Bangalore: The government is set to regulate transport of cargo by air, a senior commerce ministry official told a meeting of representatives from trade and cargo associations.
Cargo services at airports have been included in the draft Airports Economic Regulatory Authority of India Bill, 2007, R. Gopalan, additional secretary, commerce ministry, said in Chennai recently, according to a person who attended the meeting but didn’t want to be named.
In the initial draft Bill, cleared by the Union cabinet in May 2007 for introduction in Parliament, the authority was meant to fix and approve tariffs for aeronautical services, apart from monitoring pre-set performance standards at the country’s airports, but cargo activities were not included. “We want cargo services also to be brought under the ambit of the proposed Airports Economic Regulatory Authority Bill,” said J. Krishnan, vice-president of the Air Cargo Agents Association of India. “Otherwise, anybody can charge anything and get away with it.”
Monitoring standards: Cargo services have been included in the airports economic regulatory authority Bill. Photograph: Rajeev Dabral / Mint
Trade bodies had sought the inclusion of cargo activities in the proposed legislation, which is modelled on a UK regulatory system where aeronautical services do not cover cargo and related activities.
A parliamentary standing committee headed by Sitaram Yechury, of the Communist Party of India (Marxist) had recommended including cargo in the Bill after hearing the air cargo industry.
Cargo transported by air accounts for about 5% of India’s total external trade by volume, and 35% in terms of value, said an official with the Federation of Indian Export Organisations. In comparison, 95% of India’s trade by volume and 65% by value moves by sea. A miniscule portion of trade moves over land.
Tariffs at the 12 state-owned ports are regulated by the Tariff Authority for Major Ports, and these account for about 75% of the cargo handled in India.
Typically, airport operators earn about 35% of their revenues from cargo services, while the majority 65% comes from passengers. “We want all airport operators, including the Airports Authority of India and private airport operators that provide cargo services, to be regulated,” said Krishnan.
This includes terminal processing and storage charges and demurrage. The proposed body for airports will have a chairperson and two other members.
The prices set by the regulator for services provided by airport operators will be valid for a five-year period. The regulator, however, will have powers to revise the tariffs.