PRI­VATI­SA­TION OF CIVIL AIR­PORTS

The Indian civil avi­a­tion in­dus­try is one seg­ment of busi­ness that has reg­is­tered an im­pres­sive rate of growth since its lib­er­al­i­sa­tion

SP's Airbuz - - Finally - — B.K. PANDEY

AF­TER IN­DE­PEN­DENCE IN 1947, due to the lim­ited fi­nan­cial ca­pa­bil­i­ties of the pri­vate sec­tor, the gov­ern­ment was com­pelled to place much greater reliance on the public sec­tor for devel­op­ment in all ma­jor seg­ments of in­dus­try that re­quired heavy in­vest­ments es­pe­cially in­fra­struc­ture devel­op­ment. So was it with the Indian civil avi­a­tion in­dus­try in which all Green­field air­ports were de­vel­oped by the state-owned Air­ports Author­ity of In­dia (AAI). How­ever, with all-round growth of the pri­vate sec­tor over the years ac­com­pa­nied by higher lev­els of pros­per­ity at­tained, it is only nat­u­ral that the gov­ern­ment would like to re­lin­quish the re­spon­si­bil­ity of not only cre­at­ing new air­port in­fra­struc­ture; but hand­ing over own­er­ship and man­age­ment of ex­ist­ing civil air­ports to com­pa­nies in the pri­vate sec­tor. The Indian civil avi­a­tion in­dus­try is one seg­ment of busi­ness that has reg­is­tered an im­pres­sive growth since its lib­er­al­i­sa­tion.

In 2004, in a move to­wards par­tial pri­vati­sa­tion of air­ports, the UPA gov­ern­ment had for­mu­lated a rule for the man­age­ment of se­lected air­ports through part­ner­ship be­tween the AAI and pri­vate sec­tor com­pa­nies. This rule was known as Op­er­a­tions, Main­te­nance and Devel­op­ment Agree­ment (OMDA). The two air­ports that came un­der the purview of this new rule ini­tially were those at New Delhi and Mum­bai. Later, Hy­der­abad and Ben­galuru air­ports were also in­cluded. How­ever, Indian car­ri­ers as well as pas­sen­ger bodies were se­verely crit­i­cal of the move by the gov­ern­ment to­wards pri­vati­sa­tion of state-owned air­ports. The main com­plaint was that the rules for­mu­lated for air­port pri­vati­sa­tion had re­sulted in high air­port charges at Delhi, Mum­bai, Hy­der­abad and Ben­galuru.

In De­cem­ber 2014, in a re­view of the state of in­fra­struc­ture, the NITI Aayog had stated that the few air­ports in the coun­try that had been pri­va­tised, when com­pared with those op­er­ated by the AAI, had recorded higher lev­els of per­for­mance with re­gard to cus­tomer sat­is­fac­tion. How­ever, ex­pe­ri­ence of the gov­ern­ment so far in its at­tempts at pri­vati­sa­tion of be­he­moths in the public sec­tor has not been very en­cour­ag­ing. The most re­cent case is that of the at­tempt by the gov­ern­ment at dis­in­vest­ment in Air In­dia which does not seem to be suc­ceed­ing at all.

Dur­ing the last ten­ure of the UPA gov­ern­ment, bids were in­vited for the pri­vati­sa­tion of the air­ports at Chennai, Kolkata, Ahmed­abad, Guwahati, Jaipur and Luc­know. While a num­ber of pri­vate com­pa­nies had re­sponded to the ten­der, the pri­vati­sa­tion process it­self had to be de­ferred on ac­count of a stand­off be­tween the Min­istry of Civil Avi­a­tion and the Plan­ning Com­mis­sion over the terms and con­di­tions of award­ing the pro­ject. While the con­cept of pri­vati­sa­tion would cer­tainly be ap­peal­ing to the trav­el­ling public, it does ruf­fle feathers of the em­ployee unions at these state-run air­ports. In Fe­bru­ary 2015, mem­bers of the Air­ports Author­ity Em­ploy­ees Union (AAEU) re­sorted to an ag­i­ta­tion as also called for an al­lIn­dia strike in the fol­low­ing month. The con­tention of the AAEU was that as the gov­ern­ment had spent enor­mous sums drawn from public funds for the mod­erni­sa­tion and up­grade of these air­ports, it would not be fi­nan­cially ap­pro­pri­ate to re­lin­quish con­trol of these air­ports to the pri­vate sec­tor. But the real rea­son is that the em­ploy­ees who are used to the easy-go­ing life­style while work­ing in a public sec­tor com­pany in­clud­ing state run air­ports, would not like to change over to a pri­vate em­ployer where life would be less com­fort­able and highly de­mand­ing on ac­count of strin­gent con­trol. The Cen­tre of Indian Trade Unions (CITU) had also come out in sup­port of the AAEU op­pos­ing the move by the gov­ern­ment to pri­va­tise air­ports.

So far, all at­tempts by the gov­ern­ment to pri­va­tise only main­te­nance of air­port ter­mi­nals has not elicited en­thu­si­as­tic re­sponse from the likely in­vestors. The NDA gov­ern­ment is now mov­ing for­ward on a plan for to­tal pri­vati­sa­tion of se­lected air­ports. Such a plan was ini­ti­ated by the UPA gov­ern­ment, but had been aban­doned not only by them, but by the NDA gov­ern­ment as well dur­ing the ini­tial years af­ter com­ing to power in 2014. In a fresh move an­nounced re­cently, the NDA gov­ern­ment ap­pears de­ter­mined to pri­va­tise at least eight air­ports un­der the AAI lo­cated at Chennai, Kolkata, Kochi, Pune, Ahmed­abad, Jaipur, Luc­know and Guwahati. It ap­pears that there is fi­nally some hope for this long-awaited and ur­gently re­quired re­form in the Indian civil avi­a­tion in­dus­try to be­come a re­al­ity.

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