Airport reforms: Make or break for
Manmohan By Siddharth
Srivastava
NEW DELHI - It is a battle of
nerves that will perhaps determine the future of
economic reforms in India. The matter relates to
the privatization of airports, more specifically
those in Mumbai and Delhi, which handle the bulk
of domestic and international air traffic in the
country.
Ranged against each other are the
Congress-led United Progressive Alliance (UPA)
government and its crucial coalition partners, the
left parties, which are siding with the unionized
workers of the
state-controlled Airports Authority of India (AAI)
that has so far managed the airports. There has
been considerable speculation that New Delhi would
not muster the courage to open the bids for
private control and anger the left parties,
without whose support the government would
collapse.
Nonetheless, in a bold move, New
Delhi opened the bids for the airports this week,
which were then won by two of India's leading
construction firms, GMR Industries and Frankfurt
airport operator Fraport for the Delhi facility,
and GVK group and its South African partner for
Mumbai. The cabinet has quickly approved the
revamp plans. As part of the deal, the airports
will be leased to the private companies, which
will control a 74% stake in the airports while the
AAI will retain 26%. The revamped airports will
have to be ready by 2010, when the Commonwealth
Games will be held.
Even as the more than
US$1 billion plan to modernize the airports was
announced, more than 30,000 workers (including
those on contract) of the AAI launched countrywide
protests, with New Delhi, Mumbai and Kolkata
taking the lead. Several flights have been
canceled.
Sounding an ominous note, senior
leftist leader Sitaram Yechury told AAI workers
outside the Civil Aviation Ministry: "The Rajiv
Gandhi government had to go due to the Bofors
scam, and the Manmohan Singh government may also
meet the same fate if it goes ahead with its plan
to hand over the airports into the private hands."
In the 1980s, several high Indian officials,
including then-prime minister Rajiv Gandhi, were
accused of receiving kickbacks from Bofors AB, a
Swedish arms manufacturer, for winning a bid to
supply India's 155mm field howitzer.
Another senior leftist leader, Brinda
Karat, termed the decision a "shameless
surrender", while union leader Nitin Jadhav told
the Press Trust of India (PTI): "More than 90% of
the total employees of Mumbai [airport] are
participating in the strike." However, it has been
reported that clashes have broken out between
workers and the police in Mumbai.
Showing
uncommon steel, federal Home Secretary V K Duggal
asked all states to ensure there is no disruption
in regular services at the airports. "The center
[central government] is taking all steps to ensure
safety of the working staff and passengers at the
airports in view of the agitation by some segments
of the employees of AAI against [the]
privatization of Delhi and Mumbai airports," the
letter states. Police protection has been provided
to passengers.
Paramilitary forces have
been alerted, and the Indian Air Force (IAF) has
been put on standby for any contingency. All IAF
air-traffic controllers and ground-control staff
have been told to be on 24-hour standby in case
the unions carry out their threat and disrupt
civil flight operations. Though Civil Aviation
Minister Praful Patel has since denied the
reports, some officials have been quoted as saying
that the government could impose the Essential
Services Maintenance Act (ESMA) to prevent any
disruption of air traffic. If ESMA is enforced,
agitating employees can lose their jobs and
benefits if they remain on strike.
Unmoved
by the protests, Prime Minister Manmohan Singh has
termed the modernization of airports important for
infrastructure development. Manmohan told PTI that
airport modernization and development programs,
along with the "tremendous activities" in the
telecom, road and port sectors, were efforts to
build badly needed infrastructure.
"The
telecom sector has been doing excellently. In
roads and ports there is tremendous activity.
[The] modernization of Mumbai and Delhi airports
has been set in motion and work in Hyderabad and
Bangalore is on and there was lot of action in the
infrastructure sector," he said.
In an
attempt to mollify the workers, Patel has said
their jobs will be protected for the next three
years, after which the new management will be
obliged to absorb 40% of the staff, though the two
bidders have promised to take on 60%. The AAI will
retain 10-15% of the workers. However, this is of
little solace to the AAI unions, used to being
lords of their domain.
