Govt should develop aviation infra in hinterlands
"One way to mitigate the risk (of private investment in non-metro airports) is that the government provides basic infrastructure like airfields and terminal buildings. It is only then that private sector can come in to provide for commercial activities," Angela Gittens, Director General of the Airports Council International (ACI), told PTI here.
"You should not expect private parties to come up and invest in such areas. There should be a balanced approach," said the head of the global airports` body with 586 operators as its members.
She said the government should play a role in growing these hinterland markets by providing land, runways, taxiways and other basic infrastructure.
Citing example of an airport in the UK, Gittens said the airport operator and airlines joined hands to attract air traffic and grew their market.
"They shared the risk to bring in more services. But sometime, it works and sometimes it doesn`t. There is also a political risk for the government to develop infrastructure in the hinterland and this risk has to be compensated for.
"So the government should itself take the risk or pay someone else to take the risk," she said.
Asked whether the public-private participation (PPP) was the best airport development model, Gittens said in most countries, the airports are owned and operated by the government or its agencies, including in the US and Europe.
"But there is corporatisation of airport management and most employees are not government employees. The airport operators have their own Boards, carry out their own operation and management, have their own financial structure, profit- and-loss accounts and their own balance sheets," she said.
Lauding the PPP experiment in India, Gittens said "other potentially large markets are closely watching the Indian experience. So, India is a leader and has to assume greater responsibilities".
On concerns of Indian airport operators particularly on the `single till` issue, Gittens said, "We are concerned about `single till`. It robs off the economies of incentive that our (airport) operator would have to maximise through the non-aeronautical revenue.
"It could make the cost of capital greater. In `dual till`, airports can accumulate reserves."
Under the `single till` concept, airport activities — both aeronautical and commercial — are considered to determine the level of airport charges. By contrast under `dual till`, only aeronautical activities are considered for the purpose.
While the airlines favour the former, airport developers pitch for the `dual till` norm, as they want to keep the large non-aeronautical revenues outside the regulatory process for their benefit.
On airlines` demand for lower airport charges, Gittens said there was "no alternative to building the full facility.
You cannot pay for maintaining half the runway. You have to make lumpy investments and returns are expected on them."
"Infrastructure has to be developed timely. Its operation and maintenance should be done in accordance with the highest standards. It has to be sustainable from the points of view of finance as well as the services offered," the ACI chief said.