The Government of India plans to do just that, beginning with the New Delhi and Mumbai airports, which, thanks to the skewed reality of wealth distribution in India, handle nearly 70 per cent of air traffic in the country.
The plan is to modernise airports in New Delhi and Mumbai first, then in Hyderabad, Chennai, Bangalore, and Kolkata, and then in 30 other centres.
Private and public sector participation is the way forward, it has decided. But like any privatisation plan, it has met with resistance from the public sector employees, resulting in the September 29 strike call by the Airports Authority of India's employees.
If you are wondering just what is the modernisation plan and why is there resistance to it, read on:
A brief history of airport management
The central government managed airports till 1972, when the International Airports Authority of India was formed to handle the international airports in Mumbai, Delhi, Chennai and Kolkata.
The National Airports Authority was created in 1986 to manage the domestic airports.
In 1995, the IAAI and the NAA were merged to form the AAI.
In 1999, the Bharatiya Janata Party government first announced the plan to push AAI towards privatisation. The Airports Authority of India (Amendment) Bill was passed in 2003, which allows the government to lease airports to private players, who in turn can levy fees on passengers to fund the modernisation process.
Last year, the Congress-led United Progressive Alliance government announced plans to modernise the Delhi and Mumbai airports by forming two joint ventures. The government is offering 74 per cent stakes in them. Foreign firms can hold up to 49 per cent.
The players in the fray
Initially, eight consortia were short-listed for bidding for the two airports. But Bharti Enterprises and Piramal Holdings pulled out after their foreign partners, Singapore's based Changi and the German airport operator Hochtief respectively, expressed dissatisfaction with the time frame and the stiff penalty for not completion of the projects on time.
The five final bidders for the Delhi and Mumbai airports include GMR and Fraport (operators of the Frankfurt airport); Reliance and ASA Mexico; DS Construction and Munich airport; Macquire and Airport de Paris; and the Essel group and TAV.
The GVK group, which has a tie-up with a South African airport, has bid for just Mumbai.
The rules
The government has said it will finalise the consortia that will get the leases by this year. There is a strict timeframe to the development of the airports, and by March 31, 2010, they should be complete. Rs 54 billion ($1.2 billion) is the estimated cost Rs 28 billion for Delhi and Rs 26 billion for Mumbai.
The argument against
If you are wondering why the opposition to developing the airports and what the strike is about, here's the juice.
First, the AAI employees ask, why should the government privatise the profit-making airports?
Second, those who oppose the move argue, airports are closely linked to national security -- privatising them is tantamount to giving away the keys to the nation.
Third, the airport workers are scared of layoffs.
Fourth, opponents of the disinvestments move argue, the private players will enjoy the profits from the most lucrative airports. The costs of the other airports in the country -- which are not as financially viable -- will have to be borne by the AAI.
Fifth, real estate within airports in private hands is tantamount to giving away the family jewels for a song, the anti-privatisation voices chorus.
And lastly, critics say private players without a regulatory body will result in the same kind of problems as are being seen in the power sector. Remember the recent incidents in Delhi where residents refused to pay a private operator's exorbitant bills?
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