Wednesday, January 20, 2021

Why The Next Round Of Airport Privatisation Will Be Different

The pandemic notwithstanding, at the end of 2020, the Government of India signalled its intentions towards the next round of privatisation.

This time, 12 airports are likely to be in the list. There have also been indications that the privatisation bids will be solicited where the airports could come coupled as six packages of two airports each.

The shortlist includes the airports of Amritsar, Bhubaneswar, Tiruchirappalli, Raipur, Indore and Varanasi which will be clubbed with airports at Barmer, Jharsuguda, Salem, Jagdalpur, Jabalpur and Kushinagar.

Even beyond this, this next round of airport privatisation promises to be different from the previous ones.

The current wave of privatisation will build on the PPP model and, perhaps, attempt to correct past mistakes where the outcomes have been very different from the objectives.

Whether it is the cost-overruns, the inequitable partnership or the fact that the consumers have paid for much of the infrastructure by ways of fees and charges, in essence, airports which function as geographic monopolies have been guaranteed a rate of return — much of which has been serviced by an increasing burden on the travelling public — which in turn has led to a feeling of profits being earned rather than deserved, in addition to the unwanted phenomenon of cartelisation.

No doubt, we have better airports, yet the development model has been a mismatch for the market.

Over the last 20 years, the levy of higher User Development Fees (UDF), Airport Development Fees (ADF) or in some cases “arrival fees” has left much to be desired.

Concurrently, investors have fared well as terms have progressively improved over the years — almost totally in favour of investors.

20/01/21 Satyendra Pandey/Swarajya

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