Flight Plan

Flyer-first policy

AK Sachdev | Updated on April 04, 2021

Public-private participation: Disinvestment in AAI’s airports has been referred to as privatisation. Kochi, Hyderabad, Bengaluru, Delhi and Mumbai were the first to be privatised   -  VV KRISHNAN

Why competition is vital to keep airport privatisation safe from monopolisation

The Finance Minister’s Budget 2021 speech mentioned the word ‘infrastructure’ over 51 times, highlighting the government’s perception that infrastructure held the key to the rejuvenation of the economy. Disappointingly, but unsurprisingly, the long-standing demand of giving civil aviation an infrastructure status remained unaddressed.

The budgetary allocation for aviation was ₹3,224 crore — a 22 per cent reduction as compared to the last fiscal year. Of this, airports have been allocated ₹600 crore mainly for the revival of 50 airports that fall under the Regional Connectivity Scheme (RCS). In her budget speech, Finance Minister Nirmala Seetharaman said the government would be monetising assets of AAI-operated airports in Tier-2 and Tier-3 cities to build new infrastructure. The government had earlier maintained that big airports were being privatised to generate cash for investment in smaller airports.

Subsequent to the budget presentation, Aviation Minister Hardeep S Puri reportedly declared that, under the RCS, the ministry targeted operationalising 100 unserved and underserved airports. Disinvestment in AAI’s airports has been referred to as privatisation, the most common model being public-private participation. Kochi, Hyderabad, Bengaluru, Delhi and Mumbai were the first to be privatised between 1999 and 2006. Privatisation was resisted by airlines due to the anticipated increase in operating costs but the government was unrelenting; justifiably, the airlines passed on the additional burden to the passenger.

In 2019, the aviation ministry awarded the airports at Lucknow, Guwahati, Jaipur, Ahmedabad, Mangaluru and Thiruvananthapuram to the Adani Group. Budget 2021 has initiated a third wave to privatise six airports (Varanasi, Raipur, Indore, Bhubaneswar, Amritsar and Tiruchi); up to four loss-making airports may be clubbed with these in a package. At Delhi and Mumbai, despite an agreement between operators and AAI prohibiting new airports within 50 km, second airports are being permitted. Adani Group is building the airport at Navi Mumbai and also has a share in the Mumbai airport.

While the need for developing airports is important, the government must introduce competition into airport privatisation so that a monopolistic regime does not add to the burden of the passenger, who should be the ultimate intended beneficiary.

AK Sachdev, a retired group captain, is former GoAir COO


The writer, a retired group captain, is former GoAir COO

Published on April 04, 2021

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