The Hindu : Problematic privatisation

Online edition of India's National Newspaper
Friday, Sep 19, 2003

Opinion

Opinion - Editorials

Problematic privatisation

AFTER PROLONGED DITHERING, the Union Cabinet has finally cleared the privatisation of the Delhi and Mumbai airports. But it is doubtful if the last word on this privatisation exercise has been said. It now transpires that one arm of the Government did not know what the other was doing. While the Union Aviation Ministry and the Cabinet were deciding on the issue, the public sector Airports Authority of India (AAI) had already secured bids from some of the top global architects for these two airports. The AAI was in the process of short-listing five of them for each airport, an exercise that began in June. The Cabinet's decision last week may render the AAI's work redundant and further erode its credibility. It is now up to the Aviation Ministry to set the record straight and find out if these architects would at all be interested in trying again for the same project. The proposal now is to go in for a joint venture between the AAI and a private partner, possibly a global consortium. With a 26 per cent stake, the AAI will retain control over the security and air traffic services, while the private partner will take care of land-related and non-aeronautical activities to generate revenue.

The privatisation of the airports has seen embarrassing reversals in policy during the past few years. The Centre first opted for the leasing route, but found no bidders. Then, it considered the Build Operate Transfer or Build Operate Own Transfer route. And now, a decision on a joint venture project has been announced. It remains to be seen if this is final and whether the Government will stay steadfast in the face of protest by the unions. The AAI Employees Union has already launched a relay fast against the privatisation move though the Centre has assured the workers that their interests will be protected. These are the very factors that affect the credibility of the privatisation exercise. On the positive side, the Cabinet has taken a decision and a legal framework in the form of an amended AAI Act of 2003 is in place. There is no denying the fact that Indian airports need refurbishing; an International Air Transport Association Survey of passenger satisfaction in 2002 placed them at the bottom of the pack of international airports. Required now are more capacity, faster clearance of passengers and an efficient system of administration.

The Aviation authorities will also have to decide whether re-development of the Mumbai airport at Santa Cruz will be worthwhile if the Centre and the Maharashtra Government still want to go ahead with the construction of a new airport in Navi Mumbai. Considering that the development of Greenfield airports at Hyderabad and Bangalore may soon take off and a string of smaller domestic airports needs to be upgraded, it is about time that the Government thought of getting a regulatory framework in place for this sector. With the private sector poised to enter the fray, a regulator becomes imperative to protect the interests of passengers and other airport users. While investors would be keen to hike charges at the airports to make their projects viable, the regulator must ensure that the interests of users are protected as well. The Government must also decide what future role it envisages for the AAI, which has so far been the agency to construct and maintain airports. The AAI may have to be content with looking after the domestic airports at the second and third tiers, where private investments may not flow in easily.

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