Privatization of Airports – Good or bad?

Privatization of Airports – Good or bad?. The Adani Group acquired 74% of Mumbai Airport, India’s 2nd Busiest Airport. It also bagged the rights to control the upcoming Navi Mumbai Airport (from GVK Group)

Mumbai Airport in 2019-20 :

• Gross Passengers: ~4.5 Cr
• Aircraft Movements: ~304,675
• Cargo Tonnage – ~863,782 Tns!, Keeping the recent magnitude of acquisition aside, is the privatisation of Airport really a Good deal?

Let’s have a look at some of World’s Busiest & renowned airports.

• Los Angeles International Airport.

LA international airport is owned & operated by LA World Airports, a Government Agency. It is basically operated with the tax payers money. It hosts more than 8Cr passengers annually.

• Changi Airport, Singapore.

Rated the World’s Best Airport, Changi Airport had an economic impact on the tune of a whopping $36 Bn in 2017. It is owned 44% by the Singapore Ports Authority (Gov), 13% by Singapore Air Force & 43% by Private Players.

Most of the airports in the US are owned by the Government. In fact, only a few of them are operated by Private Players. Why does the US, which largely believes in Free Markets & Liberalisation does not privatize airports?

1) Absurd Pricing

Cost of acquiring an airport is generally very high. So to recover the costs, the private enterprises will charge exorbitant prices. They will increase the hangar fees, docking charges, parking fees for the airplanes. To recover this cost, airlines will have to increase the ticket prices.

2) Security Threats.

The chances of Terrorist Attacks are significantly higher if the airport is owned by a Private Enterprise solely even if the government provides necessary security arrangements.

Why? Contractual Employees of Airports may compromise security in exchange for money. The 911 attacks is a testimonial to this fact.

3) Value Manipulation.

Let’s face it. Corruption is rampant in India. Politicians can manipulate the value of the Land & pocket a cool amount of cash. In abroad, usually, the land is leased instead of selling it. The best possible outcome would be a Private Public Partnership (PPP) which would mean a Win-Win for both the parties. Good governance, best in class infrastructure & Ample Security makes any Airport a Safe Haven.

Should India follow the Changi model or privatise all the airports? Or just continue with what is happening currently?