Airport projects hit a rough patch

Employees of Airports Authority of India strike puts government in a fix; absorbing the redundant staff from the old airports is an issue

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The Central Government is working on an Airports Authority of India-led PPP project for expansion and modernisation of the Kolkata and Chennai airports.

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The two-day “non-cooperation movement,” a euphemism for a strike by the Airport Authority Employees Union, was called off by Thursday evening. It may at best be a truce because the basic problems raised by the agitating staff have not been addressed. In 2004, when the Central Government signed agreements with two consortia for the development of greenfield airports in Hyderabad and Bangalore, there was turbulence in the air. Even then, the Airports Authority Employees Union and allied trade unions in the country, threatened to go on strike protesting against the privatisation move. A similar strike was also in the air in relation to the proposal to privatise or corporatise Air India and Indian Airlines, even find a strategic partner.

Hard decisions


Last week, the Union Civil Aviation Ministry, the Airports Authority of India (AAI), and the Directorate General of Civil Aviation (DGCA) had to take some hard decisions. The new Hyderabad International Airport, developed by a consortium led by the GMR group, had its soft launch on March 14 at the hands of Congress President Sonia Gandhi. Commercial operations are expected to start soon.

The government had to order the closure of the old airport at Begumpet. So the strike had an immediate provocation. After talks that extended to the second day, Civil Aviation Minister Praful Patel emerged triumphant, announcing the calling off of the strike, which badly affected ground services.

Under the 2004 agreement, the government was bound to close down all the commercial operations at the existing airport, to provide the greenfield venture with all the space to generate the income for the investments made — an estimated Rs. 2,478 crore in the first phase. Mr. Patel made it clear that the Hyderabad and Bangalore old airports would remain open only for defence purposes and natural emergencies. There was a petition in the Supreme Court already, but the Centre had to operate within the framework of the agreement. Does it mean loss of jobs? Can these employees be absorbed in the new airport?

The case of Bangalore may be entirely different, even unique. The airport belongs to another public sector giant, the Hindustan Aeronautics Ltd. (HAL). It has been used by the HAL for its trials, repairs, experiments, and research projects, often in tandem with the Defence services. It was also put to commercial use and became an international airport some years ago. It has been generating substantial resources for HAL. Even if commercial operations come to a halt when the Bangalore International Airport (BIAL) becomes operational, perhaps by mid-May, it will have a host of other activities to keep it going. Both Bangalore and Hyderabad old airports could be put to so much more use for the Flying Clubs or Schools considering the heightened demand for commercial pilots.

In public debates in both these southern State capitals, passengers and corporates have raised the issue: Can the cities not have two airports? After all, most western centres and developed cities have two or even more airports to cope with the growing traffic. The convenience of an airport so close to the city centre far outweighs other considerations that may force Aviation authorities and private airport developers to go 30-40 km out of the city to construct a new and modern airport.

PPP model


In its much-debated infrastructure as well as aviation policies, the Centre has repeatedly advocated a public-private-partnership (PPP) model to generate the required investments to develop the infrastructure to meet global standards. Accordingly, the government went in for partnership for the re-development of the New Delhi and Mumbai airports, opted for greenfield ventures in Hyderabad and Bangalore, and is working on an AAI-led PPP project for expansion and modernisation of the Kolkata and Chennai airports. The Tamil Nadu Government is also pressing for a new airport near Sriperumbudur, about 40 km off Chennai.
So the cases of Hyderabad and Bangalore are separate and cannot be treated on a par with Delhi or Mumbai. When the AAI remains in control over both the existing and the new airport, there will be no problem in the redeployment of manpower. But when a private investor develops a new airport, he has the freedom to run the services the way the company wants. It is the Air Traffic Control, airport security, customs and immigration facilities that will remain with the government or its agencies. The ground services will shift to the investor/operator, who can either do them in-house or outsource it.

So absorbing the redundant staff from the old airports becomes an issue. Hence, their agitation. Even assuming that the two old airports remain functional, how can they continue to deploy so many staff? These are problems that the AAI and the Civil Aviation Ministry need to sort out. Mr. Patel has assured the union that employees could be consulted in future on all such issues and agreements.

Key issue


A key issue arising from the opening of the two greenfield airports relates to levy of a passenger service fee or user development fee for the domestic and international terminals as well as passengers. While Hyderabad’s GMR group has been given the go-ahead to charge Rs. 1,000 as user fee for international passengers alone, the Bangalore fees are under consideration.

BIAL has proposed charges of Rs. 675 for departing domestic passengers and Rs. 995 for departing international passengers. But it has been advised to levy an ad hoc fee on international passengers and wait for the final audited project cost to fix a charge for domestic passengers. This could upset the airfare structures, as the tax and levies could be higher than the cheaper fares offered.

Though the new Bangalore airport was supposed to become operational by March 30, the aviation authorities are now suggesting any date after May 10 so that the formalities for Air Traffic Control systems and training could be completed by then.

But the real issue in opening such new airports, away from the city centre, is one of transport and communications. Railway links and good public transport become imperative before the airports become operational.

Otherwise, the costs could skyrocket for ordinary passengers, and turn them away from the no-frills, low-cost airlines.

http://www.hindu.com/biz/2008/03/17/stories/2008031751261500.htm