Jerky take-off

While the country’s booming aviation sector can now hope for some respite since the first move towards better international airports is now complete with the privatisation of the Delhi and Mumbai airports, the government has only itself to blame for the mess that it finds itself in with several bidders crying foul and threatening to approach the courts. For, whatever justification is being given now, that the tenders allowed the government to change the terms and conditions or that it wanted to increase the number of competitors in the race, it was always open to attack on grounds of favouritism, once the government decided to deviate from the original bidding procedures. Why, for instance, did it decide to open the bids of the top four technically qualified bidders and not the top three or just the top two, or even all the bidders? Once the Sreedharan committee ratified the objection made by Gajendra Haldea, that the marks for the Anil Ambani consortium had been pumped up, the correct thing to do was to award one airport to the GMR-Fraport consortium and rebid the other. The government, however, decided to deviate from the script. So, to ensure GMR didn’t go to court, it simply had to award one airport to the group. For the second airport, it bade goodbye to the technical evaluations (if it had stuck to them, there would be no bidding since no one qualified), and went only by the financial bids. Of course, this makes the Anil Ambani objection only a technical one, since Ambani wouldn’t even have been in the race if the government had gone by the book. Nor would the Sterlite group. Indeed, if either had gone to court before the bids were opened, they’d have been more credible since it is at this point that the government actually deviated from the copy book. Clearly, both felt they had a chance in the financial bids and chose to wait till then.

The other party that comes across very poorly in the exercise, of course, is the employees since it is pretty clear they are not agitating about their jobs, but about the location and the possible privileges that come by virtue of being located in the Delhi and Mumbai airports. After all, for the first three years after the private firms take over, the pay of these workers is protected. After this, as has been made clear time and again, the workers will be absorbed by the Airports Authority of India in the other airports it runs across the country—so there is absolutely no chance of any job loss.

Indeed, now that the privatisation process is nearly final, barring the paperwork and the pre-handover procedures that could take a few months, the government’s real test will be how it handles the employees’ strike threat. Right now, the government has said it has enough back-up plans, which means the paramilitary forces can be brought in to man critical positions. Fortunately, the Air Traffic Control (ATC) is not part of the striking force since even after privatisation, the ATC function remains as it is. If the government is able to stick to its firm stance with the striking employees, that will help it restore some lost face, apart from sending out a firm signal of its reformist credentials. The other issue it needs to move on very quickly is that of the regulator who will decide on tariffs for the airports. With the winning bidders offering to share as much as 46 per cent of the Delhi airport’s revenue and nearly 39 per cent of the airport in Mumbai, there is a greater possibility of firms trying to get away with showing the regulator higher operational and capital costs. Also, given the poor experience of the DVB privatisation and of the NHAI programme, a vigil has to be kept on the physical milestones promised.