Shoddy state of Chennai could stall privatisation of other airports

The Minister of Civil Aviation is quite miffed with the huge amount spent in modernizing Chennai airport and its current state of disrepair. After several complaints from Members of Parliament, P Ashok Gajapathi Raju has decided to constitute a committee to look into how the Airports Authority of India (AAI) spent over Rs 2,000 crore in modernisation and upgradation of Chennai airport but the airport continues to have myriad problems of upkeep, hygiene and even structural issues like glass panels falling off.

So he has decided to call a meeting of top AAI officials and officials managing the airport this Thursday to take stock of the situation. But this is not the story. The story could be how the sad state of airports like Chennai, which were upgraded at inflated costs by AAI, may now make it difficult to invite private participation for operating and managing such airports.

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Late last year, it was decided that airports at Chennai, Lucknow, Jaipur, Ahmedabad, Kolkata and Guwahati will be given over to private parties for operation, development and management. There was talk of this PPP model being different from previous models because neither the state and nor the state-owned AAI were to hold any equity stake in these six airports but hand them over completely to private parties.

In India, all greenfield airports have traditionally been developed by the AAI. These six airports were to become the first such airports where private parties would have been able to acquire 100 percent equity on a 30 year lease basis, with no AAI participation.

But now, with a new government which is not particularly enamoured with privatisation of public sector units and which has begun finding irregularities in even the development work done at some of these airports by state-owned AAI - it is possible that the entire PPP model of operation may be junked.

The AAI had just renewed talks about giving out operation and management of these airports under PPP at its board meeting last week. But some representatives of the minister went off on a surprise visit to Chennai airport last Friday and found the place to be a mess.

According to them, the airport’s upkeep was in shambles, expensive glass panels imported at inflated costs have been falling off because they cannot withstand the heat in Chennai and overall, the airport is in a bad shape.

These officials did not say whether the sad state of Chennai would lead to temporary suspension of PPP model agreements for this or remaining five other airports. But they said the minister is unhappy with what has been done at Chennai and wants a full review on Thursday. Some other airports will also be similarly inspected and decisions will subsequently be taken, they said.

A senior AAI official had said last year, when the PPP model was being mooted for six airports, that being a government body, AAI often got stuck in myriad procedures and bureaucracy and decisions got delayed. “We are not good at things like commercial development which means selling space to commercial establishments to generate revenue. This is something the private operator can do much faster,” this source had said.

Like Chennai, things are not all well at the Kolkata airport either where the AAI did a similar upgradation work. There too, a lot of glass has been used to please the eye and there have been enough reports of glass panels cracking regularly. The new terminal was inaugurated in January last year and cost over Rs 2,000 crore to build. Besides cracking glasses, the new terminal building was earlier facing other teething problems such as mounds of garbage lying around because of a shortage of cleaning staff etc.

After a five-year wait, the new domestic terminal at the Chennai airport opened its doors to passengers in mid-April last year in phases. The delay in project completion had resulted in a Rs 200 crore cost overrun, taking the total cost to Rs 2,015 crore against an estimated Rs 1,800 crore. So AAI’s airport management skills are not really world class.