Airport charges may fall as AERA ambit shrinks

NEW DELHI: The government has decided to more than double the passenger traffic threshold for airports to be categorised as ‘major airports,’ effectively reducing the ambit of the Airports Economic Regulatory Authority (AERA).“The Union Cabinet on Monday approved the note we moved on the issue,” said a senior aviation ministry official who did not want to be identified. The Cabinet also approved an amendment to the AERA Act that will allow the government to bid out private airport projects on the basis of predetermined tariff.AERA was created to decide charges at major airports, handling over 1.5 million passengers per annum. Now, as per an aviation ministry proposal, only airports handling 3.5 million passengers per annum will be classified as ‘major,’ a move that removes 17 airports from this bracket.69951105 AERA, which regulated 30 airports, will now have only 13 airports under it. The job of deciding charges at the remaining 17 now comes back to the civil aviation ministry, and airlines and passengers can expect respite in charges.The regulator was part of the government’s public-private partnership (PPP) plan to develop airports, which required a mechanism to decide charges at airports built through private investment.FLAYED FOR HIGH AIRPORT CHARGESIt decided charges on the basis of a certain rate of return on the amount invested in the airport.AERA was criticised for employing a model that has led to high airport charges, comprising up to15% of the airline’scostof operations. Another official said there was too much in AERA’s kitty due to a double-digit increase in air passengers in the past four years.PREDETERMINED TARIFFThe government can now also bid out private airport projects on the basis of predetermined tariff. “The AERA Act gives powers to the regulator to decide on charges. The amendment will allow the government to award projects after fixing the airport tariff,” said one of the officials quoted above.In the predetermined tariff model, the government will fix the fee that the prospective private airport operator will charge. This will be linked to inflation for any future increase.This model will help keep airport charges under control and also ensure regulatory certainty —not justfor airlines and passengers,but alsofor companies bidding for PPP airport projects.

from Economic Times https://ift.tt/2RCovDH