 "Management contract, not outright privatisation, for AAI airports")
“We are going in for a management contract. A request for a proposal is being prepared,” said Civil Aviation Minister Ajit Singh.
The ministry has been planning to develop six AAI-run airports — Chennai, Kolkata, Ahmedabad, Lucknow, Jaipur and Guwahati - on a public private partnership (PPP) basis. Last month, an inter-ministerial group gave its nod to develop Chennai and Kolkata airports on the PPP model on the lines of Mumbai and Delhi airports. The Planning Commission too has been in favour of the PPP model of development for AAI airports on a long-term lease basis.
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| GETTING PRICEY |
| Mumbai: Airport Development Fee - Rs 100/- and Rs 600/. For one year, till March 2014 UDF will be Rs 274 for domestic and Rs 548 for international passengers, respectively. Bangalore: At Bangalore there is no ADF. Domestic passengers pay Rs 260 and international passengers pay Rs 1070 as UDF Delhi: Airport Development Fee of Rs 100 and Rs 600. UDF of Rs 231-462 (domestic) and Rs 534-1068 (international) is charged for departing passenegrs. Arriving passengers are charged a UDF of Rs 195-391 (domestic) and Rs 436-881 (international) Hyderabad: UDF - Rs 475 (domestic) and Rs 1875 (international) |
Kolkata: UDF - Rs 400 (domestic) and Rs 1000 (international)
Singh, however, said the AAI airports would not be sold or leased to private companies and the government would continue to own the assets.
He said these airports would require expansion and some would require construction of new terminals in the next three to five years and the government would take a call on the development model for expansion at a later date.
The plan to privatise Chennai and Kolkata airports is being opposed by AAI employees unions and the Trinamool Congress which runs the West Bengal government. The Trinamool has been planning to take up the issue along with the All India Anna Dravida Munnetra Kazhagam which runs the Tamil Nadu government.
However, political opposition is not the sole reason for the change of policy. One of the factors influencing the government decision is economic.
Private airport developers in India are already under stress and reportedly not keen to participate in the privatisation of six airports.
Industry bodies too are opposing the privatisation of AAI airports as it would push up costs. “In the case of the six airports in question, the need for private sector funding is not obvious since the airport upgradation has already taken place with full funding provided through AAI. Even if it is a question of bringing in external management expertise to augment the internal expertise of AAI for managing these airports, this could be achieved without the need for transfer of ownership to the private sector. Efficiencies in operations could be better achieved through awarding a ‘management contract’ to an entity with expertise in this domain,” the International Air Transport Association wrote to the civil aviation ministry while making its opposition to privatisation clear.
“The airlines and International Air Transport Association are concerned that any unnecessary private shareholding might increase the focus on profit-maximisation and as a result, increase the cost to the users. The privatisation of these six AAI airports would only serve to fuel a further round of increases in the airport cost environment, adding to costs for passenger and the airlines,” the industry body said.
In the past too, IATA and airlines have been opposing private developers GVK and GMR's proposals to hike aeronautical tariffs at Mumbai and Delhi airports citing that increased costs would negatively impact the airlines.
In its Q1 FY 2014 investor presentation, Jet Airways said its result was impacted by $ 6 million (Rs 39 crore) due to increase in landing and navigation charges at Mumbai, Delhi, Chennai and Kolkata airports.
Other airlines did not respond to email queries seeking details of cost impact.