Regulator will curb monopolistic pricing of facilities
BANGALORE: Privatisation of major airports such as Mumbai, Delhi, Bangalore and Hyderabad may have got them out of government control but they won’t escape regulation.
The government has initiated moves to rein in private airport operators. In this direction, it has begun the process of introducing a law to set up an airport regulator that will keep a hawk eye on tariff charged by airports and prevent them from exploiting their monopolistic position.
And with a panel of ministers studying the setting up of the regulator having completed their discussions, the civil aviation minister Praful Patel said on Thursday that the government could pass the legislation in parliament as early as beginning of next year.
“The defence ministry’s concerns have been addressed,’’ said Patel.
Now all that was needed was the Cabinet’s approval for the bill to be introduced. “We are confident that we will do this by the budget session,’’ said the minister optimistically.
This decision of the government has allayed airline’s fear of monopolistic pricing by private airports.
“It’s a bit late in providing this security against indiscriminate pricing by airports but it’s a good move. Airports generally have monopolistic tendency, and private airports can be worst than state-owned airports. Any regulation that drives down fees and costs is welcome,” said Air Deccan COO Warwick Brady.
In UK, Brady says, major private airport operators like BAA (Heathrow) are also regulated by the government. “The government fixes a ceiling rate of return on capital that an operator can earn. This way, they cannot overcharge to boost their profit,” says Brady.
A senior official of Hyderabad International Airport Ltd, which is setting up the airport in the city, says, the regulator’s approach should be “light-handed, and at the macro level, like in Australia, and it should take the existing agreements into consideration.”
“As it is, the ministry of civil aviation is a de jure regulator. So it is a good step that the regulatory functions are being separated from the operator,” he said.
Sanjay Kumar, SpiceJet vice-president -- sales and planning - applauds the move. “It will help in having a clear-cut policy on fixing airport charges. Today, our airport fee is very high compared with international rates even when the service provided by airports is pathetic,” he said.
At present, airport charges are divided into two categories - domestic and international. “We should have permutations and combinations of fees for different time of the day. Today, rates for peak hour and midnight are the same. With a regulator coming in, these issues will be looked into,” said Kumar.
On your toes
At present, airport charges are divided into two categories - domestic and international
But peak hour and midnight are the same now
In the UK, the government fixes a ceiling on operators’ return on capital to prevent fleecing
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