identified 13 more airports run by the AAI for privatisation.

According to industry observers, airports like Kanpur, Gorakhpur, Agra and Aligarh could be clubbed together as a ‘major airport’ and then bids can be invited for their operation and redevelopment. Similarly, airports at Nashik, Aurangabad and Nagpur can also be grouped together to be redeveloped and operated.

 

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