Privitization of Airports in India by cuiliqing

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									Privatization of Airports
in India -Emerging Legal
Issues
Aviation Law - 2
Shirley Snehitha. O




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Airports—An Increasingly Attractive Industry

Currently, only two per cent of the world's commercial airports are managed or owned by the private

sector. However, the success achieved by private investors so far is encouraging others to enter the

market. Various factors that make the industry attractive for investors are listed below in their order of

relevance:


        Strong growth trend observed in air traffic during the last several years together with the

         optimistic forecasts provided

        Growth in passenger traffic leading to improved profit margins resulting from economies of scale

         (the upward traffic trend is also expected to have a positive impact)

        Strong commercial opportunities that still remain to be exploited in this business

        Significant barriers of entry for newer companies that allows existing participants to improve their

         earnings

        Reduced risk related to exchange rate fluctuations due to the fact that airports generate

         substantial revenues in hard currencies and both travel and tourism industries are dominated

         either by the dollar or the euro.


Privatization Process Worldwide


After 1987, when the United Kingdom privatized the BAA, the interest for privatization has been

increasing across the world. In fact, more than 20 countries have completed the sale or lease of airport

facilities so far.


In the United States, commercial airports have traditionally been independent of the national control,

operated locally by local or regional authorities and highly influenced by private interests, specifically the

airlines (with enough power to decide major facets of airport management and development). While the

degree of participation of private interests in airports differs broadly among states and cities, major U.S.
commercial airports are operated through partnerships between the government, local interests and

private firms.


The preferred model of privatization of airports in Europe has been the sale of equity. This was pioneered

by the United Kingdom with its initial public offering of 100 percent shares of the former BAA in 1986.

After being privatized, BAA, has become one of the biggest international participants in the airport

industry.


The Australian airports privatization program began in April 1994 when the Australian Government

announced its decision to sell 22 airports (in several phases) that were owned and operated by the

Federal Airports Corporation (FAC).


In other Asian countries, many major airports are expected to be privatized in the near future. Among

them are those in Tokyo, Hong Kong, and several airports in India. Currently, the airport landscape in

China can be defined by a group of prospering big airports (especially those in Beijing, Shanghai,

Guangzhou and Shenzhen). The ongoing structural reform in airport sector has provided an opportunity

for these airports to seek funding from capital markets as well as strategic investors.


The Middle East has not been a region particularly active in airport privatization. However, some projects

are in place to either upgrade or develop new facilities.


In Latin America, the most common way of privatizing airports has been through concession contracts.

Concessions allow a country to retain ownership of airport assets while private promoters carry out the

investments required. Additionally, the lack of developed capital markets presents a major hurdle for other

ways of privatization.


The African airport sector has its own share of management, financing, safety, and security issues. There

is a clear need for upgrading installations in order to meet international standards, modify regulatory

framework and to incorporate new requirements in terms of security (airport certification). Substantial

investments in airports development are required in Africa to boost air transport that currently plays only a

minor role in the world air traffic.
Potential Economic Benefits of Airport Privatization


The airport industry is going through an exceptional transformation that has driven the market towards

increasing levels of competition. Additionally, major investment programs are required to meet the

expected growth in air travel demand (particularly in some emerging regions, such as Asia).

Nevertheless, governments and city airport authorities are becoming more reluctant to support airport

projects, since they have major budgetary constraints.


Airports and airlines have historically been considered as essential components of the national aviation

system, and hence both were regarded as public utilities. Due to this approach, operational and handling

activities were contemplated as being fundamental for the development of the airport business, and

commercial activities had a less important role to play. For that reason, airport assets and property have

always been publicly managed and commercial activities have occasionally been contracted or

outsourced to private companies. Within such a framework, economic regulation was seen as

superfluous. The traditional airport management model becomes visibly unsustainable when most

governments begin to be concerned about the burden of airport financing and its lack of efficiency.

However, for many years, a majority of airports around the world have continued to operate under this

model and some still remain attached to it. Since the 1980s, the industry started to evolve with changes

being brought about in the traditional airport management model. Currently, governments are

progressively regarding airports as potential profit-making enterprises rather than merely considering

them as part of the infrastructure suppliers.


