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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.
The Tribunals Reforms Bill, 2021 was introduced in Lok Sabha today. It seeks to dissolve certain existing appellate bodies and transfer their functions (such as adjudication of appeals) to existing judicial bodies (mainly high courts) (see Table 1). It also amends the Finance Act, 2017, to bring certain provisions (such as qualifications, appointments, term of office, salaries and allowances of tribunal members) under the purview of the Bill. Currently, these provisions are notified through Rules under the Finance Act, 2017.
Note that the 2017 Act reorganised the Indian tribunal system to ensure uniformity in their administration by amalgamating certain tribunals based on the similarity in their functional domain. It also delegated powers to the central government to make Rules to provide for the qualifications, appointments, term of office, salaries and allowances, removal, and other conditions of service for chairpersons and members of these tribunals.
This Bill replaces an Ordinance with similar provisions that was promulgated in April 2021. The 2021 Ordinance was challenged in the Supreme Court over its compliance with past Supreme Court judgements. In July 2021, the Court struck down certain provisions of the Ordinance, such as the four-year term of office for members, and the minimum age bar of 50 years to be appointed as a member of a tribunal. Table 2 shows a detailed comparison of key provisions of the 2021 Bill with the 2021 Ordinance and the principles laid down by the Supreme Court in its judgement. The Bill does not conform to the judgement of the Supreme Court and retains the provisions of the Ordinance that were struck down by the Court.
For an analysis of the 2021 Ordinance, please see our note here. For more details on the evolution of the tribunal system in India, please see our note.
Table 1: Transfer of functions of key appellate bodies as proposed under the Bill
|
Appellate body |
Role |
Proposed entity |
|
Appellate Tribunal under the Cinematograph Act, 1952 |
Adjudication of appeals against the Board of Film Certification |
High Court |
|
Appellate Board under the Trade Marks Act, 1999 |
Adjudication of appeals against orders of the Registrar |
High Court |
|
Appellate Board under the Copyright Act, 1957 |
Adjudication of certain disputes and appeals against orders of the Registrar of Copyright. Disputes include those related to publications and term of the copyright |
Commercial Court or the Commercial Division of a High Court* |
|
Authority for Advance Rulings under the Customs Act, 1962 |
Adjudication of appeals against orders of the Customs Authority for advance rulings |
High Court |
|
Appellate Board under The Patents Act, 1970 |
Adjudication of appeals against decisions of the Controller on certain matters. Matters include applications for patents and restoration of patents. |
High Court |
|
Airport Appellate Tribunal under the Airports Authority of India Act, 1994 |
Adjudication of:
|
|
|
Airport Appellate Tribunal under the Control of National Highways (Land and Traffic) Act, 2002 |
Adjudication of appeals against orders of the Highway Administration on matters including, grant of lease or licence of highway land, removal of unauthorised occupation, and prevention of damage to highway. |
Civil Court# |
|
Appellate Tribunal under the Protection of Plant Varieties and Farmers' Rights Act, 2001 |
Adjudication of appeals against certain orders of Registrar or Plant Varieties and Farmer Rights Authority |
High Court |
|
Appellate Board under the Geographical Indications of Goods (Registration and Protection) Act, 1999 |
Adjudication of appeals against orders of the Registrar |
High Court |
Notes: * Constituted under the Commercial Courts Act, 2015; # Refers to a Civil Court of original jurisdiction in a district and includes the High Court in the exercise of its ordinary original civil jurisdiction.
Sources: The Tribunals Reforms Bill, 2021; Parent Acts of the appellate bodies; PRS.
Table 2: Key provisions in the 2021 Bill and the Ordinance vis-a-vis the Supreme Court judgements
|
Provisions |
2021 Ordinance |
Supreme Court Judgement of July 2021 |
2021 Bill |
|
Term of office of Chairperson and members |
Four-year term with eligibility for re-appointment. |
The Court stated that a short tenure of members (such as three years) along with provisions of re-appointment increases the influence and control of the Executive over the judiciary. In a short tenure, by the time the members achieve the required knowledge, expertise and efficiency, one term gets over. This prevents enhancement of adjudicatory experience, thereby, impacting the efficacy of tribunals. The Court struck down the provision of four -year term and reiterated its past judgements, which recommended a five-year term with eligibility for re-appointment. |
Same as that in Ordinance. |
|
Minimum age requirement for appointment of Chairperson and members |
50 years |
The Court observed that the minimum age requirement of 50 years violates past Court judgements, where the Court has stated that advocates with at least 10 years of relevant experience must be eligible to be appointed as judicial members, as that is the qualification required for a High Court judge. Such a high age limit also prevents the recruitment of young talent. The provision was struck down. |
Same as that in Ordinance. |
|
Time limit for appointments |
Preferably within three months from the date of the recommendations of the search-cum-selection committee. |
The Court noted that not mandating the central government to make appointments within three months (from the date of recommendation of the search-cum-selection committee) leads to delay in the appointment of members. This impacts the functioning and efficacy of tribunals. The provision was struck down over non-compliance with past judgements, which mandated the appointments to be made within three months. |
Same as that in Ordinance. |
|
Number of recommendations for a post |
Two names for each post. |
The Court stated that the recommendations for appointment of members by the search-cum-selection committee should be final. The Executive must not be allowed to exercise any discretion in matter of appointments in a tribunal. The Court struck down the provision and reiterated its past judgement, which specified that the selection committee must suggest one name for each post. The Committee may recommend one name in wait list. |
Same as that in Ordinance. |
Sources: The Tribunals Reforms Ordinance, 2021; The Tribunals Reforms Bill, 2021; Madras Bar Association vs Union of India, W.P.(C) No. 000502 of 2021; PRS.
