Parliamentary panel critical of privatising profitable airports

The government is stifling the Airports Authority of India (AAI) by offering profit-making airports to private players “on a platter” after spending public money for its modernisation while keeping with it “only loss-making" , a parliamentary panel said on Thursday.

Severely criticising the Civil Aviation Ministry, the Parliamentary Standing Committee on Transport, Tourism and Culture recommended that the AAI should be allowed to form a subsidiary or Special Purpose Vehicle (SPV) to acquire expertise in managing airports.

 “The committee fails to understand the logic. The public utilities created by public fund cannot be given to private parties for commercial considerations,” it said. The report was released at a time when the process of privatising airports at Chennai, Kolkata, Lucknow, Jaipur, Ahmedabad and Guwahati is underway.

The panel said the AAI should be permitted to operate all airports with a rider that there should be time-bound delivery of world-class services in a more efficient manner, “matching with those being rendered by private operators”. The 31-member panel headed by CPM MP Sitaram Yechury accused the ministry of putting all the blame on AAI.

  In a bid to strengthen its argument on privatisation, the ministry said the AAI was not able to utilise commercial space in Kolkata and Chennai airports.

Picking holes in the ministry’s theory that AAI will not be able to commercially handle airport operations, the panel said, “An agency which has been managing our airports till now may not have become inefficient just one fine morning."
The committee was of the view that the ministry's views on AAI is based on "presumptive conclusions" and it appears that the decision to give the airports under Private-Public-Partnership (PPP) mode has been taken “merely on fallacious conclusions based merely on assumptions, with no concrete basis".

Wondering how the AAI could carry out its mandate with depleted resources, the panel said it is “dismayed” that instead of strengthening the AAI by giving it much needed financial and administrative autonomy to enable it to take its own decisions without being influenced or advised by either Ministry or Planning Commission, a decision to give our airports on a platter to private parties was taken.

The panel was also “surprised to see the unusual haste” being shown in the process of privatisation right from the constitution of the task force, of three Inter-Ministerial Groups one after another, placing the matter before the Cabinet and obtaining clearances and start process of pre-bidding.

Noting that the PPP model has its own pitfalls, the committee said the private players might give excellent facilities but charge a bit “prohibitive price”. 

“We have seen the development of national highways that due to poor margins in road projects, concessionaires are abandoning projects in the recent years as toll collection did not turn out as per expectations,” it said.

On airports, it said, these facilities are not being run as for public service by private players and they will increase user fees as they have done in the past on the pretext that operations are not profitable. 

“The committee is of the considered opinion that our people need good facilities at our airports but not which are unaffordable,” it said.

The panel also expressed concern over the fate of employees of airports in Kolkata and Chennai, which are going to be privatised soon. 

“The fate of the existing employees needs to be tackled first at both the airports before taking any step in this regard,” it said.