There are three main potential economic gains obtained from privatization, namely improvements in

operating efficiency (the private for-profit business model more often leads to a further exploration for

means to cut costs and boost revenues than public management), the introduction of new management

styles and marketing skills directed to serve users with a more consumer-oriented approach, and better

investment decisions. However, in many cases, these investment decisions might also imply under

investment or capacity reductions, which mandates the presence of a regulatory environment.
Regardless of all its potential benefits, privatization also involves risks and requires prudent management

from the public authorities. Several policy issues have to be contemplated by the governments if the

public interest needs to be safeguarded. Specifically, the eventual externality, negative or positive effect

imposed by airport users over non-users or other users, generated by the provision of airport services or

strengthened market position gained by the airport operator after privatization should be carefully

considered. In this respect, a regulatory regime (in terms of charges, safety, quality, and noise intensity or

spatial planning) should be designed before privatization takes place and the regulatory role ought to be

delegated to an independent body.




Airport Policies - India


Some of the important policies as charted by the Airports Authority of India have been listed below for the

information & awareness of all the users of the Indian Airports


       Ownership and Management


1. The Constitution of India refers to civil aviation as a subject in the Central List and is therefore within

the legislative competence of Parliament. The Aircraft Rules, 1937 permit airports other than Government

airports to be owned by citizens of India or companies or corporations registered and having their

principal place of business in India. Thus the legislative framework for privatization of airports already
exists. In fact, some airports are already owned by State Governments, private companies and even

individuals.


2. What is needed now, in view of the worldwide thrust towards corporatization and privatization of

airports, is a strategy that permits utmost latitude in the patterns of ownership and management of

airports in the country. Thus, airports may be owned by the Central Government, PSUs, State

Governments, Urban local bodies, private companies and individuals, as also by joint ventures involving

one or more of the above. Similarly, it would be best to keep all the options open in respect of the

management of airports or parts of airports. These could be on Build-Own-Transfer (BOT), Build-Own-

Lease-Transfer (BOLT), Build-Own-Operate (BOO), Lease-Develop-Operate (LDO), Joint Venture,

Management Contract or Wrap-around Addition basis. In each individual case, the exact pattern could be

negotiated, depending on the circumstances.


3. In the case of high-cost projects involving international hubs, Government may seek international or

bilateral cooperation with countries having the requisite expertise and financial strength. The actual

implementation of the projects would be entrusted to consortia interested in turnkey execution on a joint

venture basis.


4. Foreign equity participation in such ventures may be permitted up to 74% with automatic approvals,

and up to 100% with special permission. Such participation could also be by foreign airport authorities.


5. It may be clarified that the normal procedures of licensing of airports by the DGCA would continue to

apply in accordance with the laid down regulations.


       Private Sector Participation


1. Both the reasons of bridging the yawning gap in resources as also to bring in greater efficiency in

management of airports, the participation of private parties (including foreign ones) is a must.

Government will take all possible steps to encourage such participation.


2. An Airport Restructuring Committee in the Ministry of Civil Aviation will identify existing airports, in

respect of which private sector involvement for development and upgradation of infrastructure is desired.
It will also prepare a shelf of projects in respect of Greenfield airports. The pre-feasibility reports will be

made available to private investors.


3. The AAI will create separate profit centers for all individual airports and hive them off as subsidiary

companies on a case to case basis, for the purpose of entering into commercial arrangements or joint

ventures with private parties.


4. Where airport operators desire private participation in their existing airports, all patterns of ownership

and management would be open to them. No Government approval would, however, be required.


5. In case of Greenfield projects, the Central Government, the AAI, a State Government private company

or a group of individuals can act as the promoter. The promoter will be required to prepare a pre-

feasibility study and submit the formal proposal to the concerned State Government. The State

Government will add its comments to the proposal in respect of acquisition of land, supply of water and

power, construction of access roads, etc. and forward the proposal to the Central Government.


