PRIVATIZATION OF INDIAN AIRPORTS
Privatization may refer to different economic functions based on the context involved. It can mean the transference of control and execution of services and activities previously administered by the state to the private sector. Instances of this can include the privatization of airports and railways. The board of the Airport Authority of India (AAI) has approved to privatize of 13 airports. This is the first major asset monetization pipeline. The government is aiming for a private investment of ₹3,660 crores in airports by FY 24. The AAI board has approved the privatization of six major airports- Bhubaneshwar, Varanasi, Amritsar, Trichy, Indore, and Rajpur along with seven smaller ones in Jharsuguda, Gaya, Kangra, Tirupati, Jabalpur, and Jalgaon, according to sources. The smaller airports will be clubbed with the six major airports for scale and size, thereby making them attractive to investors. According to the center, this is a permanent move as the airports are being leased out for 50 years. The AAI will utilize the revenue received through this model to develop airports in small cities across the country. The center is also saying that privatization of the facilities will enable passengers to get better facilities. Prime Minister Narendra Modi’s government plans to privatize 30-35 airports in the next five years.
ADVANTAGES OF PRIVATIZATION OF AIRPORTS IN INDIA
The most apparent benefit of any form of privatization is the fact that efficiencies increase. Private organizations are more efficient than their public sector counterparts. Privatization of airports gives the shareholders the incentives to study the process and introduce automation. Automation makes airports more reliable and able to operate at a lower cost. Government-run airports will not think of automation under normal circumstances since they cannot replace labor with machines without paying out hefty severance settlements. I believe that airports must be run by money that is generated by flights. An airport should not be run on public money i.e based on taxpayer grants. Once airports are privatized their source of revenue is based on collection from passenger airlines and advertisements. They do not receive any grants from taxpayer money.
The government plans to liberalize the sector with the privatization of profit-making airports. AAI’s mandate will be expanded to develop new ones in areas where the private sector may not want to venture through profits earned through revenue share from the privatized airports. Airports have revolutionized air travel and have transformed cities into hubs of international trade and air travel. The privatization drive of any airport aims to maximize profits through private capital investment, ensure efficient management and exploit non-aeronautical revenues. Countries must ensure that international standards are followed by privatized airports as the fundamental determinants of aviation policy anywhere and must focus on safety, security, and efficiency. With privatization, the government cannot interfere with the company’s work and decisions. The government is no longer liable to pay for the employees and take responsibility for the workers hired. This leads to a reduction in the over-employment in the company thus increasing working efficiency.
DISADVANTAGES OF PRIVATIZATION OF INDIAN AIRPORTS
Since private companies have an increased expenditure due to a lack of government support, the costs for passengers or potential passengers increase. The companies might increase the parking charges of airlines which can increase the ticket prices, increase the food and beverage prices due to a rent increase, and more. For individual passengers or passengers who are in search of a good airport experience can afford to pay for the commodities in return for good services but for companies that send their employees or teams for conferences, meetings, and so on, the expenditure increases as the company pay for the employees.
A decrease in costs means a decrease in labor costs. Privatization will lead to numerous employees getting from their duties. Since these employees have worked at airports for numerous years, they do not have a chance of working in the same field as every city has one airport in different cities practicing the same due to privatization. This can create a multitude of people to be unemployed.
FUTURE OF PRIVATIZATION OF AIRPORTS IN INDIA
India is planning to open 100 additional airports by 2024, as part of a plan to revive economic growth in Asia’s third-largest economy. The proposal includes starting 1,000 new routes connecting smaller towns and villages. Ahead of UDAN day (21st October) the Ministry of Civil Aviation flagged off 6 routes, expanding the aerial connectivity of North-East India, under the UDAN scheme. Ude Desh Ka Aam Naagrik (UDAN) was launched as a Regional Connectivity Scheme under the Ministry of Civil Aviation in 2016. The scheme envisages providing connectivity to unserved airports of the country through the revival of existing airstrips and airports. The scheme is operational for 10 years. The center and state government of Tamil Nadu are considering a second airport in Chennai by 2035. The costliest of all the upcoming international airports in India will be the Navi Mumbai Airport which will be constructed in a phased manner from 2019 to 2031 to share the increasing load of air traffic at Mumbai’s Chhatrapati Shivaji International Airport. “The central government plans to privatize a total of 25 airports between 2022 to 2025 under the National Monetization pipeline”, Minister of State for Civil Aviation VK Singh said in a reply in the Lok Sabha on December 9. As a part of the government’s plans for asset monetization, the 25 airports selected by the government are located in Nagpur, Varanasi, Dehradun, Trichy, Indore, Chennai, Calicut, Coimbatore, Bhubaneshwar, Patna, the minister said in his response to the lower house. The government also plans to privatize airports in Madurai, Tirupati, Ranchi, Jodhpur, Raipur, Rajahmundry, Vadodara, Amritsar, Surat, Hubli, Imphal, Agartala, Udaipur, Bhopal, and Vijayawada.
CONCLUSION
We can conclude that the government of India has make-up its mind to monetize its assets by privatizing, including airports to improve the efficiency of the working of these airports and get some income to build other infrastructure.