AERA Bill approved by Union Cabinet

On May 5, 2008, the Indian Government finally approved the Airport Economic Regulatory Authority (AERA) Bill, and passed it to the Parliament of India. This bill has been languishing since its introduction on September 5, 2007, by the Civil Aviation Minister Shri Praful Patel.

Till now, almost all airports in India were controlled and operated by the Airports Authority of India. The rates they charged were controlled by the government, and were artificially low. The newly introduced private airport operators in Cochin, Delhi, Mumbai, Hyderabad, and Bangalore, could not operate at these low rates. They began exercising their private monopoly powers and threatened to hit airlines, passengers, and industry with large raises in landing and parking fees, user development fees (UDF), and cargo handling fees.

As per the press release, the function of the AERA will be to:

  • Determine tariff structure for aeronautical services taking into consideration.
    • capital expenditure incurred and timely investment in improvement of airport facilities.
    • service provided, its quality and other relevant factors
    • cost of improving efficiency
    • economic and viable operation of major airports
    • concession offered by central government in any MoU; etc. provided that different tariff structures are determined for different airport
  • Determine the amount of development fees in respect of major airports
  • Determine amount of passenger service fee to be levied under the Aircraft Rules.
  • Monitor the performance standards relating to quality, continuity and reliability of service as may be specified by Central Government or any authority authorized by it.
  • Call for information as may be necessary to determine the tariff.
  • Perform such other tariff related functions as may be entrusted to it by the Central Government or as may be necessary to carry out the provision of the Act.

The Authority will also have penal powers. It will have the power to:

  • Penalize for willful failure to comply with its orders and directions of the AERA Act.
  • Punish for non-compliance of the orders of the Authority
  • Penalize for offences by companies
  • Penalize for offences by Government Departments.

The Authority shall determine tariff once in 5 years and may, if it considers appropriate in public interest amend, the tariff from time to time during the 5 years.

The AERA will have just 3 members, one Chairperson and 2 members, all appointed by the Central Government.

I can only hope that the Government pushes the bill through the Parliament, and sets up the AERA soon.

But, keep in mind, the AERA Bill is not meant for you and me, the individual passenger. Its is squarely aimed at the airlines and the airport operators.

For the last year, there has been a constant battle between the private airport operators and airlines. Earlier, DGCA, MoCA and Airports Authority of India (AAI) used to manage and regulate airports and aviation issues. With the AERA in place, private airlines can breathe a sigh of relief and hope to get fair treatment, and protection, from the monopolies of the airport operators, both private and Governmental.

If you are expecting relief from the outrageously high UDF being proposed by all the private airport operators, don’t hold your breath.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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