6. The Central Government will set up an independent statutory body called the Airport Approval

Commission, having adequate technical and financial expertise to examine such proposals quickly and

submit its recommendations on three aspects:


  a. Whether there is need for a Greenfield airport at the suggested place, taking into account the

existing airports in the vicinity and projected increase in traffic;


  b. Which is the best site, which is technically feasible and economically viable?


  c. In case there is need for a Greenfield airport and it is found to be prima facie, feasible and viable,

whether it should be executed in the public or private sector or be taken up as a joint venture.


7. On the receipt of the report of the Airport Approval Commission, the matter will be examined by the

Central Government at the appropriate level for a decision. A decision once taken will normally not be

subject to modification at a later stage.
8. Once the Central Government has cleared the project, the promoter, if it is a Government body, will

follow the prescribed procedure for floating global tenders in order to select the best party capable of

executing the project as also to obtain the best possible terms. The tendering procedure will be

transparent. The selected party would then prepare a detailed feasibility report, which would be sent to

the Central Government for final acceptance. Approvals once accorded would not normally be revoked.


9. Fiscal incentives would be provided to those involved in infrastructure projects, as maybe decided by

Government for time-to-time. Currently, the following incentives are available:


   a. Hundred per cent deduction in profits for purposes of Income Tax for the first five years.


   b. Thirty per cent deduction in profits for the same purpose for the next five years.


   c. Full deduction to run for continuous ten out of twenty fiscal years of the assessee’s choice.


   d. Forty per cent of the profit from infrastructure is also deductible for financial institutions providing

long-term finance for infrastructure projects.


10. Such incentives should be made available not only to new companies investing in airport

infrastructure but also to AAI and the existing agencies investing in upgradation of existing airport

infrastructure.


11. AAI may provide air traffic control services in private airports on terms and conditions mutually agreed

upon. Alternatively, it may provide ATC staff on deputation and give advice on the specifications of the

equipment to be compulsorily installed for communication, navigation and surveillance.


       Role of the Central and State Governments


The role and functions of the Central Government as contained in the various statutes and the preceding

sections extend to the following matters;


a. Investment in airport infrastructure


b. Clearance of Greenfield airport projects
c. Airspace management, safety and security of airports


d.      Bilateral air services agreements, including those involving international cooperation for

modernization and upgradation of airports


e. Licensing of airports and ATC personnel


f.   Environmental aspects and removal of obstructions around airports


g. Approval of aeronautical charges


The Ministry of Civil Aviation will try to facilitate the speedy clearance of projects from different Ministries.


The State Governments will deal with the following aspects:


a. Acquisition of private land and allotment of government land


b. Supply of water and power, and provision of sanitation and sewage services


c. Provision of surface access through multi-modal linkages


d. Prevention of environmental pollution


e. Maintenance of law and order


f.   Protection of airports from encroachments and vandalism.


In case Government land is allotted by a State Government for an airport owned by a private party, it may

be made available at the same rate as is charged from other industrial ventures in the State.


Government will ensure that legislative and administrative mechanisms for speedy acquisition of land are

devised.


The Ministry of Civil Aviation will liaise with the State Governments in order to ensure provision of all

these essential services and basic facilities. The State Civil Aviation Secretaries will act as coordinating

officers for single-point liaison with all the State-level departments and authorities.
Regulatory Mechanisms


In the context of a multiplicity of operators (including private areas) and the possibility of oligo-polistic

practices, there is a need for an appellate authority which could look into grievances with regard to

fixation of tariff rates, allotment of slots, working of air traffic controllers, allocation of space in the airports

etc. To this end, Government will create fair and independent Airport Regulatory Board comprising

representatives of the Ministry of Civil Aviation, DGCA, airport and airline operators, etc. This grievance

redressal mechanism would help in speedy and effective resolution of disputes among the various

stakeholders.


There will also be a legislation for conversion of the DGCA into a Civil Aviation Authority with full powers

of regulation overall aspects of the aviation industry.


Legal Framework


All changes necessitated by this policy in the existing Acts, Rules, Regulations and other provisions

should be carried out expeditiously, so as to facilitate its implementation.


