3 - Ministry of Civil Aviation

CHAPTER -.5INFRASTRUCTURE5.1 Airport Development and AAI restructuringThere can be no growth .of civil aviation without the development of an efficient andmodern airport infrastructure. All the other major emerging economies have already upgradedtheir airport infrastructure to be at par with or even better than what exists in the developedcountries. It is only in India that there has been no significant investment in this area in thelast one decade. Airport infrastructure is, therefore, the single most important area in the civilaviation sector that calls for urgent attention of the government.In Part I of the Report the Committee had strongly advocated a policy of privatisation ofairports. The Committee has noted that since submission of Part . I of the Report, privatisationhas become the subject of a major national debate and a political consensus on this sensitiveissue is not yet , in sight. In view of the urgent need for modernisation of the airportinfrastructure, the Committee would like to reiterate Its earlier recommendations with certainadditional steps that could be taken for modernisation through a restructuring of AAI. TheCommittee, however, hopes that the ongoing process of . restructuring Delhi and Mumbaiinternational airports rt would be carried to its logical conclusion.Management of all airports in the country had been brought under a single authorityearlier with a view to ensuring uniform minimum standards. While this did help small airportsin remote areas also to maintain standards at a minimum acceptable level, the centralised1 decision-making process killed local initiative and accountability. Such a monolithicmanagement structure is not conducive to rapid development of a mature airport network ofinternational standards and does not exist in any developed country of comparable size. Inmature markets, airports compete among themselves on the strength of performance standardsand each airport tries to maximise revenue from all possible sources. The AAI is now able toboast of vast reserves of funds only because it has failed to reinvest the airport revenue forexpansion and modernisation even as it kept raising airport charges exorbitantly at regularintervals. The absence of even one international airport with parallel runways is a sad commenton the monolithic management of airports. Encroachment of vast, areas of airport land rightunder the nose of local airport management also points to the absence of accountability. It isstra1ge that nearly one lakh squatters have come to occupy prime land at Mumbai airport in anorganised manner and yet not even one person has been held accountable or punished forallowing this to happen.Government should, therefore, unbundle the Airports Authority of India and corporatiseairport management. Each of the larger airports should be managed by an independentcorporate entity while the smaller airports may be grouped together on regional basis andcorporalised. State Governments and Financial Institutions should be encouraged to invest 'inthe equity of these separate airport companies. A part of the profits earned by the largerairports should go into a common airport management fund under the AAI and the revenue22