Bids have been invited for the privatisation of Chennai and Lucknow airports in the first instance, with invitations for Kolkata, Ahmedabad, Jaipur and Guwahati to follow.
The decision by the Civil Aviation Ministry to privatise six major airports in the country comes at a time when the government is facing a massive resource crunch. It is telling that the list includes Chennai and Kolkata airports, where the state-owned Airports Authority of India recently built new terminals. Bids have been invited for the privatisation of Chennai and Lucknow airports in the first instance, with invitations for Kolkata, Ahmedabad, Jaipur and Guwahati to follow. The development and management of these airports will be awarded to private players for a concession period of 30 years. The logic behind including smaller airports in this plan seems to be that a well-resourced private operator would be able to offer better facilities to help airlines enhance connectivity. A praiseworthy feature of the plan is that no bidder is to get more than two of the six airports. Further, applicants will not be eligible for more than one of the three international airports in the list — Chennai, Kolkata, and Ahmedabad. While the government will permit bidders to hold 100 per cent equity in the awarded projects, this will be subject to the regulations in operation by the Airports Economic Regulatory Authority.
Indeed, the role of the regulator is of paramount importance especially as the concessionaire can levy charges on airlines for handling flights, and on passengers in the form of a User Development Fee (UDF). A new Bill to empower the regulator has been cleared by the Cabinet. Developers and operators must come under the regulator for the levy of fees and charges, so that passengers are not fleeced. Similarly, to make the airports attractive for airlines, handling charges must be reasonable, especially in the era of cheap and no-frills airlines. Fearing retrenchment, some employees’ unions have already gone on strike to protest the privatisation move. The onus is squarely on the government to ensure that the services of all existing employees in these airports are protected. Likewise, excess land must not be made a part of the offering unless it is separately priced. India’s experience with new airports has been mixed. On the one hand, at Delhi’s Indira Gandhi International Airport, where T-3 was developed and is run by a private investor, the flooding of the terminal in June due to heavy rain exposed the poor planning that has gone into its development. In Chennai and Kolkata, on the other hand, it was the AAI that built new terminals, but the construction leaves a lot to be desired. The terms and conditions for new bidders must factor in these issues. It is time the facilities offered to passengers, airlines and visitors at major airports matched international standards.