Home / Economy / Govt working to simplify tariff formula for minor airports

NEW DELHI : The civil aviation ministry and Airports Economic Regulatory Authority are working to simplify the tariff-setting mechanism for all minor airports in India, two officials said.

“The ministry and AERA are working on defining formulas for minor airports under three categories. It is still in early stages of discussions and no decision has been made yet," a senior government official said, requesting anonymity.

AERA sets the tariff for major airports, including charges for landing, parking, and ground handling services. The authority was established in 2008 to regulate tariffs, development fees and passenger service fees for aeronautical services at major airports.

For remaining airports, tariffs are determined by airport operators with guidance from AERA. Most airports are run by the Airports Authority of India, a body under the civil aviation ministry.

According to preliminary discussions, the ministry and AERA are exploring different formulas for determining airport tariff for three categories of minor airports.

“For now, we are looking at classifying airports under three segments. One could be those with up to 0.5 million passengers per annum, two, between 0.5 and 1.5 million annual air traffic, and the third category can be between 1.5 and 3.5 million passengers per annum," a second official said also seeking anonymity.

Currently, over 100 airports in India have annual air traffic of less than 3.5 million.

The Centre has been looking at ways to ease the airport tariff mechanism to attract more private players in the airports sector via public-private partnerships. In 2021, Airports Economic Regulatory Authority of India (Amendment) Bill 2021, was passed by the Rajya Sabha, when the definition of ‘major airports’ were changed.

The bill has also allowed the central government to group airports and notify a group of major airports. Thus, when a small airport is clubbed with a group and the group is notified as a major airport, its tariff is determined by AERA instead of the AAI.

AERA determines the aeronautical charges at the major airports, including those leased out by AAI based on its regulatory philosophy of return on investments.

Under the National Monetization Pipeline, the Centre has earmarked 25 airports for asset monetization till 2025, including Bhubaneshwar, Varanasi, Amritsar, Trichy, Indore, Raipur, Calicut, Coimbatore, Nagpur, Patna, among others.

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