Presently property tax is being levied on the properties of AAI, thus putting a further strain on the viability

of the airports. This anomaly needs to be rectified, because airport land is owned by the Central

Government and AAI is only a trustee.


Private- Merits n demerits


Control – There exists a problem of controlling the private operator.


Conflict of interest - A recent point of concern has been the intention of CIAL to foray into airlines sector.

This has raised concerns about possible conflict of interest between airport infrastructure and airlines and

the possibility of the airport allocating slots favorably to its own airline.


Regulation – The government plans to introduce an economic regulator for airports. This has been

suggested in the Naresh Chandra Committee report and has been on the government’s agenda for some

time now.
Safety Concerns – There may be concern over safety and the tendency of private players to give more

importance to short term profitability than long term sustainability. This can be countered by strict

vigilance and a competitive market for airport infrastructure.


Are Private Airports in India Ready to Take Off?


On March 14, Sonia Gandhi, chairman of India's ruling United Progressive Alliance government at the

Center, inaugurated the new private sector airport at Hyderabad in the southern state of Andhra Pradesh.

It was a false start, though: Several airlines, citing the need for more time to move into the facility,

delayed the airport's launch for another week. Just a couple of days earlier, the government in Delhi had

asked the country's other high-profile, private sector aviation project -- the Bangalore International Airport

(BIAL) -- to postpone its planned March 30 opening until May.


While delays on large projects like these are not unexpected, India's program for privatization of airports

has faced opposition from the beginning. On March 12, some 15,000 employees of the Airports Authority

of India (AAI), which is responsible for civil aviation infrastructure in the country, went on strike to protest

the privatization of the airports in Mumbai and Delhi and the decision to close the currently operational

airports in Hyderabad and Bangalore when the new ones opened. Earlier in the month, airport taxi drivers

had gone on strike to protest these changes as well.


Strikes may seem trivial in the larger mosaic of airport privatization, but they add weight to the growing

opposition to the model of civil aviation infrastructure development that the government has adopted.

Unable to fund these projects, the government has turned to public-private partnerships which, in theory,

allow it to tap into the efficiency and entrepreneurial problem solving that private companies can offer. But

delays, mounting project costs and concerns about monopolies are clouding the horizon of consortium-

led projects to upgrade or build new airports. While many feel complete privatization might be the way to

go, others argue that airports are a basic component of infrastructure, and as such should exist for public

benefit, not profit. The debate is critical: According to the government's own estimate, some 500 airports

will have to be set up as Greenfield projects or refurbished by 2018.
        Private Airport – (An example) Cochin International Airport Limited (CIAL) in Kerala has been a

         pioneer in India in the field of airport privatization. At present, it is the only private sector airport in

         the country. CIAL merits special attention as the financing, control and operation of the same are

         very unique. The need for the airport was felt when the existing civil enclave at Cochin was

         inadequate to handle the growing traffic; mainly comprising of frequent NRI                (Non Resident

         Indians) travelers from the Gulf. The government did not have enough funds for the same. This

         led to the formation of a private company that took the initiative to raise the requisite money from

         a number of NRI shareholders and a number of private companies (in exchange for exclusive

         rights to provide services at the airport, for example Indian Oil,). The company also negotiated

         complex dealings for land requisition and building the airport.


Private sector options


Private sector participation in airports, through ownership, management, or new investment programs,

can take many forms, including outright sale of shares or assets, concessions, and long-term leases.

Historically, the private sector has managed most of the landside concessions, but governments are now

increasingly seeking to involve the private sector in the provision of airside services as well. The goal is to

improve efficiency, increase fiscal revenue by selling profitable concessions, and improve infrastructure

through privately financed investments.


