Employees’ unions should set aside their misgivings on airport privatisation

The debate on privatisation has been rekindled following a cabinet decision to hand over six airports to private companies twelve years after Mumbai and Delhi airports went into private hands. Is public private partnership (PPP) model the right way to build airports infrastructure and support the burgeoning aviation sector that is brimming with activity? There is also the question whether profit-making airports in Ahmedabad, Lucknow, Guwahati, Jaipur, Thiruvananthapuram and Mangaluru be given to private companies on revenue sharing arrangement. The NDA government seems to be fully convinced that handing over Mumbai and Delhi airports to GVK and GMR groups has yielded results. As part of concession agreement, AAI seem to have accrued a massive Rs 10,000 crore from the two airports as its share of revenue in the last 12-odd years. Also, Delhi International Airport Ltd (DIAL) figures high among 20 busiest airports globally with 63.7 million passengers handled in 2017 alone. DIAL has surpassed Incheon in South Korea, Pudong in Shanghai and Dubai in the UAE among top airports that handled over 40 million passengers.

Bengaluru, Hyderabad and Kochi are other big international airports operated by private companies and figure among the best run Asian airports. This has not convinced airport employees’ unions and airlines on handing over major airports to private companies. They have their reasons for this. For instance, employees’ unions that are mostly Left-affiliated opposed the move when bids were floated for Chennai and Jaipur airports in 2014. Eventually, the privatisation move was given up and private management of these airports was an idea that did the rounds. Nothing has materialised so far on that front. Secondly, airlines fear that airport fees may see a substantial jump once the airports go into private hands. Many airlines have complained of airport fees going up by over 400 per cent after GVK and GMR took control of the Delhi and Mumbai airports. Landing an aircraft in these two cities may be more expensive than that in Singapore, Dubai or even London, they complained.

Meanwhile, the cabinet decision to put up six of 15 most profitable airports for bidding is bound to reignite the privatisation debate. While GMR had shared 46 per cent revenues with AAI at Delhi, GVK had committed on 39 per cent in Mumbai. With stringent competition likely for the six airports, revenue sharing percentages and actual outgo may go up substantially.

Projections are that India along with China, North America and Europe will dominate with 40 per cent share in air travel of 18.67 trillion kilometres globally by 2037. This may have given the confidence to NDA government for putting up six medium sized airports on privatisation drive.

If global experience is anything to go by, any airport handling over 20 flights per hour may not be very viable as it gives less time for passengers to spend for shopping or eateries. Heathrow in London is a perfect example quoted by aviation experts in this regard. Global and Indian experiences in privatisation beg for different models in international competitive bids for six airports.