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July 30, 2021

India passes AERA bill to support development of smaller airports

The airports in India are planned to be clubbed in a manner so as to present operational and financial synergies for the bidder.

The Government of India has passed the Airport Economic Regulatory Authority (AERA) Amendment Bill, which will see the integration of smaller loss-making airports run by the Airports Authority of India (AAI) with larger airports.

The move comes as it was felt that privatising larger airports would leave AAI with only small loss-making airports.

The AERA Amendment Bill, which proposes to amend the definition of ‘major airport’ under the Airports Economic Regulatory Authority Act, 2008 (Aera Act), was tabled in the Lower House of Indian Parliament by the Civil Aviation Minister Jyotiraditya Scindia and was passed amid the din.

Currently, an airport in India is considered as a ‘major airport’ if it has more than 3.5 million passenger traffic annually, or any other airport specified by the Indian government.

The new amendment proposes to replace the term ‘any other airports’ with ‘group of airports’.

AERA Bill was first tabled in the Lower House in March but was referred to a standing committee.

The committee submitted its report earlier this month.

In its report, the committee recommended that the tariffs will be too high for the smaller airports to cope with if they operate independently.

The report stated: “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 the development of smaller airports.”

The bill is claimed to support the development of the smaller airports in the country.

However, the bill will now have to be passed by the Upper House in order to come into effect.

According to some government sources, the airports will be clubbed in such a manner so as to present operational and financial synergies for the bidder.

The Government of India has already announced that it will privatise AAI-operates airports in cities like Amritsar, Varanasi, Bhubaneshwar, Indore, Raipur and Tiruchirapalli, but is yet to finalise the airports that can be paired with them for disinvestment.

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