The Indian government's ambitious plan to privatise the modernisation of the country's two biggest airports -- at Mumbai and Delhi -- has sparked off a major controversy, leading to strikes, protests, threats, complaints and accusations.
Thousands of Airport Authority of India employees are on an 'indefinite' strike against the government's privatisation plans, and a bidder who lost out has moved the court challenging the airport bids.
Why is there a hue and cry over the airport modernisation process? Here is all you want to know on it.
What is the airport modernisation row all about?
This week, the government awarded the modernisation contract for the Delhi and Mumbai airports -- the country's two busiest airports -- to two private consortia. GMR-Fraport clinched the modernisation bid for the Delhi airport, while GVK-South African Airports bagged the Mumbai airport.
But the government's first step towards reform in the airport sector has led to nationwide protests by the employees of the Airport Authority of India, supported by the Communist parties and national trade unions. They say they will not allow the airports in the country to be privatised.
Are the airports in India so badly maintained that they need to be modernised?
Indeed. There are in fact 449 airports/airstrips in the country. Among these, the AAI owns and manages 5 international airports, 87 domestic airports and 28 civil enclaves at defence airfields and provides air traffic services over the entire Indian airspace and adjoining oceanic areas.
Some 35 million domestic and international passengers travel through these airports every year. But most of the domestic airports are shabbily managed. The air traffic has boomed in the last two years and several private airlines have been launched.
But the infrastructure at all the airports has remained pathetic. This prompted the government to go ahead with the modernisation/privatisation of the Mumbai and Delhi airports.
What was the process of modernisation?
To begin with, the government invited technical bids and financial tenders from private companies/consortia to build and maintain the two airports. Last year, the ministry of civil aviation received six bids to modernise the airport in Mumbai and five for the Delhi terminals.
But several potential bidders, including international players, walked out of the process saying the government's evaluation parameters were too high. This week, the government finally selected two bidders and awarded the contracts to them.
A consortium led by GVK Industries Ltd and the Airports Company of South Africa was awarded the work for Mumbai airport. And for the Delhi airport, the contract was awarded to a consortium led by the GMR group in collaboration with German airport operator Fraport.
How much will the companies invest to build the airports?
The financial bids of GMR-Fraport and GVK-South African Airports consortia for the two airports modernisation is Rs 5,400 crore (Rs 54 billion). GMR-Fraport has offering 45.99 per cent revenue share to the government, and GVK has offered a revenue share of 38 per cent.
So why is Reliance Group crying foul?
The Anil Ambani-owned Reliance Airport Developers had emerged the highest bidder for the Delhi airport modernisation plan by offering 46 per cent share in revenues to the government; but it lost out in the bid. Crying foul over losing the bid, the Reliance group has filed a petition in the court challenging the contract process.
The government said it picked GVK-South African Airports over Reliance as its technical bid was considered higher. GVK was then asked to match Reliance's bid, which it did to bag the project.
Why are the airport employees protesting?
Airport employees say they will lose jobs if the government goes ahead with the privatisation plan. There are nearly 22,000 employees with the AAI, working across all the airports in the country.
Employees at the Delhi and Mumbai airports fear that the private companies that are going to rebuild these airport will throw them out. They also say that the AAI -- which is a profit making public sector enterprise -- will lose money out of the modernisation exercise.
But is that true?
The government says the charges are baseless. It says it has taken care of the welfare of the employees in the airport modernisation process. Both bidders have agreed to subsequently absorb 60 per cent employees (bid condition was minimum 40 per cent).
About 10 per cent employees will continue to work for AAI in these airports and 7 to 8 per cent employees are expected to retire by 2009. The rest will be absorbed by AAI and posted at other airports.
'Employees unions fear that AAI will lose money if the modernisation contract is given to the private sector. This fear is baseless,' Civil Aviation Minister Praful Patel told a press conference in New Delhi on Tuesday.
Why are the Communists supporting the strike?
Communist leaders say they not protesting against the 'modernisation' of these airports. They argue that all the airports in the country, especially the biggest ones like the Mumbai and Delhi airports, should be modernised and made world-class. "But in the name of modernisation, what the government has done is to virtually sell the airport to a consortium of companies. We are all for modernisation of airports; but we are dead against their privatisation," says M K Pandhe, president, Centre of Indian Trade Unions, which is affiliated to the Communist Party of India-Marxist.
What is the alternative suggestion from the Communist/employees unions?
They assert that instead of awarding the contract for modernising the airports to private companies, the government should allow the AAI to build world-class airports. They have been arguing that AAI is a profit making company with reserves and surplus funds of Rs 30,000 crore (Rs 300 billion) and almost zero-debt status, which can meet the anticipated expenditure for development of the airports.
The AAI Employees Union has in fact submitted a airport modernisation plan to the government. But the government says their plan was evaluated and it scored less than 50 per cent in the technical evaluation, not making the cut even after revisions by the bid document.
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