New high for air reforms: Aviation regulator on way

With private players entering new territories, the Government has decided to bring in a Bill this Budget session to put in place an independ...

With private players entering new territories, the Government has decided to bring in a Bill this Budget session to put in place an independent regulator who will oversee all economic aspects of the civil aviation sector.

These will include regulating new airports with private participation and settling disputes among various stakeholders, including airlines.

The Civil Aviation Ministry plans to table a Bill to establish an independent Civil Aviation Economic Regulatory Authority (CAERA). The step takes forward the suggestion first made by the Naresh Chandra Committee on civil aviation reforms.

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The committee, in the first part of its report, observed that economic regulation of the aviation sector had, at best, been an ‘‘informal exercise’’ with functions of the regulator and the operator of airports and air traffic control being vested in the Airports Authority of India. Also, in the case of airlines, there was no clear-cut directive on settlement of disputes with service providers.

The Ministry has now proposed that the new regulator be responsible for formalising all charges to be levied on operators and ensuring a level playing field for all players. Among the tasks on its plate would be:

	NO LONGER IN THE AIR

			• Bill to propose independent civil aviation economic regulator, particularly to oversee airports with private participation • Responsibilities to include tariff fixation and settlement of disputes • Proposed by the Naresh Chandra Committee as a single-member authority that can be later expanded • Will initially oversee Delhi, Mumbai, Bangalore and Hyderabad airports

• Fixing tariff

• Finalising parking and user charges

• Broad guidelines to service providers

• Settlement of disputes among stakeholders in new airports

• Arbitrating between various users and service providers, including airlines

It’s learnt that initially the scope of the regulator would be limited to regulating the economic aspects of Delhi, Mumbai, Bangalore and Hyderabad airports where there is private participation and AAI is a stakeholder. This addresses concerns by private players that, till now, AAI was a stakeholder as well as regulator. Their worry was that in the event of a dispute, the dice would be loaded against them.

But now, the AAI too would be answerable to the new regulator.

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To start with, CAERA is expected to be a single-member regulator assisted by technical staff. The Bill seeks to expand its role in the days ahead. That may become necessary anyway, given the liberalisation initiatives underway in the sector.

Sources said CAERA will be modelled along the lines of regulators in other key economic sectors like telecom and insurance.

The Ministry also proposes to break the monopoly of government-owned oil companies that supply aviation turbine fuel at airports.

While discussions are underway with concerned ministries, sources said, the idea was to eventually bring the supply of such fuel under the purview of the new regulator as well.

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This will make sure there is no monopoly and, as the sector opens up further, all players get the same opportunity.

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