Final move: Jaitley clears airport privatisation

NEW DELHI: The Law ministry has advised the government to privatise services at the four metro airports without pressing for amendments to the Airports Authority of India (AAI) Act, which is pending with Parliament since November ’00. A clearance to this effect has been okayed by Arun Jaitley in one of his last decisions before quitting the Cabinet to become the new BJP spokesperson. The civil aviation ministry had sought the law ministry’s opinion on the issue in view of the delay in getting the amendment, which is necessary to enable lease of the airport to private parties, cleared by Parliament.
As a result of the stand, the government has to start privatisation, aimed at upgrading services at the four international airports by drawing corporate investment and management afresh. The proposal under consideration is to set up separate companies to take over management of the airports and make AAI a partner in all the companies. This will eliminate the need to amend the AAI Act. The government and private investors can then work out a royalty and revenue-sharing arrangement according to traffic projections and business potential.
Though the two ministries and the Planning Commission were already discussing a revised model for privatisation of the four metro airports, doubts about the arrangement’s complexity and its legal sanctity persist. Therefore, the law ministry’s view will be crucial to the entire process of upgrading infrastructure at these airports.
Since members of the Standing Committee on Transport and Tourism were upset with the government for holding roadshows in London and Delhi even before the amendment was cleared by Parliament, the Bill’s fate had become uncertain. The government was taking Parliament for granted and jumping the gun, they had accused. The roadshows were held to attract potential investors as a preliminary step before calling for expression of interest.
Once the law ministry’s stand is studied, alternatives will be worked out, civil aviation minister Shahnawaz Hussain said. The issue was discussed by officials of the civil aviation ministry and AAI at a meeting on Monday. While the strategy will be different now, the ministry is determined to ensure flow of private investment and allow foreign direct investment (FDI) upto 74%.
AAI has to have at least 1% equity in all four companies, ministry sources said. The revenue earned through involvement of private parties will be used to cross-subsidise loss-making airports in the country which number over 100. Even after management control of the airport companies are handed over to private parties, AAI will retain air traffic control and security.