The privatisation of the Delhi and Mumbai airports may be a blessing for the passengers and the airlines, but the Airports Authority of India is in a bind.
Sample these figures: the profit before tax of the Mumbai and Delhi airports together in 2002-03 was Rs 506.01 crore (Rs 5,060.1 million), while that of AAI was Rs 497 crore (Rs 4,970 million).
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In 2001-02, the profit before tax of AAI was Rs 476 crore (Rs 4,760 million), while that of the nine profit-making airports was close to Rs 1375.39 crore (Rs 13.75 billion). This would mean that the other 115 airports under the AAI made losses to the tune of Rs 900 crore (Rs 9,000 million).
"It is through the profits of the Delhi and Mumbai airports that we manage to cross-subsidise the other loss-making airports. The annual fee and the 4 per cent share in revenue cannot be enough to cover the deficit caused by the privatisation," senior AAI officials said.
Of the 124 airports that are under the AAI, only nine are profit-making, 72 are loss-making, operational airports and 42 are loss-making, non-operational airports.
To make matters worse, the total expenditure of AAI has climbed 4 per cent over 2001-02 to touch Rs 1,850 crore (Rs 18.50 billion) in 2002-03, thanks to the maintenance costs of the airports. Delhi and Mumbai account for only 39 per cent of AAI's total expenditure.
One way to tackle this problem will be to privatise a large number of airports swiftly. "This is another problem because the entire process of getting a proposal through for Mumbai and Delhi took five years. Besides the actual process of finalising the details, calling bids and selecting the operator will take some time. For the Bangalore greenfield project it took two years," an official said.
The civil aviation ministry plans to privatise around 20 airports, following the Mumbai and Delhi joint venture format. The AAI has, in fact, already begun looking for a global technical and financial adviser to select the airports.
The issue is that there are very few airports which are actually lucrative. In 2001-02, besides Mumbai, Delhi, Kolkata and Chennai, the other profit-making airports were Hyderabad [Rs 3.83 crore (Rs 38.3 million)], Goa [Rs 4.92 crore (Rs 49.2 million)], Bangalore [Rs 18.46 crore (Rs 184.6 million)], Juhu [Rs 2.22 crore (Rs 22.2 million)] and Pune [Rs 2.04 crore (Rs 20.4 million)].
The traffic figures for some airports are not heartening either. In some operational airports, traffic figures in 2002-03 were lower compared to 2001-02. In Bhubaneshwar, the drop was 8.9 per cent, followed by Jammu (8.2 per cent), Varanasi (8.9 per cent) and Juhu (4.4 per cent).
"About 90 per cent of the operational airports in the country will find no takers, because of the low traffic, liabilities and very low chances of growth," an executive of an international airport consultancy company said. The AAI, on the other hand, cannot shut down most of these airports mainly due to political pressure and social obligations.
To makes matters worse, AAI itself is burdened with dues worth Rs 1,010 crore (Rs 10.10 billion). The majority of this, Rs 500 crore (Rs 5 billion), is owed to it by Indian Airlines and Air-India as airport charges. Foreign airlines owe another Rs 110 crore (Rs 1.10 billion). Getting the state-owned carriers to pay up is proving to be a difficult task due to interference by the ministry.
AAI is also saddled with 22,000 employees and its employee cost has climbed 3 per cent to reach Rs 700 crore (Rs 7 billion) in 2002-03, which is 37 per cent of its total expenditure.
Though the government plans to depute the workers to the privatised airports for a period of one to three years, AAI officials fear that most workers will opt to stay on with the authority or will have to be given VRS, which will be a massive strain on its purse.
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