The Hindu Business Line : Restructuring airports

SHOULD THE MODERNISATION of the Mumbai and New Delhi airports be carried out by the Government-owned Airports Authority of India or be farmed out to the private sector? There is no doubt about the Government's answer. Citing the paucity of funds in-house, the Government has already invited the private sector to take up the projects — the Transaction Document will be out next week and the bids for these two airports received by mid-September, according to the Civil Aviation Ministry. Interestingly, this week the Parliamentary Standing Committee on Transport, Tourism and Culture, headed by the CPI(M) member in the Rajya Sabha, Mr Nilotpal Basu, has come out strongly against the move on chiefly two counts: it believes that, one, the Government has the money for the projects and the Airports Authority is competent to execute them, and two, the investment must go into greenfield airports rather than expanding the current ones.

The first objection has, of course, more to do with ideology, and with the keenness of the Committee that Government retain control over airports. That would be difficult to justify in the commonly-agreed pursuit to transform the two airports to world-class. In all the years that the Airports Authority has held the reins, the infrastructure at the airports has trailed passenger needs and expectations. For many seasoned international travellers, Mumbai's would qualify to be among the least equipped in the world. If the Airports Authority had the money to modernise the airport, as the Parliamentary Committee avers, and did not do the job all these years, it is a telling reflection of its commitment and competence to benchmark with the best in the world. There would be little point in going against the grain of experience, and placing one's bets again on the public sector entity.

The argument in favour of investing in greenfield sites rather than in the existing airports has more merit. Traffic at Mumbai airport, for instance, is projected to quadruple from 14 million passengers in 2004 to 52 million in 2024. Yet given that a second, parallel runway cannot be laid to streamline landing and take-off operations, everyone seems agreed that the airport will be choked by 2012. So the Parliamentary Committee is justified in questioning why Rs 5,825 crore should be invested in upgrading the airport when its expansion in the longer term is going to be constrained. The panel's recommendation that the greenfield airport and the existing airport must compete with each other takes the discourse to a different plane. Till now it was assumed that cities can afford only one airport and, that too, run by only one operator. The new airports for Bangalore and Hyderabad will rise on that premise; the existing government-owned airports will shut down once the private ones are up and running. The perils of private sector monopolies are well known, and the lesson from the entry of the private sector in ports and telecommunications is that consumers have got the best deal when service providers are in competition with one another, not when they have monopoly over a territory. There is still time for the Civil Aviation Ministry to reshape its policy on this issue and create room for competition.

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