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The Airports Authority of India Act, 1994 is the Central legislation enacted with the intent to establish an airport authority as well as to transfer and vest the activities of International and National Airports Authority of India with the Indian Airports Authority so created for advanced management and consistent administration of airports along with civil enclaves in the manner of services rendered by air transport and the mode in which they function and the station for entire aeronautical communications. It further aims to constitute or aid the formation of airports. The Act applies to airports where the functions of air transport services are carried out excluding the airports or airdromes under the authority of armed forces of India. It also relate to private airports that gives air traffic service, civil enclaves, stations of aeronautical communication added with training stations, institutions and workshops which is connected with air transport services.

The Act provides for the establishment of Airports Authority of India. It shall be a body corporate with continuous succession and common seal. It shall have the power to purchase, possess and sell off property and to enter into legal agreements along with the power to litigate. The Authority contains a Chairperson to be appointed by the Central Government, ex officio member who shall be Director General of Civil Aviation or equivalent and eight to fourteen other members. The Chairperson as well as other members shall be selected from persons with unique awareness and knowledge in air transport including transport services, commerce, industrial or economic matters or management and other persons on behalf of association of workers and customers. The whole-time members shall continue in the office for a term of five years or up to sixty years whichever previously happens and part time members shall continue in office for a term of three years. Such term is specified except with regard to ex – officio members.

The main functions of the authority are to administer airports, stations of aeronautical communication and civil enclaves, give services in air traffic and air transport in such enclaves, arrange, organize, build up, create and sustain runways, terminals, ancillary constructions at airdrome, aprons and taxiways, constitute airdromes and aid in the organization of private airfield by providing such mechanical, economical or other help that are considered essential by the Central Government. Other task includes procurement, installment and upholding navigational assistance, communication equipment, beacons and gives assistance at airdromes and other situations, give services for air safety and investigate and rescue, abilities in harmonization with other agency, constitute schools or organizations or centers for training for officials, build residential structures for employees and constitute and maintain restaurants, hotels as well as rest rooms close to airdromes. The constitution of storehouse and consignment complex and organize postal, insurance and money exchange are also functions of the Authority.

In addition, the Act transfers all the undertakings under the International and National Airports Authority to the Airports Authority of India. The undertakings so transferred shall be inclusive of material goods, rights, supremacy, privileges and land, structures, equipments, machines, works, cash balances, savings, capital etc. After the appointed day, the licenses, quotas, exemption and permits provided to International or National Airports Authority with regard to the business shall be considered to be given to the Authority where such establishments are vested according to the provisions of the enactment. In order to perform the functions under the enactment, the authority shall have the power to enter into contracts and legal agreements. Such contracts shall be entered on behalf of the Authority by the Chairman. The land needed for the proper fulfillment of functions of the Authority shall be deemed for public purpose and acquisition of the land shall be as per the Land Acquisition Act, 1894.

The Act was amended by the Airports Authority of India (Amendment) Act, 2003 which added new provision for eviction of unauthorized occupants etc of airport premises.