Although there have been only a limited number of privatization transactions, two options seem to be the

most suitable for transferring airport activities to the private sector: (1) build operate-transfer (BOT)

schemes (a project finance mechanism generally used in developing countries, where the priority is new

investment to upgrade and expand facilities), and (2) corporatization followed by full or partial divestiture

(generally used in industrial countries, where the priority is to obtain privatization revenues and improve

efficiency). Developing countries trying to promote private sector participation in airports could choose a

combination of the two options, beginning with a BOT scheme that gives way to corporatization with full or

partial divestiture.
Emerging Legal Issues:

     Privatization requires careful consideration of a number of factors. Fundamental among these is

      that an airport is, in essence, a monopoly on which the users - aircraft operators, passengers and

      shippers alike - are highly dependent. Consequently, a number of safeguards must be

      implemented before proceeding with privatization. All obligations such as freedom of access, non-

      discrimination between categories of users and conformity with international agreements and

      obligations should apply to all airports, regardless of ownership.         In particular, there is an

      obligation to conform to ICAO policies and principles, notably those contained in the Convention

      on International Civil Aviation and its Annexes.

     Privatization can take various forms. It can be an outright sale of the airport, or a part sale,

      leasing, the establishment of joint venture companies between the government and private

      parties, and the award of operating concessions to private companies. Outright sale involves a

      straightforward transfer of property rights. Part sale can either be an equity sale or sale of specific

      activities or functions to private parties.

     ICAO’S work on Airport Certification:

             The ICAO Secretariat has undertaken a study of the current provisions in the field of

              airports and air traffic services - the two areas recommended by the DGCA’s Conference

              for possible expansion. In the area of airports, a task on licensing/certification of airport

              has been approved by the Air Navigation Commission and is in progress. A new manual

              on the subject is being developed to assist States in their reorganization efforts in the

              changing environment of privatization. The study has identified the need for introducing

              into Annex 14, Volume I, the requirement for airports to be licensed/certified. The Annex

              currently does not have such a requirement because, so far, most States were operating

              and managing the airports and air navigation services themselves. With the privatization

              of airport operation, management and maintenance activities, however, the airports

              would need to be certified by the regulatory authorities.
           The manual on licensing/certification of aerodromes will cover the need for certification,

            the regulatory system required in this regard, model regulations on which States could

            develop their own regulatory system, a brief description of the organizational structure of

            the regulatory authority, and a sample airport certification application forms that could be

            used etc. The review of the draft manual is in progress and it is hoped that soon it will be

            possible to bring it to a final stage of maturity to be of assistance to States.

   In the current situation competition started playing a main role in the airport sector; therefore,

    regulation is very essential in natural monopoly utility industries (Airport) in order to prevent the

    abuse of market power from a private sector management.

   Need for appropriate legislation to enforce safety oversight functions.

   Government ownership and partnership in the development of airports, a more collaborative

    approach.

   The real question for privatization concerns how the shared partnerships should be organized:

    what kind of contracts should be drawn up between the public agencies and the private

    operators?

    The chief factor distinguishing the types of contracts is the amount of investment the private

    contractor contributes.   The more the private investors contribute for their own account (as

    opposed to investing in bonds or borrowings of the government authorities), the longer the

    contract should be, so that the investors have the opportunity to recoup their investments and

    make a profit. Naturally, the longer the contract, the more control is passed from the government

    owner to the private investors.

    Three major types of public/private shared partnerships can be envisaged. These are:

        a. Subcontracting of services -- for short terms.

        b. Master Concessions -- typically to operate existing facilities for medium-terms such as 10

            years. Examples are the concessions let to BAA and other operators to organize

            shopping areas at the Boston, New York/LaGuardia, Pittsburgh and Washington/Reagan

            airports.
            c.   Build and Operate Contracts -- typically to build projects under long-term contracts such

                 as 25 years.


In practice however, a lot can go wrong. Under unfavorable circumstances, either the public owner or the

private operator gets hurt badly by the failure of its partner to perform adequately. For example:


    a. Many airports were hurt when Eastern Airlines went bankrupt.            Atlanta in particular suffered

        because it was unable to use the Midfield Concourse operated under long-term lease by Eastern

        – although Eastern was no longer operating, it was not possible for Atlanta airport to make

        arrangements with the creditors to use the midfield concourse, which stayed empty while a new

        one was being built.

    b. The private concessionaires who built up the shopping facilities at the new Denver International

        Airport faced bankruptcy when the airport was unable to open the airport until about 18 months

        after the intended opening -- their stores were outfitted and stocked yet no customers were in

        sight.


