The Airports Economic Regulatory Authority of India (Amendment) Bill, 2021 was passed by Parliament on August 4, 2021. It amends the Airports Economic Regulatory Authority of India Act, 2008. This Bill was introduced in Lok Sabha during the budget session this year in March 2021. Subsequently, it was referred to the Standing Committee on Transport, Tourism, and Culture, which submitted its report on July 22, 2021.
Typically, cities have one civilian airport which provides all aeronautical services in that area. These services include air traffic management, landing and parking of aircraft, and ground handling services. This makes airports natural monopolies in the area. To ensure that private airport operators do not misuse their monopoly, the need for an independent tariff regulator in the airport sector was felt. Hence, the Airport Economic Regulatory Authority (AERA) was established as an independent body under the 2008 Act to regulate tariffs and other charges (development fee and passenger service fee) for aeronautical services at major airports.
For the remaining airports, these tariffs are determined by the Airports Authority of India (AAI), which is a body under the Ministry of Civil Aviation. In addition, AAI leases out airports under the public-private partnership (PPP) model for operation, management, and development. Before AERA was set up, AAI determined and fixed the aeronautical charges for all airports. It also prescribed performance standards for all airports and monitored them. Various committees had noted that AAI performed the role of airport operator as well as the regulator, which resulted in a conflict of interest.
The 2008 Act designates an airport as a major airport if it has an annual passenger traffic of at least 35 lakh. The central government may also designate any airport as a major airport through a notification. The Bill adds that the central government may group airports and notify the group as a major airport. Thus, when a small airport will be clubbed in a group and the group is notified as a major airport, its tariff will be determined by AERA instead of AAI. Note that AERA will not determine the tariff if such tariff or tariff structures or the amount of development fees has been incorporated in the bidding document, which is the basis for the award of operatorship of that airport.
The amendments under the Bill raise some concerns regarding the grouping of airports and the capacity of the regulator.
As of 2020, there are 125 operational airports in India (includes international airports, customs airports, and civil enclaves). The number of airports under the purview of AERA increased from 11 in 2007 to 24 in 2019. For the remaining airports, tariffs are still determined by AAI. In the last five years (2014 to 2019), air passenger traffic increased from 11.3 crore to 34.9 crore (which is an annual growth rate of 10%). Till 2030-31, air traffic in the country is expected to continue growing at an average annual rate of 10-11%.
Before 2019, an airport with annual passenger traffic of at least 15 lakh was considered a major airport. In 2019, the AERA Act was amended to increase this threshold to 35 lakh. The Statement of Objects and Reasons of the 2019 Bill stated that the exponential growth of the aviation sector has put tremendous pressure on AERA, while its resources are limited. Therefore, if too many airports come under the purview of AERA, it will not be able to perform its functions efficiently. Consequently, in 2019, the number of airports under the purview of AERA was reduced. Now, with the passage of the 2021 Bill, AERA will have to again regulate tariffs at more airports as and when notified by the central government. Thus, the capacity of AERA may be needed to be enhanced for extending its scope to other airports.
Table 1: List of major airports in India (as of June 2019)
|
Ahmedabad |
Delhi |
Mumbai |
|
Amritsar |
Goa |
Patna |
|
Bengaluru |
Guwahati |
Pune |
|
Bhubaneswar |
Hyderabad |
Raipur |
|
Calicut |
Jaipur |
Thiruvananthapuram |
|
Chandigarh |
Kolkata |
Tiruchirappalli |
|
Chennai |
Lucknow |
Varanasi |
|
Cochin |
Mangalore |
Kannur |
Source: AERA website as accessed on August 2, 2021; PRS.
Tribunals function as a parallel mechanism to the traditional court system. Tribunals were established for two main reasons - allowing for specialised subject knowledge in disputes on technical matters and reducing the burden on the court system. In India, some tribunals are at the level of subordinate courts with appeals lying with the High Court, while some others are at the level of High Courts with appeals lying with the Supreme Court. In 1986, the Supreme Court ruled that Parliament may create an alternative to High Courts provided that they have the same efficacy as the High Courts. For an overview of the tribunal system in India, see our note here.
In April 2021, the central government promulgated an Ordinance, which specified provisions related to the composition of the search-cum-selection committees for the selection of members of 15 Tribunals, and the term of office for members. Further, it empowered the central government to notify qualifications and other terms and conditions of service (such as salaries) for the Chairperson and members of these tribunals. In July 2021, the Supreme Court struck down certain provisions of the Ordinance (such as the provision specifying a four-year term for members) stating that these impinged on the independence of the judiciary from the government. In several earlier judgements, the Supreme Court has laid out guidelines for the composition of Tribunals and service conditions to ensure that these Tribunals have the same level of independence from the Executive as the High Courts they replace.
However, Parliament passed the Tribunals Reforms Bill, 2021 in August 2021, which is almost identical to the April Ordinance and includes the provisions which had been struck down. This Act has been challenged in the Supreme Court. For a PRS analysis of the Bill, please see here.
On 16th September 2021, the central government notified The Tribunal (Conditions of Service) Rules, 2021 under the Tribunals Reforms Act, 2021. A couple of the provisions under these Rules may contravene principles laid out by the Supreme Court:
Appointment of the Administrative Member of the Central Administrative Tribunal as the Chairman
In case of the Central Administrative Tribunal (CAT), the Rules specify that a person with at least three years of experience as the Judicial Member or Administrative Member may be appointed as the Chairman. This may violate the principles laid down by the past Supreme Court judgements.
The CAT supplants High Courts. In 1986, the Supreme Court stated that if an administrative tribunal supplants the High Courts, the office of the Chairman of the tribunal should be equated with that of the Chief Justice of the High Court. Therefore, the Chairman of the tribunal must be a current or former High Court Judge. Further, in 2019, the Supreme Court stated – “the knowledge, training, and experience of members or presiding officers of a tribunal must mirror, as far as possible, that of the Court it seeks to substitute”.
The Administrative Member of the CAT may be a person who has been an Additional Secretary to the central government or a central government officer with pay at least that of the Additional Secretary. Hence, the Administrative Member may not have the required judicial experience for appointment as the Chairman of CAT.
Leave Sanctioning Authority
The Rules specify that the central government will be the leave sanctioning authority for the Chairperson of tribunals, and Members (in case of absence of the Chairperson). In 2014, the Supreme Court specified that the central government (Executive) should not have any administrative involvement with the members of the tribunal as it may influence the independence and fairness of the tribunal members. In addition, it had observed that the Executive may be a litigant party and its involvement in administrative matters of tribunals may influence the fairness of the adjudication process. In judgements in 1997 and 2014, the Supreme Court recommended that the administration of all Tribunals should be under a nodal ministry such as the Law Ministry, and not the respective administrative ministry. In 2020, it recommended setting up of a National Tribunals Commission to supervise appointments and administration of Tribunals. The Rules are not in consonance with these recommendations.
