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Airport privatisation may not be forever: ACI chief

Last Updated: Sunday, June 9, 2013 - 11:57

Cape Town: Indicating that privatisation of Kolkata and Chennai airports' management should not be permanent, a global airport expert has said such a move by the government should be intended only to give a "breather" to the Airports Authority of India which has modernised them.

"I don't know how much the AAI was involved in the decision-making process. Sometimes, it makes sense to outsource certain areas at least for some time. When you privatise something, it is not necessarily forever. It is a breathing spell... To give time to catch your breath," global airports body Airports Council International (ACI) Director General Angela Gittens told said.

The chief of ACI, which represents 573 members operating 1,751 airports in 174 countries and territories across the globe, was asked about government's recent decision to privatise management control of the Kolkata and Chennai airports through global competitive bidding.

AAI modernised Chennai airport at a cost of Rs 2,100 crore, while Kolkata airport was refurbished for Rs 2,350 crore. The two are the highest revenue earners for AAI.

Gittens, who was here to attend IATA's (International Air Transport Association) annual general meeting, also said, "What's happening in India is that growth is happening faster than the development of facilities. So it may not be realistic to expect that one airport authority is going to manage all that growth right away."

A former CEO of two of the world's largest airports -- Miami and Atlanta, Gittens strongly favoured India developing at least Delhi and Mumbai airports as hubs for local airlines. But she also pointed out that there was no Indian carrier currently in a position to fully operate a hub.

"India has so much growth. But there is not a single hub as such. Dubai is a big hub. Post the Jet-Etihad deal, Abu Dhabi is likely to become another international hub. But what will happen to Indian airports after all the infrastructure development?" the ACI chief said.

On whether Jet seeking to fly out of 23 Indian cities to Abu Dhabi after its Etihad deal would lead to modernisation of several airports, Gittens said, "You have to be very careful to undertake capital investment on the basis of a particular airline's plans. What if the plans change or the plans don't work out? An airline can walk away, but an airport can't."

"So, you have to look beyond what the airline is asking for and think about the underlying market they are referring to and decide to take the risk if it makes sense to do so."

The ACI chief, who has also served in US aviation regulator Federal Aviation Administration and NASA, lamented that Air India was on "life support" and not in a position to create a hub for its activities in India.

"Considering the growth we are witnessing in the Indian aviation sector, where has India faltered in having a hub? You have an artificial hub in Dubai and Abu Dhabi," she said, adding that India does not have an airline, including Air India, which has the strength to be a hub carrier.

"You either need to give Etihad or another carrier license to create a hub in Delhi or Mumbai or give it to an Indian carrier. But it should be somebody who needs the hub in either Delhi or Mumbai. That is the main concern.

"It is a big disadvantage for Indian aviation. Whether it is a disadvantage for Indian carriers is not the issue, but it is certainly a disadvantage for Indian economy," Gittens said.

Observing that India's hubs "are all outside of India (which) is not a good thing", she said: "you want a hub in Delhi and Mumbai at the very least. You have to realise this reality. You might be better off by letting fate take the draw and let some of the other Indian carriers become the hub carriers."

Asked whether only Air India could be blamed for not becoming a hub carrier, Gittens said, "Air India has not really been allowed to be a market carrier. They have not been allowed to be a market carrier. They have not been allowed to make business decisions. They need to be operated as a business and not as a quasi-government agency."

"There is too much intervention in the running of Air India. Sometimes in trying to help, you hurt more than you help. And perhaps that's what has happened. Air India needs to be able to make market decisions," she said.

The top airport official justified the hike in airport charges saying these fees had not been raised for ten years.

"These were a combination of 'catch-up' charges, for infrastructure because they built new airports in Delhi and Mumbai," Gittens said, adding that India has benefited from the new facilities created in the two metros.


First Published: Sunday, June 9, 2013 - 11:57
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