Flying, but where’s the flight plan?

With the government holding on to all “sovereign rights” and deciding toset up a regulatory authority which will have the final say on matters suchas duty free shops, terminal charges and even airport parking, aviationexperts are already worried about the future of the leasehold plan. They saythat the constitution of the new regulator, the Civil Aviation Authority(CAA), is going to be of critical importance. It should ideally includeprivate operators and government officials should be given much lessrepresentation. It should not be a quasi-AAI which, despite earning recordprofits from the four major airports, has not even made basic infrastructureinvestments to improve facilities in the airports.

The present thinking in the aviation ministry seems to favour the TelecomRegulatory Authority as a model. Private operators are also wary of thebewildering multiplicity of authority in airports. How coordination betweenthe ministries of Finance (which controls Customs), Home (which is in chargeof immigration) and Civil Aviation (which controls the AAI) will be achievedis a worrying question. However, senior officials say that the CAA will bethe only authority private operators will have to deal with.

Whatever the final shape of the plan, by next year all the airports will bein private hands. As a first step towards evolving the 50-year lease plan,the government has engaged KPMG Peat Marwick as consultants. They werepicked after a hectic bidding race which included players such as ABN-Amro,Fergusons and ANZ Grindlays. Now, a financial consortium will carry out aprocess of due diligence, which will mean going over the books andproperties of the AAI, following which the show will be on the road. Expertssay that an investment of nearly Rs 20,000 crore will be needed.

AAI officials say that Heathrow, the busiest airport in the world, will bethe model for airport upgradation. Incidentally, using the lease-holdpretext, scores of officials have made trips to London and Singapore to“study” the airports over the last year. Wryly comments a senior officialdenied a trip: “Heathrow is a strange model to choose since we do not evenget a quarter of its traffic. But then, visiting London is always apleasure.”

Passengers inured to the pathetic facilities in major airports will be infor some culture shock: the initial plan envisages proper aerobridges, cleanand comfortable waiting areas and duty free shop run by private operatorswho will bid for these rights.

Experts say that Bangalore will probably be the first off the blocks. Delhimay face a few problems now that Minister of State for Civil Aviation ChamanLal Gupta has expressed security concerns after the hijack of IC-814. Hereportedly wants the ministry and the government to take a fresh look at thenew civil aviation policy and factor in the security angle. Gupta says thathe will not allow any compromise on security and a new chapter on specificsecurity measures will be added to the proposed civil aviation policy.

However, officials contend that the runway, Air Traffic Control, securityand Instrument Landing System (ILS) will still be controlled by thegovernment, so the knee-jerk security-cannot-be-compromised argument revealsa serious lack of understanding. Whether the security concerns delay thelease plan is still a matter of speculation with the Prime Minister’s Office(PMO) trying to set a year-end deadline for the plan.

In any case, private operators who are keen to participate in the lease-holdplan say that if the airports are privatised, security may actually improve.Says a senior KPMG official: “Look at Singapore and the United Kingdom. Howmany security violations occur there? We have to change this mentality thatrequires the government to be in charge of everything.”