Take-off is a term the government does not seem to be acquainted with when it comes to privatisation of airports. Modernisation of metro airports through private participation was first talked about in 1998 by Prime Minister Atal Bihari Vajpayee.
The intent was oft repeated and in the Budget for 2003-04, Finance Minister Jaswant Singh outlined a Rs 3,500 crore (Rs 35 billion) upgradation plan for the Delhi and Mumbai airports. But the process has only hit air pockets till now. The civil aviation ministry is yet to move a concrete proposal on the issue to the Cabinet.
"In the past seven months, proposals have only been sent back and forth between the finance and civil aviation ministries. It was earlier expected that at least a private partner will be finalised by this year. But it looks uncertain now," said an official in the Airports Authority of India.
Civil aviation ministry officials claim that the bone of contention is how much power the AAI should wield in the Mumbai and Delhi airports after privatisation. While the civil aviation ministry had proposed that the AAI retained a 10 per cent stake with charge of security and air traffic control, the finance ministry is of the opinion that the AAI should have more say in the management.
At present, various alternatives are being considered, including the AAI retaining a 26 per cent stake and holding golden shares. The government is planning to lease the assets to the private player. If all goes well, the civil aviation ministry may be ready with a Cabinet note this week.
The urgency to privatise the two airports stems from the findings of an International Air Transport Association survey that placed the Mumbai and Delhi airports at the bottom in a list of 57 global airports in terms of amenities, infrastructure and passenger satisfaction. The survey further stated that the airports were the least favourable in providing 19 services offered by all airports.
KPMG, the government-appointed consultant to the privatisation plan, pointed out that all the international airports in India were plagued by a set of problems, including skewed aircraft utilisation patterns, capacity imbalances and lack of co-ordination among various agencies functioning at the airports.
It pointed out that commercial revenue was just one-fifth of the airports' total revenue and spendings at the duty-free shops at the Indian airports was less than $1.5 a passenger, against the Asian average of $8.
While the Mumbai and Delhi airports are at least under consideration, the privatisation of the Kolkata and Chennai airports have been put on the backburner. Officials said the Kolkata, Chennai and non-metro airports would be taken up only after the Delhi and Mumbai projects made some headway.
The privatisation could have been underway had the Cabinet not rejected a civil aviation ministry proposal in January this year. The ministry had suggested that the AAI should hold 5 per cent in the joint venture company to be formed for the four metro airports. The Cabinet directed the civil aviation ministry to reconsider the proposal in consultation with the finance ministry.
However, after the Cabinet's refusal, confusion prevailed regarding the format of privatisation. The privatisation of the Kolkata and Chennai airports was dropped and then Civil Aviation Minister Shahnawaz Hussain said the Delhi and Mumbai airports would be accorded highest priority and the ministry would firm up a new proposal by February 2003.
Initially, the ministry decided to corporatise the two airports with the AAI investing from its Rs 2,000 crore (Rs 20 billion) reserves for their upgradation. The plan was subsequently dropped.
The AAI was then asked to invite global architects to present a design and Jones Lang LaSalle, Hochtief AirPort, Lufthansa Consulting, Airport Consulting Vienna were among those shortlisted. This also came to naught with the finance ministry insisting that the private player in the joint venture be allowed to make the design.
"This vacillation has not only cost us our credibility but may even ward off investors from the project. The same thing happened after we conducted roadshows in early 2000," an AAI source said.
