Effort to privatise, decongest airports hits a roadblock
NEW DELHI: India’s attempt to increase the number of airports and expand congested airports (or launch a second one in some cities) has hit an air pocket and the privatisation of at least 10 airports is pending at different stages, two officials involved in the process said.
India’s domestic air travel business grew at the fastest pace in the world, followed by China, by 18.6% in terms of passenger traffic in 2018, according to data from the International Air Transport Association (IATA). It was the fourth consecutive year that passenger traffic in the country expanded at the world’s fastest rate. The Union government has issued tenders for the privatisation of Ahmedabad, Lucknow, Guwahati, Jaipur, Thiruvananthapuram and Mangaluru airports, while the tender for Jewar airport in Greater Noida (the second airport for Delhi) is expected to be issued soon. Tenders for the Goa and Navi Mumbai airports have been awarded but construction is yet to start due to problems related to land acquisition. Bidding for privatisation of the Nagpur airport is over but the Maharashtra Airport Development Company (MADC) is yet to be awarded the contract despite bids closing in October 2018.
Many of these, the existing airports, are operating beyond capacity. The resultant delays affect passengers, and also prevent airlines from expanding their services. If work on any of the expansion projects begins today, it could take till at least 2022 to finish. That too is unlikely to happen; the government has a window of two weeks before the summer’s Lok Sabha elections will be announced. Once that happens, no contracts can be issued as the so-called model code of conduct will come into effect. That means a delay of at least till early June. Private airport operators are still hopeful, though. “Deadlines are a little tight but the government has said that it will be able to do it. (If it is delayed), cost will naturally increase. Government should realise that any delay in (creation of) airport infrastructure will only increase congestion,” said Satyan Nayar of the Association of Private Airport Operators.
There’s also a little leeway for the government to actually award the contracts even after the elections are announced.
According to Harishankar Brahma , the former chief election commissioner of India, the Airports Authority of India (the state-owned airports company which will be awarding the contracts) can award the contracts after the model code of conduct is in place, provided it is able to categorise the matter as an emergency. The ministry of civil aviation has already made it clear that all greenfield airports -- those built from scratch -- will be constructed by private developers and that most expansion projects will also be given to private companies. A civil aviation ministry official said that the most common reasons for the delays are delayed regulatory approvals, financial constraints and stalled land acquisition.
Navi Mumbai airport, which will be second airport for Mumbai, is to be built under the Publicprivate Partnership (PPP) model by the GVK Group. Now the project is running much behind schedule while the first airport (also run by GVK) is operating beyond capacity. Maharashtra’s ₹1,685 crore Dr Babasaheb Ambedkar International Airport in Nagpur is at least three months behind schedule. It was only on October 1, 2018 that the highest bidder for the airport to be built on a PPP basis was finalised. Four months have passed, but the project is yet to be awarded to the winner. A delay may result in cost and time overruns. “Since AAI is also our partner, we are awaiting their approval. Following this, the proposal will be cleared by board and then by the state government. We will try to complete the process of awarding the contract before the model code of conduct comes in place,” said Suresh Kakani, managing director of MADC.
Delhi’s second airport, at Jewar, is also delayed. “We are waiting for approval from NITI Aayog. Once this is done, the project will be approved by the project implementing and monitoring committee and Uttar Pradesh chief minister... After this, we will float a tender to invite proposals from developers,” said Arun Vir Singh, chief executive officer of Noida International Airport Limited. He said the company is looking to do this by the end of February -- a deadline that seems impossible to meet.
AAI insists that work is proceeding apace on at least six airports for which tenders have been floated. The work will be awarded by the first week of March. “The privatisation is a step in the right direction...the government will have to fasten the process to keep the implementation process on time,” said Mark Martin, CEO of Dubai-based Martin consulting.
“...we will continue to push ahead our privatisation effort,” minister of state for civil aviation Jayant Sinha said in an interview last year. Mumbai International Airport Limited and GMR Group did not respond to e-mails seeking comment.