Airports Economic Regulatory Authority (AERA)

The Airports Economic Regulatory Authority (AERA) serves as an essential statutory body that was established under the Airports Economic Regulatory Authority (AERA) of India Act 2008. This Act was enacted by the Parliament of India, reflecting a significant legislative initiative aimed at enhancing the regulatory landscape of the aviation sector. The formal notification of this Act was published in the Gazette No. 36 dated 05.12.2008, marking a pivotal development in the governance framework overseeing airport operations in India. The inception of AERA was largely driven by the pressing need for a specialized authority dedicated to the economic regulation of airports, ensuring that the services rendered at these facilities are not only efficient but also equitable and justifiable for all stakeholders involved.

Airports Economic Regulatory Authority (AERA)

The primary objective of the Act is to create a comprehensive and robust framework for the establishment of AERA, which is entrusted with the critical responsibilities of regulating tariff and other charges associated with aeronautical services provided at various airports throughout the nation. This encompasses a wide range of activities, including the determination of tariffs and the vigilant monitoring of performance standards to guarantee that airports uphold the requisite quality of service. The regulatory oversight provided by AERA is designed to strike a delicate balance among the interests of airport operators, airlines, and passengers, thereby fostering a fair, transparent, and competitive environment within the aviation sector.

FOUNDATION DATE

The Airports Economic Regulatory Authority was officially established on the 12th of May 2009, subsequent to its formal notification by the Central Government. This date signifies the commencement of AERA's mission to bolster the regulatory framework that governs airport operations and economic practices in India, laying the groundwork for future developments in the aviation industry.

COMPOSITION

Chairperson and Members: 

The Authority is structured to comprise a Chairperson along with 2 other Members, all of whom are appointed by the Central Government. This composition is intentionally designed to ensure that the Authority is led by individuals possessing substantial expertise and extensive experience in relevant fields, thereby enhancing the effectiveness of its operations. Importantly, in situations where the Authority is tasked with addressing issues related to a civil enclave situated within a defence airfield, an additional Member will be nominated by the Ministry of Defence. This Member must hold a rank no lower than Additional Secretary to the Government of India, underscoring the necessity for collaboration and coordination between the civil aviation sector and the defence domain, which is crucial for comprehensive oversight.

Secretary and other officers:

To facilitate the smooth and effective functioning of AERA, the Central Government has the authority to appoint a Secretary. The role of the Secretary is pivotal, as they are responsible for managing the administrative and operational aspects of the Authority as outlined in the Act. Furthermore, AERA is empowered to appoint additional officers and staff as deemed necessary to ensure the efficient execution of its responsibilities. In accordance with established regulations, AERA may also engage a diverse array of experts and professionals who exhibit exceptional integrity and possess specialized knowledge in critical domains such as economics, law, and aviation. This strategic engagement of subject matter experts significantly enhances the Authority’s capability to make well-informed decisions and recommendations that are vital for the effective regulation of the aviation sector.

FUNCTIONS

• One of the primary functions of AERA is to determine the tariff for aeronautical services, taking into account a variety of critical factors, including:

  • The capital expenditure that has been incurred, along with considerations for timely investments aimed at the enhancement of airport facilities, ensuring that these facilities can meet future demands.

  • The quality of services provided, alongside other relevant factors that may impact operational efficiency, which includes customer satisfaction and service reliability.

  • The costs associated with improving operational efficiency and ensuring the economic viability of major airports, which is essential for sustaining growth in the aviation sector.

  • Revenue generated from services that are not classified as aeronautical services, providing a broader perspective on airport financial health.

  • Any concessions granted by the Central Government through agreements, memoranda of understanding, or other arrangements, which can influence tariff structures.

  • Any additional factors that may be pertinent to the objectives outlined in this Act, allowing for flexibility in tariff determination.

AERA possesses the authority to establish distinct tariff structures for various airports, taking into account all or any of the aforementioned considerations specified in sub-clauses (i) to (vi);

• Additionally, AERA is responsible for determining the amount of development fees applicable to major airports, which plays a crucial role in funding airport infrastructure and improvements, thereby enhancing the overall passenger experience;

• The Authority also determines the amount of the passenger service fee as mandated under rule 88 of the Aircraft Rules, 1937, which was established under the Aircraft Act of 1934, ensuring that the fees are set in a manner that reflects the quality of service provided;

• Moreover, AERA is tasked with the monitoring of established performance standards that relate to the quality, continuity, and reliability of services, as specified by the Central Government or any authorized authority, ensuring that airports maintain high operational standards;

• To facilitate its functions, AERA has the authority to call for necessary information that is required to determine tariffs under the aforementioned clause, promoting transparency and accountability in its operations;

• Lastly, AERA is empowered to perform any other functions related to tariff regulation that may be assigned to it by the Central Government or that are essential for the enforcement of the provisions of this Act, allowing the Authority to adapt to evolving circumstances within the aviation sector.

TARIFF FIXATION

In accordance with Section 13(2) of the Act, AERA is mandated to determine the tariff once every five years. This systematic approach to tariff fixation ensures that the regulatory framework remains relevant and responsive to the dynamic nature of the aviation industry. However, the Authority retains the flexibility to amend the established tariff during this five-year period if deemed appropriate and in the interest of the public. This provision allows AERA to respond effectively to changing economic conditions, operational requirements, and emerging trends, ensuring that the tariffs remain fair, justifiable, and aligned with the best interests of all stakeholders involved.

APPLICATION

As outlined in Section 1(3), the AERA Act is applicable to a diverse array of categories, which include:

• All airports where air transport services are currently operated or are planned to be operated in the future, with the exception of airports and airfields that are owned by or are under the control of the Armed Forces or paramilitary Forces of the Union, thereby ensuring that civilian aviation regulations remain distinct;

• All private airports, which are essential for catering to the growing demand for air travel, reflecting the increasing privatization and commercialization of the aviation sector;

• All leased airports, which may operate under various contractual arrangements, thereby encompassing a wide range of operational models;

• All civil enclaves, which serve as important nodes for civil aviation, facilitating connectivity and accessibility;

• All major airports, which are critical for national and international air traffic, ensuring that these key infrastructure assets are effectively regulated.