Opinion

Why change of pilot at Thiruvananthapuram airport is not fair

K Ravi Raman | Updated on September 09, 2020

Kerala has built and run quality airports at lower costs and made them profitable. The state deserves a chance to run TIA

Kerala has a legacy of public-private partnership in conceptualising, creating, managing, and operating one of the most successful airports in the country, and of establishing yet another under the PPP model. Hence, it is unjustifiable in technical and social terms for this legacy to have been ignored in handing over the control of Thiruvananthapuram International Airport (TIA) to Adani Enterprises, a business concern with no experience in managing airports.

After the Centre decided to lease out the Thiruvananthapuram Airport to Adani Enterprises, Kerala’s Government and Opposition passed a resolution unanimously calling upon the Centre to reconsider its decision and hand over the control and management of the airport to a special purpose vehicle (SPV) in which the State government is a shareholder.

Apart from being an administrative, educational and tourist destination, Thiruvananthapuram is a booming IT hub. The city’s Technopark is home to 410 companies (2018-19). Similarly, the total investment here has also gone up to ₹14,000 crore in 2018-19, from ₹12,000 crore in 2015-18. Technopark firms employ more than 60,000 IT workers directly and another 1,50,000 persons indirectly. There is no doubt that an improvement in airport infrastructure will give a fillip to industry and IT companies in the area. However, the Airports Authority of India is unwilling to permit new flights to TIA, even after the number of passengers handled by the airport has grown substantially over the years.

Three reasons

Three major reasons prove why Kerala’s stance carries weight. TIA was built with public money, since its inception in 1932. Of the 636-plus acres currently in the possession of the Airports Authority of India, 258 acres were provided by the State of Travancore. In 2005, the State government handed over nearly 24 acres to the AAI for the construction of a new international terminal. The process of acquiring 18 acres is on.

As part of the 2005 land transfer, there was a stipulation that when the airport became a company or an SPV the government would have to convert the price of the land into equity. The backdrop was an agreement reached with the Ministry of Civil Aviation in 2003. According to that agreement, considering the contribution of the State government to the development of the airport, the operation and supervision of the airport would be given to the new SPV, Thiruvananthapuram International Airport Ltd (TIAL), with the State government as a shareholder. The Centre’s decision to hand over the airport to a private enterprise breaches this agreement.

Secondly, Kerala has its unique models of airport ownership and management as has been clear in the case of Cochin International Airport Ltd (CIAL) and the Kannur International Airport Authority Ltd (KIAL). CIAL made a profit of ₹204 crore in 2019-2020. This is on a revenue of ₹655 crore. Plus, it is the world’s first airport to be fully powered by solar energy. CIAL has also now ventured into other infrastructure activities in the sphere of transport and logistics.

The third reason is with respect to the argument that development requires increased capital and efficiency. It is not fair to say that this will happen only if TIA is handed over to Adani Enterprises. CIAL is a profitable venture and is the answer to those who believe privatisation is needed for development. The public sector holds 47.67 per cent equity in CIAL. The combined investment by the government and the public sector was ₹130.66 crore. And the dividend received so far is ₹368.46 crore, a whopping 282 per cent.

It is true that the user fee at TIA is high. Domestic passengers are charged ₹506 and international passengers ₹1,069. However, CIAL is the only metro airport in the country that does not charge a user fee from passengers. If TIA is redesigned on the CIAL model, the fee may be much lower. It is the cost efficiency of investment that ensures development.

For example, construction at CIAL cost₹4,250 per square feet, while the Delhi Airport cost₹11,000 per sq ft. The new terminal at Bangalore Airport, which is currently under construction, will cost ₹12,000 per square feet. This means Kerala has shown its ability to develop airports at a lower cost.

The writer is Member, Kerala State Planning Board. Views are personal

Published on September 09, 2020

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