AERA likely to lose hold over tariff regulation, post privatisation by Civil Aviation Ministry

The Civil Aviation Ministry is most likely to privatise the next batch of airports on the basis of pre-determined tariffs. The government is likely to invite bids for privatisation of Varanasi, Calicut, Patna, Amritsar, Bhubaneswar, Ranchi, Coimbatore, Trichy, Indore, and Raipur airports in the next round.

If the decision finalised, Airport Economic Regulatory Authority (AERA), would lose the authority to set or revise user charges for passengers as well as airlines in such cases. However, the government would consult or seek recommendations of AERA in setting such pre-determined tariffs, thus transforming AERA’s role from regulatory to the advisory. The changes in the AERA Act were passed by the Parliament last year.


Another major change which resulting from the amendment and applicable in case of privatisation of airports is that now the airport regulator can set tariffs only for airports handling 3.5 million or more passengers a year which was earlier 1.5 million passengers per annum. Due to this change, around 17 airports are now outside the scope of AERA’s regulation with regard to tariffs. Post the amendment, the number of AERA regulated airports dropped from 30 to 13. The other 17 will now come under the ambit of the civil aviation ministry. In addition to that, even for new airport privatisation projects with a capacity of 3.5 million passengers per annum, the Civil Aviation Ministry holds the ultimate power and if it decides to opt for the pre-determined tariff structure, they will be out of the ambit of AERA.

Adani Enterprises have won the rights to operate and maintain 5 airports where the tariff regulation shall not be exercised. Apart from the Mangalore airport, which handles less than 3.5 million passengers, tariffs at Ahmedabad, Jaipur, Lucknow, Guwahati and Thiruvanathapuram would continue to be regulated by AERA.