M Govinda Rao: The authorities and our airports

The ideal role the Airports Authority of India could play is assisting and advising the government to access private investments.

Traditionally, investment in infrastructure has been in the government domain. The rationale for this is that these investments have significant externalities and if left to the private sector, there will be significant underinvestment. However, in India underinvestment in infrastructure is due to the government's failure to make the required investments, on the one hand, and erecting entry barriers for private investment, on the other. Anther argument for public investment in infrastructure is that lumpy investments would create monopolies and public monopoly should be preferred over private monopolies. The preference for public monopoly comes from an unflinching faith in the benevolence of governments even as we see bureaucrats and politicians maximising their own benefits rather than increasing the welfare of the people.

The typical case of government failure is in the case of airports. The Airports Authority of India (AAI), the public monopoly entrusted with the responsibility of creating and managing airports in the country, has miserably failed to fulfil its role. It has demonstrated that it has neither the competence nor the resources to deal with the growth of the aviation industry. It has failed to plan for the increases in passenger and goods traffic in terms of landing facilities, parking bays, and tracking and control systems, and has not cared a wee bit for passenger comfort. Yet, to protect its turf, it has put every hurdle it can to prevent the entry of the private sector.

Aviation infrastructure is the backbone of the tourism industry, which is employment-intensive. While the bottleneck has been felt for long and in 2003-04 the finance minister's Budget speech outlined that Delhi and Mumbai airports would be developed as principal hubs of international travel to India, and while every Budget since then reiterated that resolve, passenger dissatisfaction has only increased. Chaos at the airports rules inside the terminals, on the runways and the tarmac, and in the air. At every stage of travel, the passengers have to jostle for space and put up with the stink. Apart from congestion and chaos, the passengers have been literally taken for a free ride, with aircraft circling the airports for long, seeking ATC clearance. The delays caused in metropolitan airports and productivity losses spill over into other airports and offices. The passengers feel frustrated, complain about the pathetic state of affairs, but feel utterly helpless even as the AAI shows complete apathy.

For self-respecting international travellers, our pride in being Indians is hurt when we see that even countries like Vietnam and Ethiopia have much better airports. Just across the border, in Lahore, we have a different experience. The poor airport management is combined with unprofessional immigration counters. One often wonders why a country with such advances in technology and educated manpower cannot train a sufficient number of officers to manage the immigration counters professionally.

When markets fail we advocate government intervention. What do we do when governments fail? The saddest fact is our steadfast refusal to learn from past mistakes, and successes of others. Our isolationist policies and "closed skies" approach in the past prevented the growth of the tourism industry. Even after some liberalisation, with such rich historical heritage, the number of international air passengers in India in 2005-06 was a mere 22.4 million. Of this, 5.8 million were in Delhi and 6.7 million in Mumbai. In contrast, Bangkok International Airport alone serviced 25 million passengers and Changi Airport in Singapore catered for 30 million passengers.

Even after the proposed restructuring of Mumbai and Delhi airports is completed, the facilities will be woefully inadequate. With increasing income levels, expanding businesses and newfound interest in the country, there will be explosion in the aviation industry and the construction of large and modern greenfield airports in both the cities is imperative. Failure to plan such an expansion immediately will constrain the growth of the economy and restrict expansion in employment.

The interesting point is that countries such as Thailand, Malaysia, and Singapore have planned for a massive expansion of their already existing state-of-the-art air travel facilities. Unless we too show such foresight, we will be throttling our economic expansion and figure nowhere on the tourism map. Take the case of Bangkok international airport, which is considered one of the best 30 airports in the world. It caters for 25 million passengers, and has 33 aerobridge gates and another 62 parking bays. Similarly, Changi airport in Singapore manages over 30 million passengers. Both the airports have state-of-the-art equipment and first-rate passenger facilities. Despite this, both Bangkok and Singapore have phenomenal expansion plans. In Bangkok, a new ultramodern greenfield airport will be commissioned within a few months. Thankfully, they don't seem to think much of their politicians and the King has named it "Suvarnabhumi". The airport is spread over 3,200 hectares and the investment is estimated at $.4 billion. Located at about 25 km from the city centre, it is connected with elevated highways and an express rail link. It will have the facilities for the movement of 45 million passengers and 3 million tonnes of cargo, and two runways of 4,000 metres and 3,700 meters, respectively, to enable most modern jetliners to land, including A380s. There will be 121 parking bays and 51 will be connected to the building through the aerobridge. It will have 120 immigration desks on arrival and 360 check-in counters for departure. Similarly, Changi has planned the construction of a third terminal with additional 28 aerobridge gates to manage additional 30 million passengers.

It is ironical that political parties which want low-income groups to benefit from public policies oppose those policies that create enormous employment opportunities. Skill requirements for these jobs are not very high and they benefit the common man. In the prevailing situation, large private investment and management in airports infrastructure are imperative. The ideal role the AAI could play is assisting and advising the government to access private investments rather becoming a barrier to the entry of private players. The earlier the Airports Authority and the government of India realise this, the better it is for the country.

The author is Director, NIPFP. Comments at
mgr@nipfp.org.in