CII Seeks Quality Benchmark For Airport Modernisation

New Delhi, Nov 7: | Updated: Nov 8 2003, 05:30am hrs
Even as the first meeting of the recently-constituted group of ministers (GoM) on airport restructuring is awaited, Confederation of Indian Industry (CII) has come out with a cautionary note: The value to the nation must come from economic activities generated by an airport on an on-going basis, not from a one-shot sale or lease of an airport. To focus only on maximising the yield to government from the proposed leasing of international airports would be short-sighted and counterproductive in the long-term.

The primary objective of the government must be to create a goose that lays golden eggs, CII said in a background paper prepared for its international conference on Century of Aviation - Flight to Future, to be held in the Capital on November 12.

Its prescription to the government in choosing a right candidate: The emphasis must be based on its international brand equity and track record, concept plan development for the airport in question and demonstrated financial backing.

Without care in pre-qualifying the best and most reputable airport operators who would bid for our major international airports, we could also risk handing these over to operators who would pay a higher price but would then cut corners on the investments in the airport itself and concentrate on maximising short term profits to the detriment of long term gains, it said.

Selection of the successful bidder must be weighted in favour of the best concept plan offered by the bidder, rather than being decided on the basis of financial bid alone. This would naturally take into cognizance the quantum of investment proposed in the airport concerned by the bidder, the background paper said.

It has suggested that the concept plans submitted with bids must be benchmarked against the best airports in this region, rather than in isolation.

Citing examples of major airports of the world, the paper has said that 60 per cent of their revenue was generated by non-aeronautical services such as duty-free shopping, advertising, food & beverage retailing etc. The Airport Authority of India that controls almost all airports in the country, generates only 7 per cent of its total revenue from non-aeronautical services, it said.

It has suggested the government to equip airports to cater to the rapidly growing cargo and parcel traffic. Fruits and flowers are a new growth area that need special handling (cold chains) and will require air cargo capacity at many airports, the paper said.