The Centre is in the process of establishing new “robust, objective-based, measurable quality services benchmarks” for passengers’ convenience, which will be used in calculating future airport tariffs, sources told businessline.
At present, the current tariff determination system does take some “very subjective” service standards into account. However, sources claimed that these standards are not “entirely” measurable.
Consequently, sources told businessline that a need was felt to make the current system more robust by adding “precise, objective-based service quality benchmarks or standards” to the calculation matrix that can be measured.
Besides, the airport’s operational efficiency, coupled with initiatives taken by the operator to boost the economic viability of the facility, will be accounted for in the new tariff determination system.
Many parameters
As of now, tariffs at airports depend on many parameters, including expected traffic growth trends, operators’ expansion plans, and capital expenditure requirements, along with services rendered, among others, under a regulatory oversight mechanism that is overseen by the Airport Economic Regulatory Authority (AERA).
These charges are first reviewed and scrutinised by AERA, and only then are allowed to be collected by airport operators, so as to provide them with a ‘fair rate of return’ on the investment they made while constructing, operating, and maintaining the airport.
“There was a need to have a more robust system that took into account objective-based measurable service standards for maximising passenger convenience at the airport,” sources told businessline.
“The new, overarching system will have provisions for penalties if the operator comes short in providing the minimum service benchmarks.”
The move marks a significant shift in India’s aviation economics, sources said, adding that not only the size of the airport but also the type of passenger conveniences will be a major determinant in calculating future airport charges.
According to sources, the new ‘services benchmarks’ will reward operators for efficient operations — like swift baggage handling, minimal queuing delays at entry or exit, and other facilities.
“The initiative will apply to all airports across the country, aiming to elevate service quality amid booming passenger traffic.”
The move caters to the growing calls for service standard accountability as airports struggle to keep pace with India’s air traffic surge, which has seen passenger numbers climb past pre-pandemic levels.
Industry watchers say that linking tariffs to performance could expose long-hidden inefficiencies, though airport operators worry about tighter profit margins in an already competitive sector.
Presently, AERA has been entrusted with the responsibility to determine tariffs that are charged to airlines and departing passengers during the ‘Control Period,’ which spans 5 years.
The centre had established AERA in 2009 under an Act of Parliament, viz., the AERA Act, 2008.
Accordingly, AERA determines the tariffs in respect of major airports with over three million passengers per annum handling capacity based on stakeholder consultation under a regulatory framework.
These tariffs are reviewed, scrutinised, and revised by AERA every five years, considering the investment and expenditure incurred by the airport operator.
Notably, aeronautical tariffs are charged by airport operators from airlines for usage of air navigation services along with other facilities, like landing and parking of aircraft.
The non-aeronautical tariffs are charged from concessionaires, who operate retail outlets and food and beverage joints, as well as car rental or taxi businesses in or alongside airport premises.
