IATA expresses reservations over privatisation of airports

Voicing reservation over privatisation of airports, global airlines body IATA has said governments should resist the temptation of earning revenue through such exercises and evolve policies supportive to all players to spur growth in the aviation sector.

"An investor needs to make a fair return on his investment. But if you (government) are taking away all that money from the top, the operator will have to charge more to make some money, which eventually comes from the passengers and it keeps the fares up. So the government shouldn't be greedy about that," IATA's director general and chief executive Tony Tyler said during a recent interaction.

Observing that privatisation is not a "panacea" and does not solve all the problems, he said there is a "particular temptation" when governments privatise airports.

He sounded critical of the model adopted by the government in privatising Delhi and Mumbai airports in which government reduced its holdings to 26 per cent but still gets a revenue share of 45.99 per cent and 38.7 per cent respectively.

The chief of the International Air Transport Association (IATA) said airports could also be privatised for bringing in commercial discipline and flavour, rather than minting money. "It also helps freeing the airport from the government decision-making (process)."

"The important thing is the right model and the right framework to make sure that the (airport) charges that airlines pay are reasonable and that the right incentives are there to invest (in an airport)," Tyler said.

There are very successful airports run by governments and private companies, while there are very expensive and inefficient airports too run by governments and private sector, he said.

Terming India as the "future of opportunities" for the airlines globally, Tyler said there is a lot of interest and ambition in the Indian carriers too to grow and serve the market.

But inadequate infrastructure and high taxes and costs make it not only expensive but also "difficult" to operate in India, he said.

IATA has earlier too termed Indian airports as "very expensive" and advocating lowering of airport charges, taxes and fuel charges.

"What we need is supportive policies. The government has to give a helping hand and I am quite optimistic that things will change for the better under the new government," the IATA chief said.

On the entry of the two new carriers -- AirAsia India and Vistara -- in the domestic aviation space this year, Tyler said this show the competency in the Indian aviation industry.

Indian air traffic was going to grow and it has to support the businesses, he said, adding "we are forecasting a 6.7 per cent average annual growth over the next 20 years in the Indian market."

The Indian aviation market is going to be the 10th largest market this year and the third largest by 2034 and this is a confirmation that India is a good market, he said.