Modi Government pushing AAI to bankruptcy by taking away its profitable airports
The government move to take away profitable airports from Airports Authority of India (AAI) and offering them to private companies may eventually make the state-owned entity sick.
Going by the current pace of privatization, the day will not be too far when the same government will be seeking resolution of AAI under insolvency and bankruptcy law.
Privatization is perhaps a quick fix to a problem and not a long-lasting solution. In order to bring real change and transformation, it is important to change the processes and governance. The government has preferred to take easy route but it probably does not realize that such moves have limitations.
It has so far gone for “one size fits all” approach. The approach is going fast, furious and over-speeding on most issues. Be its note-ban move to curb black money or hasty GST implementation to push economic growth. Similarly, it is going whole hog on privatization of airports.
It is easier to make a large entity small. It takes a lot of effort to grow an organization in size and scale. Over the years AAI grew in size and scale and has the potential to become one of the top airport operators. With a large pool of specialised personnel and professionals, sizeable operations and financial muscle, it can certainly reach new heights. But the government as its owner would have to come in its support. Sadly, it has pulled the plug.
If a public sector entity can create world’s five star airports like Changi in Singapore and Dubai, there is no reason why AAI can not create large airport hubs in India.
“Reasoning is required for AAI and airports in general. Privatization is one way of fixing the problem quickly. But it may not be a sustainable solution for future,” said an aviation consultant.
In case the government really wants India to become a $5 trillion economy by 2024-25, it needs to bring change in processes, governance and the way public sector companies function. It needs to ensure that enough autonomy is given to the state-run companies and unshackle them to take their decisions.
The management of these companies should enjoy freedom in decision-making. They can not be expected to accomplish big goals when their hands are tied.
While airports globally have turned into commercial hubs with a lot of businesses thriving around them, they remain the key infrastructure for fast and safe transportation. In a developing country like India, airports can not be allowed to go completely in private hands for the sole purpose of profit-making. It poses risks to affordable flying.
The government has gone ahead with privatizing six airports and selected another half a dozen to bid out. But the government needs to reverse its decision before it is too late.