Because of the potential difficulties, the contracts for sharing in the responsibility for privatizing various

activities on the airport need to be crafted carefully. In particular, both the public and private partners

need to protect themselves from contingencies that may arise. The protection can be partially secured by

options within the contract itself -- for example a “use it or lose it” clause in the contract between Eastern

Airlines and Atlanta airport could have avoided the embarrassment of not being able to make use of a

major facility when it was needed. However legal clauses alone are not sufficient -- if a concessionaire

for a store is not making a profit and thus fails provide adequate service, a legal suit may simply force the

operator into bankruptcy but not remedy the problem of poor service to the passengers and a lack of

income to the airport owner.


Persons experienced in making arrangements for public/private partnerships from both sides of the table

agree that drawing up the appropriate arrangements between the parties, arrangements that will work

well over time, takes considerable management skill. There are plenty of mistakes that can and have

been made. Embarking on new arrangements needs to be done carefully and thoughtfully.
       Aviation law has always encompassed complex liability questions, expansive regulatory

        challenges, and multinational financial transactions, and recent developments have provided

        aviation lawyers a chance to be at the forefront of many of today's most pressing policy

        questions.




Conclusion and Suggestions:

The results of foreign privatization experiments affirm that competition, choice, and proper incentives are

the essential components of a safe and efficient aviation Infrastructure sector. Although the analysis

shows that Indian airports are way behind foreign peers in terms of infrastructure and performance, the

government has taken corrective action in order to improve their state. The sheer potential of air travel in

India makes it a very lucrative market. This has increased interest in the sector. The government is still in

a learning mode as far as airport infrastructure provision is concerned. It has experimented with BOO in

the past through the Cochin Airport and recently with 30 year concessions for Delhi and Mumbai Airports.

It will be interesting to see how the government balances the expectations of its coalition partners and at

the same time ensure efficient and world class airports for its populace. The good news is that the

government realizes the opportunity and is prepared for taking decisive decisions for the same. The

future growth and performance of airports will depend to a large extent on the political will and the ability

of the government to garner support for the ongoing initiative.


Complete privatization of airports is not the answer to India's needs, either, especially when it comes to

the larger airports. "In fact, that is not the answer anywhere in the world. It has to be some kind of public-
private co-operation. In the U.S., it is the local government or municipality that owns the facility, and it

then subcontracts a whole bunch of activities to different private entities -- from operations to the strategic

management aspect to futuristic decision making.


Privatization May Take a Long Time


Privatization of governmental operations may take considerable time. This is because governmental

operations exist in a web of procedures and practices -- from finance and procurement to hiring and

pensions -- that are very different from those of private businesses. It takes time and care to untangle

these relationships so that a particular operation can be sold or otherwise transferred to private operation.


The privatization of airports as a whole takes about a decade from the original state of a fully

governmental operation to some form of privatized management. This is the worldwide experience.


· In Australia the process of mutation from the Ministry of Aviation, through the Federal Airports

Corporation (a Government owned corporation) to the first long-term leases of airports to private investors

took almost exactly a decade.


· In Britain, the evolution of the national airports from the control of Government ministries through the

British Airports Authority to the sale of shares of this organization as the BAA plc, took well over 15 years.


· In Canada, the transfer of authority from the control of the central government under Transport Canada

to the first Local Airport Authorities took almost a decade.


The Challenge


The limited experience with airport privatization-especially in developing countries-makes it hard to draw

firm lessons. There is no doubt, however, that governments will be unable to fund all the necessary

investment in airport and air navigation infrastructure, and that the private sector will therefore play an

increasing role in meeting the sector’s needs. The challenge for developing economies is to find creative

mechanisms to foster private sector participation in markets where traffic has not yet reached a lucrative

threshold or transaction risks are perceived to be higher than normal.
"At the end of the day, the airports are for public benefit and, if it is complete privatization, there are a lot

of issues around who is making the money and whether anything will be done for the public good."


