Airports: Airlines may get higher stake

The empowered Group of Ministers, on Tuesday, recommended a hike in maximum permissible equity participation in the proposed joint venture companies -- for the airports of Mumbai and Delhi -- by airlines and cargo carriers from five to ten per cent.

The GoM has thus proposed a modification in the Expressions of Interest document.

However, sources said ABN-AMRO, the global consultant appointed to advise the government in the restructuring and modernisation process of the two airports, had strongly recommended that the participation of airlines should not be enhanced and be maintained at the five per cent level as earlier.

In a letter to the civil aviation ministry, the ABN-AMRO is understood to have said that the universal approach taken in respect of international airports that have been privatized had been either to exclude airlines or to limit their participation to a cap of five per cent.

The global consultant had also told the government that the ownership structure of major foreign airports, which had private equity had no airline investors. In this context, it had quoted the examples of airports in Munich and Sydney.

The sources said the ABN-AMRO had submitted that the prime reason for such a stand was that the airlines were interested in focussing on limiting the access of their competitors to the airports they controlled.

The airlines would also be interested in minimising or limiting the cost and scale of airport development, besides reducing the aeronautical charges.

The ABN-AMRO is learnt to have pointed out that there was a direct conflict of interest between the airlines and the airport ownership company.

It is also understood that the consultant had warned that a decision to hike the participation of airlines would allow them to qualify as members of the boards in the two proposed JVs and further the conflict of interests.