The Telegraph
Since 1st March, 1999
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The government is stuck in non-reform mode. Therefore, any liberalization is likely to be disproportionately applauded. The cabinet has approved a comprehensive amendment to the Airports Authority of India Act of 1994, and a new bill will be introduced in Parliament. Given the experience with the earlier bill, pending in the Lok Sabha since 2000, legislative changes are unlikely to be immediate, especially if the bill is referred to a standing committee. For example, on the earlier bill, the standing committee had security objections to privatization. Security and air traffic control will now stay with the government, meaning AAI. But private-sector participation will be allowed in existing and new airports, with majority private equity in green-field airports, including development of shopping malls, hotels, cinema halls and other passenger amenities. The bill also has a clause that allows AAI to deal better with encroachments. The idea is to corporatize existing airports, with Delhi and Mumbai becoming hubs. In fact, AAI has already invited bids for new architectural designs to renovate Delhi and Mumbai airports. Green-field airport projects are simpler. But it is unlikely that existing airports will be modernized in a hurry. There is some confusion about the form privatization will take. For example, with AAI demanding its pound of flesh, the idea of leasing out existing airports to the private sector is presumably out.

Why else should AAI invite bids on architectural designs' The country may have forgotten. But road-shows on airport privatization were held more than a year ago in Delhi and London, with 30-year leases proposed for airports in Mumbai, Delhi, Calcutta and Chennai. The prime minister announced an airport privatization programme in 1999. Even if no assets are sold and even if payments are made to AAI, it is doubtful whether this leasing model will be accepted. If Mr Shahnawaz Hussain is reluctant to give up his airlines, why should he agree to give up his airports' Joint ventures and private-sector investments with AAI control will probably be more acceptable. Nor will green-field airports be that easy, as Mr S.M. Krishna will vouch. The Karnataka chief minister’s clearance deadline was March 15. But the finance ministry objected to concessions offered for the new airport in Bangalore. Therefore, the company affairs ministry will work out a model framework of concessions, to be followed in Bangalore and elsewhere. These bureaucratic processes take time. Hence, citizens will have to wait for the country’s airports to improve. All that has happened is that a legislative hurdle has been overcome. That too, at the level of the cabinet rather than in Parliament.

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