Privatization of Delhi & Mumbai Airports - A Bumpy Take Off

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Case Details:

Case Code : ECON016
Case Length : 21 Pages
Period : 2003-06
Pub Date : 2006
Teaching Note : Available
Organization : Airport Authority of India, Ministry of Civil Aviation
Industry : Civil Aviation
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Additionally, the process was opposed by the Airports Authority Joint Employees Forum6 (AAJEF).

To protest against airport privatization, they went on a strike which lasted four days from February 1, 2006.

The Left parties7 did not support the GoI on the issue and joined hands with the AAJEF. To make matters worse, Reliance chose to take legal action against the government. All these events have dimmed the prospects of privatization of the Mumbai and Delhi airports.

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Brief History of the Aviation Industry in India

As of 2006, India had a total of 11 international airports, 89 domestic airports and 26 civil enclaves at defense airfields. India also had four international cargo terminals at Delhi, Chennai, Kolkata, and Mumbai which, together, were capable of handling one million tons of import/export/transit cargo annually.

All of these were being managed by the Airports Authority of India (AAI). AAI was formed after the GoI merged the International Airports Authority of India (IAAI)8 and the National Airports Authority (NAA)9 on April 01, 1995.

All of India's airspace (excluding the special user airspace10) extending further than the territorial limits of the country, as acknowledged by International Civil Aviation Organization (ICAO),11 was controlled and managed by AAI. AAI provided Air Traffic Management Services over Indian air space and adjoining oceanic areas to assure the safety and security of all aircraft operations.

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6] The AAJEF is a forum of four constituent associations. - the Airport Authority Officers' Association, the Aeronautical Communicators Officers' Association, the AAI Engineers' Guild Airports and the Airports Authority Employees Union (comprising Group C and D employees).

7] The four Left parties are the CPI, CPI (Marxist), Forward Bloc, and Revolutionary Socialist Party (RSP). They hold 61 seats in the lower house of the parliament, and supported the UPA Government without participating in the government. The Government required their support to secure a decisive majority in its favor for decisions in the lower house.

8] IAAI was established in 1972 for the development of the four International Airports at Delhi, Bombay (Mumbai), Calcutta (Kolkata) & Madras (Chennai).

9] NAA was established in 1986 for the management of all domestic airports and for air traffic management of the entire Indian airspace and adjoining oceanic areas.

10] Special user airspace is the part of airspace that is used for flight operations like military activity or to test new aircraft.

11] ICAO is an international organization that establishes international standards, and recommends practices and procedures in the field of aviation.


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