Private sector incentive in airport development shouldn’t be jeopardised

Chennai: By approving the Airport Economic Regulatory Authority (AERA) Bill, the Cabinet has ushered in a new institutional mechanism for independent regulation of airport services in the country. However, regulators should ideally step in only when there is evidence of market failure, not in anticipation of it, says Mr S. Vasudevan, Manager in the Infrastructure Advisory Group at KPMG Advisory Services.
Speaking to Business Line on the contours of airport regulation, he said that regulators have a role only when airlines, airport operators and other airport users are unable to negotiate an agreement on pricing or a settlement of operating/service delivery issues between them.
According to him, the most important and pressing issue is to create capacity through newer, bigger and better airports, as air traffic demand and airline operations continue to challenge capacity at most major airports as never before.
AERA will soon appoint a regulator, whose principal mandate would be to review and determine tariffs for aeronautical services, besides monitoring compliance of airport operators on pre-set performance standards.
06/07/07 D. Murali and C. Ramesh/The Hindu

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Categories: Airports Jul 2007