AIRPORT PRIVATISATION INEVITABLE! LET US MAKE MOST OF IT…
Aviation World Feature Airport infrastructure is the essential skeletal framework of aviation but generally tends to be taken for granted, possibly because addition of new airports and transformation of old ones happen at a slow pace and away from public glare. Nonetheless, airports play a vital role in sustaining aviation, supporting the transport network, promoting trade and tourism, and contributing to economic development of the nation. Covid-19 has been exceptionally unkind to civil aviation with airports possibly being the worst affected sector. By Gp.Capt. AK Sachdev (Retd.)In India, airports, being capital and real estate intensive, were in public sector domain during our initial years but that has changed in the last two decades with change of policies and the government’s fiscal compulsions to disinvest in them. There are close to 500 airports strewn over the extent of the country with 139 of them being under the public domain and owned by Airports Authority of India (AAI) according to AAI’s official site (https://www.aai.aero/en/business-opportunities/indian-airports accessed on 08 February 2021). According to AAI, the total number of functional airports in India is 153 of which 29 are international, 114 are domestic and 10 customs airports (at which unloading of imported goods and the loading of export goods is permitted). To put this figure into perspective, US, which has a billion less people than India, has over 5000 functional airports. This article critically appraises the push for privatising airport infrastructure.BUDGETARY IMPETUS The central government budget presented in 2018 had introduced NextGen Airports for BHarat (NABH)Nirman initiative. It proposed to increase the existing capacity of airports by more than five times through construction of 100 new airports in the next 10 years. An impressive sounding figure for investment in that direction was also mentioned but the onslaught of Covid-19 rendered all that planning superfluous. Indeed, aviation went into survival mode globally and it is only now that optimism is beginning to manifest itself in actions and thoughts of aviation stake holders, including the government. The budget presented last month reflected some of that buoyancy; the Finance Minister’s budget presentation speech mentioned the word ‘infrastructure’ more than 40 times and included a proposal to set up a Development Finance Institution (DFI) with a capital of Rs 20,000 crore and an ability to lend up to Rs 5 lakh crore. The issuance of Zero Coupon Bonds for infrastructure funding also has the possibility of providing an avenue for aviation financing.Disappointingly but unsurprisingly, the long standing demand of civil aviation to be given infrastructure status remained unaddressed. The total budgetary allocation for aviation was Rs 3,224 crores, a figure representing 22% reduction as compared to the ongoing fiscal year. Of this, airports have been allocated Rs 600 crores mainly for the revival of 50 airports that fall under the Regional Connectivity Scheme (RCS). Airports Economic Regulatory Authority of India(AERA) has been allocated Rs 10 crores. Besides, the Airports Authority of India (AAI) saw a provision of Rs 5,139 crores marked under Internal and Extra budgetary resources; the implication is that AAI will have to put up collateral to raise funds. The aviation portion of the budget has endeavoured to convey that the financial problems of airports are being addressed. However, the actual availability of funding is a bit nebulous, given the fiscal pressure this budget will be consummated under. There is thus a momentum building up for finding other means of funding airport infrastructure. In December 2019, the National Infrastructure Pipeline (NIP) had been launched; it now has a pipeline of 7,400 projects, which require major funding expansion from both government and private sector. The government’s plan is to realise this goal through three concrete measures: creating the necessary institutional structure, monetising assets, and expanding capital investment through budgets. Monetising functioning public infrastructure is a way to generate more funds by drawing in private sector participation and that is the route airport infrastructure development is embarked upon. PRIVATISATION In her budget speech the Finance Minister said the government would be monetising assets of the AAI-operated airports in Tier-2 and Tier-3 cities to raise money for building new infrastructure; this is a significant departure from the past where the government has maintained that big airports were being privatised so that the cash thus generated could be invested in airports in smaller cities. In a semantic quirk, the disinvestment in AAI’s airports has been always referred to, rather euphemistically, as privatisation — a term that encompasses the whole spectrum of private participation from a wholly private ownership to a Public Private Participation (PPP) model with multiple participants. As can be expected, each model has a unique texture withdiverse partners getting into bed but with disparate dreams. The result is that all the PPP ventures have not had the same degree of success. Perhaps the only thing common to airports moving away from the AAI fold has been the incremental addition to the air passengers’ burden. The first Indian airport to be privatised in India was Cochin as far back as 1999, followed by Hyderabad in 2002 and Bengaluru in 2004; Delhi and Mumbai — the two largest airports in the country — were privatised in 2006. At that time there was no airport regulator (the Airport Economic Regulatory Authority (AERA) came up only in 2008 as a result of a Parliamentary act. It is not clear whether this fact contributed to the additional burden of privatisation on airlines (which in turn passed it on to the passengers). Privatisation was resisted stoutly by airlines but the government was unrelenting. Meanwhile, the project costs of airports overshot the original estimates (Delhi by 3.8 times and Mumbai by 1.7 times) with the incremental costs being passed on to the passengers through development fees to the tune of Rs 3400 crores. These figures are mentioned here to show the passenger pain related to airport privatisation. After 2006, there was a lull in the interest from potential investors in airports until 2015 when disparate entities again started looking at airports as lucrative ventures. In

