"Indian airport reforms taking wings"

Saturday, August 2, 2003

Airport reforms taking wings
India - Business Line


AT LAST, SOME cheer. As the Rajya Sabha clears the Airports Authority of
India (Amendment) Bill 2003, the last legal hurdle to airport reform gets
removed. The Bill, passed by the Lok Sabha, has several welcome features. It
not only seeks to provide a legal framework for private investments in
greenfield airport projects, but also paves the way for proposed
"restructuring" (read privatisation) of Mumbai and Delhi airports. The
country's only private airport in operation in Kochi for the past few years
too stands to benefit. Till now, Kochi International Airport Ltd has been
operating virtually without enabling legal provisions. The Bill allows
leasing of airports, and formation of joint ventures and the setting up of
an Airport Appellate Tribunal. All this, however, has not come a day too
soon. The proposal for reforms of the country's major airports was mooted by
no less than the Prime Minister way back in 1999 to make the facilities
world class. The Bill, therefore, is expected to put reform in the aviation
sector on the fast track.

But then it may be premature to rub hands in expectation. Getting a Bill
through Parliament is one thing, implementing projects on the ground quite
another. Several issues deserve a closer look. For instance, airport
security and air traffic control. The Civil Aviation Minister has allayed
fears in this regard. One only hopes the Minister realises that the security
and air- traffic control, even if vested with the Government, should form an
integral part of a highly sophisticated and integrated airport management
system. Next, how to evict encroachers from airport land. It is easier said
than done. For example, the Government, despite effort, has failed to remove
a shrine located on the airport land in one of the metros. Finally, what
happens to the Airports Authority of India (AAI) and its more than 20,000
employees? AAI is not a sick company; it posts handsome profits every year
though they come from the operation of only seven out of 67 airports under
it. If it is difficult to close down even an ailing unit, less said about a
profit-making one. What happens to the 60 odd airports whose survival
depends on the profit earned by a handful now set for a change of ownership?

While security, technology and maintenance are quite rightly the priorities
for any major airport today, economic viability can hardly be
overemphasised. Private investors, even as they show interest in the
greenfield projects in Bangalore and Hyderabad, insist on subsidies as they
have reservations about the commercial viability of these projects. The
Bill, therefore, includes a provision to levy advance user fee on passengers
using existing airports in these two cities. The Government, it appears, has
succumbed to the pressure of those who claim to believe not in subsidies but
in the free interplay of market forces as the key to success. Pity.


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