Nimish
Member
Joined: 16 Dec 2006
Posts: 9757
Location: Bangalore, India
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 Posted: Wed Mar 28, 2007 6:36 pm Post subject: Airlines regulator to be in soon |
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From: http://www.dnaindia.com/report.asp?NewsID=1087460
| Quote: | If all goes well, an independent regulatory authority to look into the setting up of tariff regimes for aviation industry will soon be up and running. Following a cabinet nod, the bill for the appointment of Airport Economic Regulatory Authority (AERA) is to be tabled in the ongoing budget session of the Parliament. If passed, which is most likely, the new AERA will first impact two major airports — Mumbai and Delhi.
The frame of reference as also the regulatory regime is still not spelt out very clearly, but according to the civil aviation ministry spokesperson, “All airports with traffic of over 10 million passengers per annum (read Delhi and Mumbai) would be under the purview of the regulator. The concerned administrative ministry being the ministry of civil aviation to whom it would submit the annual reports.”
Clearly with airports being privatised and tariff regulation of late becoming a major issue with both the airlines and the private airport operators, an independent regulator is only a natural progression for a more mature aviation sector. “The many changes, including the rise in the number of the people involved in the sector, have necessitated the need for price regulation along with the boom,” added the civil aviation spokesperson. But the bottomline is what regulatory mechanism would India be coming up with?
Well, there are many to pick the best practices from. These include the UK model, the Australian model, the Singapore and the US model which can be used for benchmarking. What is essential though is a “constructive engagement between the airports and airlines (as they are much better placed to deal with issues of economic regulation themselves) mandating them to negotiate with each other is the best way to achieve ‘win-win’ outcomes”, said Kapil Kaul, CEO, Centre for Asia Pacific Aviation (CAPA).
According to aviation expert Naresh Chandra, the arbitrary setting up of tariffs by the government is what necessitates the bill. “It will facilitate fair decision-making and relieve the angst among airline operators. The autonomous body would be quasi-judicial and outside the purview of the day-to-day government functioning.”
Even the International Airport Transport Association (IATA) is rooting for such a regulator. According to Brian Pearce, chief economist, IATA, “The move would improve efficiency and productivity by encouraging timely and cost-effective investments and benefit stakeholders. The stability provided by the new framework can also attract long-term investment in the industry, avoiding the potential volatility in infrastructure asset prices driven by speculative finance.”
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But Kaul has a different take. “Airports, when studied in an objective manner across the globe, tend to be monopolies. In India, the airlines are paying 60-70 per cent higher for airport services, highest in the world. However, the infrastructure at the airports remains extremely poor. The basic objective must be to ensure that the interest of all the stake holders and the airline consumers be protected,” he said.
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So is it an Airports Regulator or an Airlines regulator? Sounds like DNA has reported with a wrong subject line? |
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