Unseemly haste

The Centre seems to be in a rush to privatise six airports — at Ahmedabad, Guwahati, Jaipur, Lucknow, Mangaluru and Thiruvananthapuram — run by the Airports Authority of India. The request-for-proposals were issued on December 14, 2018, the last date for bids was February 14 and the winners are to be finalised on February 28. That is, only two months were given for bid submission, and the whole process is to be completed in two-and-half months. In contrast, the original timelines, later extended, for the Mumbai and Delhi airports privatised more than a decade back, stretched six months or so. The hurry this time seems to be driven by the need to help the Centre shore up its divestment kitty for FY-19. But unseemly haste is undesirable, especially in a matter as critical as airport privatisation. Players should be given adequate time to do their due diligence, evaluate and submit bids, so that the long-term objectives of privatisation are met and there are no project failures. There is disquiet in some quarters that the aggressive timelines are a cover to eliminate competition and favour a few. Favouritism and cronyism, or perceptions that these are at play, could backfire, leading to long-drawn litigation.

Besides, there are concerns about seeming anomalies in the bidding process. For instance, the minimum technical and financial capacity for qualifying bidders is identical for all six airports. This seems to be at variance with the established norms of basing bidding criteria on individual airport project costs. The dash to divest should not be at the cost of a well thought-out process. There are other sensitivities to be also taken into account. AAI employee unions have been vehemently against the privatisation move. It is prudent to address AAI employee concerns and assuage fears before taking the process forward. The Kerala government has thrown its hat in the ring for the Thiruvananthapuram airport. If it does not succeed, there is a risk of a Centre-State standoff; this will have to be handled adroitly.

The experience with airport privatisation has been a mixed bag. Operations by private players at Delhi, Mumbai, Bengaluru and Hyderabad airports have improved scale, facilities and services. But there have been cost escalations and disputes with the AAI and airlines, and fare increases for passengers due to hike in fees such as user development charges. Even so, privatisation of airports seems unavoidable as high-potential airports may languish due to lack of investments, and may not be able to cater to growing traffic. The trade-off, on the whole, should be beneficial to all stakeholders. For this, the bidding process needs to be above board with comfortable timelines and incontestable outcomes.

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