Privatization of Delhi & Mumbai Airports - A Bumpy Take Off
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Case Code: ECON016 Case Length: 21 Pages Period: 2003-2006 Pub Date: 2006 Teaching Note: Available |
Price: Rs.400 Organization : Airport Authority of India, Ministry of Civil Aviation Industry : Civil Aviation Countries : India Themes: - |
Abstract Case Intro 1 Case Intro 2 Excerpts
"Aviation has only been treated as a glamour industry; it has never been treated as something which is core to infrastructure and development of the country."
- Praful Patel, Union Minister of Civil Aviation, Government of India, on the need for Airport upgradation, in February 2005.
"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 financial bids. These changes are a complete departure from the tender conditions and are untenable."
- A Reliance Spokesperson immediately after Announcement of Delhi and Mumbai Airport Privatization Bid Results in January 2006.
"We're going to intensify our agitation until the government relents. It is the question of the lives of thousands of airport employees and their families."
- Nitin Jadhav, General Secretary, Airports Authority of India Employees Union in February 2006 on the second day of the employee strike against Airport Privatization.
Introduction
In February 2006, Reliance Airport Developers Private Ltd. (Reliance) filed a petition in the Delhi High court challenging the results of the bidding process for the privatization of the Delhi and Mumbai Airports. The plea contested the 'arbitrary and illegal' way in which the Government of India (GoI) had awarded the bids. With this development, the GoI's hope that the long drawn out process of privatization of Delhi and Mumbai airports was reaching a fruitful end, received another jolt. The privatization of the two premier airports of India had been postponed repeatedly since 1997.
Successive governments sought to initiate the process by bringing in the required changes in airport infrastructure policy, but the process was always hindered by roadblocks. In May 2004, the Congress (I) led-UPA5 government came to power and commenced the process of privatization of the Mumbai and Delhi airports by inviting bids from interested parties. It was delayed until September 2005. Then again, the bidding process became controversial. While some players left the fray because of certain bid conditions, others were rejected by the evaluators. The bid results that were announced in December 2005 led to public outcry and dissatisfaction. Allegations of lack of transparency and apparent favoritism were made. Subsequently, the GoI appointed several committees to lend credibility to the much maligned process.
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 parties 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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