The merits and drawbacks of privatization have been subjects of considerable debate among business-

people, city leaders, and public employees alike. Indeed, each element of privatization—from its apparent

cost-saving properties to its possible negative impact on minority workers—provokes strong reaction.

About the only thing that everyone can agree on is that the trend has been enormously beneficial to

owners of small- and mid-sized businesses.


Privatization offers both opportunities and threats to the economy. We have to privatize in such a manner

that we make the maximum opportunities while at the same time minimizing the threats to the economy.


Wherever privatization of airports (and air navigation services where applicable) is contemplated, the

regulatory authorities should review their own organizational structure in order to be able to ensure that

even in the new environment, safety of operations is assured. To this end, it may be necessary for States

to review the national legislation related to aviation and have suitable provisions empowering their civil

aviation administration’s to be able to inspect, monitor and ensure implementation of ICAO specifications.

This also facilitates the State to meet its obligations under the Convention on International Civil Aviation

to comply with the ICAO Standards and Recommended Practices (SARPs) contained in the applicable

Annexes to the Convention.




The Latest Buzz Regarding Privatization of Airports:


       NEW DELHI: Delhi's IGI airport has been ranked the second-best airport in the world for 2011by

        the Airports Council International.


This is a massive jump for the airport which, before privatization in 2007, had scored 3.02 on the ASQ

and did not manage a rank in the top 100. Delhi International Airport (P) Ltd (DIAL) commended the

efforts of agencies such as customs , immigration , CISF , airlines , concessionaires , housekeeping and

other support staff for contributing to the image make-over for the airport.
       NEW DELHI: The Airports Authority of India (AAI) has appointed consultancy firm KPMG to

        recommend an appropriate regulatory approach for its airports, keeping in mind its unique

        operating environment and socio-economic obligations.

       BRAZIL: Brazil Airports Privatization to Be Test of Financing Ability


SAO PAULO – The privatization of Brazil's airports could prove to be a test of the country's nascent long-

term credit market, as investors look beyond the national development bank to fund the more than 22

billion Brazilian reais ($13 billion) that will be needed to modernize three major airports.


As Brazil's burgeoning middle class takes to the sky in droves, the government wants to pick up the pace

of investment at airports. On Monday, it will tender multi-decade contracts to modernize and operate

airports in Brasilia, Sao Paulo and Campinas.


       MADRID: Spain suspended plans to privatize its two main airports on Monday, presenting a fresh

        challenge to the government's efforts to improve its stretched finances.


The previous Socialist government had hoped to raise at least €5 billion ($6.46 billion) from the

privatization of the Madrid and Barcelona airports, part of its efforts to ease the country's debt burden. But

the new conservative government of Prime Minister Mariano Rajoy objected to the plan on the grounds

that it could get only fire-sale prices as Europe's sovereign-debt crisis continues to roil financial markets.

"The decline in value could not be recovered," said Public Works Minister Ana Pastor at a news

conference to announce the official suspension of the plans. She said the government will prepare a new

plan to raise funds from private sources. Potential alternatives could include the sale of a stake in Spain's

entire airport system, rather than privatizing separate airports, Ms. Pastor said.
References:

     Brazil Airports Privatization To Be Test Of Financing Ability -------Published February 03,

      2012Dow Jones Newswires

     Crowning glory: Indira Gandhi International Airport second best in the world-----Economic Times

      FEB, 2012

     KPMG to frame regulatory approach for Airports Authority of India airports-----Economic Times

      FEB, 2012

     Spain Halts Plan to Privatize Main Airports------ By Pablo Dominguez and David Roman

      JANUARY 2012

     Are Private Airports in India Ready to Take Off?           Published: April 03, 2008 in India

      Knowledge@Wharton

     Privatizing Airports—Options and Case Studies by Ellis J. Juan (rru.worldbank.org/documents/

      public policy journal)

     Airport Privatization Issues by Dr. Richard de Neufville

     Privatization of Airports – Role of Regulatory Authorities – A Safety Perspective – By Arun K.R.

      Rao

     The Latest Legal Features, Research and Legal Profiles - Aviation (February 2010)

								
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