If
anyone had any doubts about the misleading analysis
and suppression of information purveyed by most of
the mainstream media, these doubts should be dispelled
by the latest evidence with respect to the recent
strike by airport employees. This has been widely
reported as the retrogressive actions of some employees
who simply want to keep their jobs and are therefore
impeding modernisation.
The
chaos and mess at airports and the inconvenience of
passengers has been described in the media in the
most agonised terms, with frequently expressed fears
about how this strike will adversely affect India's
''international image''. In the process, the real
reasons why the airport employees have taken the decision
to strike, and issues relating to the modernisation
or privatisation of airports, have actually been suppressed.
The argument is being presented as one in which those
who want to expand and modernise India's airports
are being prevented by a bunch of backward looking
trade unionists who want everything to remain the
way it is. But this is the opposite of the truth.
The workers' fight against privatisation is based
on the argument that a perfectly acceptable and desirable
plan for modernising the airports has been available,
presented by the Airports Authority of India to the
Cabinet nearly three years ago, using the available
cash reserves of the AAI as well as borrowed funds.
In fact, if the central government had not deliberately
held up this plan, the country could already have
been benefiting from the latest and most modern airports
especially in the metros. Instead, this proposal was
suppressed, because the basic aim of both the previous
NDA government and the current UPA government has
been to hand over airports to the private sector.
So this is a clear case in which a public sector organisation
has been run down and not allowed to modernise using
its available reserves, to pave the way for eventual
privatisation.
As a result, there is no question now that most of
our large airports are in a mess, badly short of space
and services, and desperately in need of renovation
or even complete overhaul. This has adverse implications
which go beyond the convenience of passengers, since
airports have become important hubs of trade and so
this affects cargo trade and commercial promotion
generally.
There are now many examples of different ways of managing
airports. The experience so far suggests that even
where airports have been ''privatised'', in most cases
this has not meant the actual transfer of ownership
or even control.
This is because airports, and especially those which
are major national or international hubs, fall very
clearly in the category of strategic infrastructure
assets, and it is usually seen as crucial to maintain
some degree of national control. This is why most
governments - even champions of privatisation such
as Australia - have put definite restrictions and
caps on the proportion of foreign investment and the
actual control exercised by foreign parties.
Add to this the fact that airports are by definition
natural monopolies, since location-specificity implies
that there is no real choice, except perhaps for airlines
in the process of choosing which ''hub'' to use. Otherwise,
it is hardly possible, say, for passengers to say
they would prefer to fly to Chennai than to Delhi
because of better airport facilities in the former.
This feature of being a natural monopoly means that
if an airport is not under direct public control,
it must at least be under strong public regulation
to ensure that unfair monopolistic practices do not
become rampant.
Internationally, the most successful examples of airport
management typically involve some amount of private
outsourcing for particular activities while retaining
overall public control. Thus, many airports have successfully
brought in private parties to invest in cargo handling
facilities or even whole terminals, hangars and parking
bays, servicing and overhauling facilities, marketing
and shipping yards, export zones and so on. Such contracted
services dominate as the main form of ''privatisation''
in most airports in the US, Europe and Japan.
There is a further point. Obviously, the development
of airports has to be in accordance with a master
plan for the relevant urban area, which considers
the overall development of not just the airport but
also the surrounding region. Therefore it clearly
cannot be undertaken by any private party in isolation,
but requires the involvement of local government bodies,
industry associations and other groups.
The issue of cross-subsidisation is also important.
This is probably the most important feature of most
transport networks which has encouraged public holding
of such facilities. Thus, railways in India use profits
from heavily-used routes to finance losses from providing
services to more remote and less heavily trafficked
areas. The same is true of the public airlines - it
is obvious that most private airlines only flog the
very profitable inter-metro routes and avoid smaller
cities and towns which nonetheless require such connectivity.
Similarly, thus far, the AAI has used the profits
made from major metropolitan airports (such as Delhi
and Mumbai) to promote and support the development
of airports in other cities, smaller towns and more
remote locations which would not command the same
interest. Mumbai and Delhi airports are the most profitable
and heavily used airports in India, and losing them
would dramatically reduce the funds available with
AAI to develop other airports.
AAI is currently one of the more profitable public
sector companies, with reserves and surplus funds
of Rs. 3,000 crore, and almost zero-debt status. This
can easily meet the anticipated expenditure for the
development of the airports of the country, including
those in Delhi and Mumbai, especially since the corporation
can leverage this healthy financial condition to raise
loans from the market.
Instead, the UPA government has clearly gone against
the promise made in its own CMP, and opted for straightforward
privatisation without adequate consideration of the
security, strategic and other issues. And the entire
bidding process has been extremely irregular and full
of impropriety, leading to accusations of subjectivity
and manipulation to favour certain parties. It led
to a situation where only two bids were treated as
viable for the two airports, implying no contest.
Even the highly respected outside expert appoint by
the government, Mr. Sreedharan, pointed to flaws in
the criteria used for shortlisting, and in effect
suggested that the entire bidding process be reopened.
In such a background, it should be evident that the
airport workers on strike were not fighting for their
own jobs or wages, but for what is the national interest.
Instead of recognising the real issues and creating
the basis for a genuine national debate, most of the
mainstream media has chosen to obfuscate and suppress
the vital information which matters as much for the
future of the country.