The Airports Economic Regulatory Authority of India Bill, 2007
The Airports Economic Regulatory Authority of India Bill, 2007
The Airports Economic Regulatory Authority of India Bill, 2007 to provide for the establishment of an Airports Economic Regulatory Authority to regulate tariff and other charges for the aeronautical services rendered at airports and to monitor performance standards of airports and also to establish Appellate Tribunal to adjudicate disputes and dispose of appeals and for matters connected therewith or incidental thereto.
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’.
- In India, there are 125 airports, of which 11 are international.2 till recently, all airports were owned and operated by the Airports Authority of India (AAI). The Airport Infrastructure Policy, formulated in 1997, allowed for private sector participation and has led to a number of existing and new airports being owned or managed by the private sector, including those at Kochi, Delhi, Mumbai, Bangalore and Hyderabad.
- Currently, the Airports Authority of India (AAI) owns and operates most airports in India, as well as plays the role of regulator, which results in conflict of interest. The Committee on a Road Map for the Civil Aviation Sector (Naresh Chandra Committee) which submitted its report in 2003 recommended creating an independent regulatory authority.
- The Bill seeks to establish the Airports Economic Regulatory Authority, an independent regulator to regulate tariff and other charges for the aeronautical services rendered at airports and to monitor performance standards of airports.
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.
Appellate Tribunal
The Bill establishes the Airports Economic Regulatory Authority Appellate Tribunal to adjudicate disputes among or between service providers and/or consumer groups. The government shall, in consultation with the Chief Justice of India appoint a Chairperson and two Members for 3-year terms. The Tribunal will not adjudicate on any dispute subject to the jurisdiction of the Monopolies and Restrictive Trade Practices Commission, the Competition Act, 2002, consumer courts or the Airports Authority of India Act, 1994. No civil court may entertain any suit over which the Tribunal has jurisdiction.
The government or any person may make an application for adjudication or an appeal to the Appellate Tribunal. Every appeal must be filed within 30 days and be disposed of within 90 days to the extent possible.
Applicants or appellants may either appear in person or authorise one or more chartered accountants, company secretaries, cost accountants, or legal practitioners to present his case to the Tribunal. Decisions or orders given by the Appellate Tribunal may be appealed to the Supreme Court within 90 days of the decision.
Penalties
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.
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