Airport privatisation and branding

    21-Aug-2021
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Kamal Baruah
The financial stress caused by Covid-19 probably made the Central Government to move in the direction of disinvestment by monetizing public infrastructures assets, Government owned assets and Public Sector Undertakings. And with India becoming to be the world's third largest aviation market by 2024, the Centre is trying to attract investors to Tier-2, Tier-3 airports by amending the AERA (The Airports Economic Regulatory Authority of India). But AERA(Amendment), 2021 is in the news recently as it seeks to amend the original AERA Act, 2008.
The Airports Authority of India (AAI) was initially  running and managing the airports. A change was made later in the civil aviation policy as some private players were also given airports to run for the reason behind to provide consumers with great services. However airports run the monopoly because cities usually have one airport, which controls all aeronautical services in that area.To safeguard air travelers from misusing the monopoly of private airport operators, the need for an independent tariff regulator in the airport sector was felt.
AERA Act, 2008 was set up as a statutory body keeping in mind that the country needs to have an independent regulator who has transparent rules and can take care of the interests of the service providers as well as that of the consumers. The AERA regulates tariffs and other charges such as development fee and passenger service fee for aeronautical services for air traffic management, landing and parking of aircraft, ground handling services at major airports.
The major provisions in AERA (Amendment), 2021 propose to amend the definition of major airport to include a group of airports. The 2008 Act designates an airport as a major airport, if it has annual passenger traffic of at least 35 lakh.The Government may also designate any airport as a major airport by a notification. It allows AERA to regulate tariff and other charges for aeronautical services for not just major airports with annual passenger traffic of more than 35 lakh, but also a group of airports.The Government will be able to club profitable and non-profitable airports as a combination/package to bidders to make it a viable combination for investment under PPP (Public-Private Partnership) mode.
(To be contd)