Indian airports
(there are 124 in the country) are seen as
ramshackle remnants of the past when the state
managed everything, and are in urgent need for
improvement given the requirements of a
fast-growing Indian economy, with passenger
traffic rising by more than 25% last year. Delayed
flights, insufficient runways, cramped space, dirt
and litter, long-winded immigration processes and
an absence of passenger lounges are just some of
the common complaints.
While the AAI wants
to retain control and the communists fear job
cuts, proponents of the modernization exercise see
the opposition as due to the workings of power
lobbies that resist change without an attendant
willingness to take responsibility for customer
welfare and efficiency. Bureaucrats, politicians,
left parties and trade unions are seen as parties
to this status quo. The AAI has suffered the fate
of many other government-controlled outfits: there
have been accusations of mismanagement, political
interference, poor customer care and little or no
interest in upgrading infrastructure. The
employees, given job protection and fixed
benefits, see little incentive to be proactive.
The pressure on the airports, meanwhile,
continues to grow. It is estimated that there will
be 50 million passengers in India by 2010. The
Delhi and Mumbai airports manage close to 65% of
India's air traffic but are woefully inadequate.
Mumbai already handles close to 14 million
passengers annually and is likely to take more
than 20 million passengers over the next five to
six years. Aircraft are often forced to circle for
more than 30 minutes while waiting for a landing
slot.
India's domestic and international
airlines market has opened up, resulting in a
considerable dip in passenger fares. Indian
aircraft carriers are expected to buy at least 280
new planes by 2010, worth an estimated $15
billion, and another $15 billion worth the
following decade. But the airports have remained
dismally short of global standards.
The
Indian Express had this to say on the the
unfolding AAI strike: "Reforms in this country
have never really been sold in the name of
consumers. Britain of the 1970s showed what such
muted public debates could lead to. Union
militancy was never confronted, only accommodated
in various degrees. The Thatcherite revolution was
born out of the resultant public anger. India's
political and social complexity means there will
be no Maggie Thatcher. But we do need to
understand once and for all the social and
economic costs of being blackmailed by a militant
labor aristocracy. That comprehension will
probably not come unless there's definitive,
paradigm-challenging disruption. To airport
unions, therefore, a planeload of fraternal good
wishes in their struggle."
The Manmohan
Singh government has heaved a sigh of relief over
not having to take a stand on Iran, with the five
permanent members of the United Nations Security
Council deciding to take on Tehran's nuclear
plans. The left parties had raised a fuss over New
Delhi siding with Western powers, but their
arguments have been deflated with Russia and, more
important, China doing an about-turn on Iran's
nuclear posture, and deciding Tehran should be
referred to the UN. The Indian communist parties
have a peculiar affinity for Beijing, though the
country's economic model is now raw capitalism in
all but name.
No such luck, however,
smiles on New Delhi on the issue of airport
privatization, a key requirement to boost travel,
tourism and business infrastructure. So far New
Delhi has held on, despite the technical hiccups
and political resistance. There is still some way
to go. The winning bidders will have to be handed
the management of the airports by April. The
unions and the left will turn only more strident.
In the latest wrinkle, one of the losing
bidders, top Indian conglomerate Reliance, which
had teamed up with the Mexican firm Aeropuertos y
Servicios Auxiliareas, has hinted at legal action.
In a statement that stopped just short of accusing
the government of corruption, a company
spokesperson said: "To our utter shock and
surprise, substantial changes to the published
tender conditions have been telephonically
communicated, in strange circumstances, barely two
hours before opening of the financial bids ... We
are advised these changes are a complete departure
from the tender conditions and are untenable."
Clearly, the government has its work cut out for
it.
Siddharth Srivastava is a
New Delhi-based journalist.
(Copyright
2006 Asia Times Online Ltd. All rights reserved.
Please contact us for information on sales, syndication and republishing
.)
