AERA should have own appellate tribunal, says IATA's Sheldon Hee

IATA has called for a dedicated appellate tribunal for AERA, warning that aviation tariff disputes decided by non-sector bodies risk hurting airlines' fragile finances and raising passenger costs

The Airports Economic Regulatory Authority (AERA), which regulates aeronautical tariffs and charges at major airports, should have its own appellate tribunal that fully understands the aviation business and the impact its orders can have on airlines’ financial viability, said Sheldon Hee, Regional Vice President of Asia-Pacific region at global airlines body International Air Transport Association (IATA). 

Currently, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) is the appellate authority for AERA matters. Hee’s comments come at a time when the Supreme Court is seized of a high-stakes aviation tariff dispute that could affect millions of flyers, stemming from a TDSAT order on how aeronautical charges at Delhi and Mumbai airports should be calculated. 

In an order dated July 1, 2025, TDSAT revisited past tariff calculations made by AERA, potentially opening the door for recovery of over ₹50,000 crore in alleged under-recoveries by the two private airport operators. Airlines have challenged the order in the Supreme Court, warning that its implementation could lead to a sharp increase in user development fees and other airport charges, significantly pushing up airfares and passenger costs. 

Hee, in an interview with Business Standard, said airlines recognise the need for airports to recover investments, but cautioned that over-investment or early recovery of charges can place a disproportionate burden on carriers at a time when margins are extremely thin. He said AERA has done well in enforcing accountability and transparency among airport operators, but noted that some of its directions have been challenged before the appellate tribunal. He added that, in IATA’s view, certain tribunal's orders point to a gap in familiarity with the aviation sector and with how costs across the ecosystem affect airlines’ financial viability. 

“TDSAT is a telecom institution more familiar with the telecom industry. There might be certain nuances that are unique to the airline industry, especially in terms of the sensitivity of margins and so on, which may not be taken into consideration (by TDSAT),” he said. 

“So, we are concerned that some of the rulings that AERA has come up with have been challenged, and in some instances, overturned. For us, we feel that this may be indicative that AERA should actually have its own dedicated appellate tribunal...We are completely fine that AERA's decisions are scrutinised. But they should be scrutinised by an authority that understands the business,” he stated. 

He pointed out that global airline net profit margins average just 3.9 per cent and drop to 2.3 per cent in Asia-Pacific -- roughly $3.20 per passenger -- with several airlines in the region operating at or below breakeven. 

In its draft stage around 2006-07, the AERA legislation had envisaged a sector-specific appellate body -- commonly referred to as the Airports Economic Regulatory Authority Appellate Tribunal (AERRAT) — to hear appeals against tariff and regulatory orders. However, by the time the law was finalised and enacted in 2008, this proposal was dropped, and Parliament instead designated the TDSAT as the appellate authority for AERA matters. Hee commented on the AERA's draft consultation paper, released in September 2025, proposing to link airport tariffs with passenger service standards, introducing incentives for good performance and penalties for lapses. 

Hee said IATA supports AERA’s move to define passenger service standards for Indian airports, calling the exercise “timely” and aligned with the regulator’s statutory mandate. However, he said the framework should focus on outcomes that matter most to travellers, such as infrastructure quality, reliability of assets and queueing time, backed by strong monitoring and transparent governance. 

Pointing to recent “infrastructure failure incidents” at some airports, Hee said these occurrences underscore the need for closer oversight of construction quality, design integrity and preventive mai­nte­nance. He said since passengers and users ultimately fund airport infrastructure through charges, the framework must ensure durability, safety and continuity of service. 

In June 2024, a section of the roof canopy at Terminal 1 of the Delhi airport collapsed during heavy rain, killing one person and injuring several others and prompting the suspension of operations at that terminal as an investigation was ordered.

 

The Ministry of Civil Aviation set up a high-level committee -- comprising structural engineers from IIT Delhi and IIT Jammu -- which submitted its report on October 1, 2024, flagging discrepancies in design, workmanship and maintenance as possible reasons for the collapse. 

Hee, meanwhile, told Business Standard that IATA does not support including an incentive mechanism within AERA’s service quality framework. Airlines and passengers, he argued, already pay through aeronautical charges for airports to meet prescribed performance standards, leaving “no requirement or justification” for exceeding those thresholds at additional cost. He cautioned that incentives could encourage unnecessary operational spending to achieve marginal gains, effectively resulting in users “paying twice” -- first through existing tariffs and again through the financial impact of incentive payouts.

 

The framework, which AERA has sought stakeholder comments on, lays out a mix of objective and subjective service-quality metrics -- including passenger wait times, baggage delivery, cleanliness and overall experience -- and allows for tariff reductions, such as cuts in user development fees, if airports fall short of benchmarks, while better-than-expected performance could earn incentives.