'Global airport privatisation experience shows grave risks'

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Singapore, April 6 (PTI): With India going ahead with airport privatisation, a top global aviation official on Thursday warned that the worldwide experience was marred with "very grave risks" and a tough regulator was essential to ensure proper functioning of private airports.
"Some years ago we favoured privatisation of airports. But unfortunately the experience has proved to be fraught with very grave risks. This experience should act as a wake-up call for all governments that that they have a very tough regulator in place," Director General and CEO of International Air Transport Association (IATA) Giovanni Bisignani told PTI in an interview here.
In this context, he referred to the airport privatisation experiences of the UK, Mexico, Hong Kong and some other nations where either the absence of a regulator or the regulator's "inefficiency" led the private operator to make huge profits by hiking user charges substantially and providing no benefits to the consumers.
The IATA chief's comments came weeks ahead of government's plans present the Airport Economic Regulatory Authority Bill in the Parliament during the second part of the on-going Budget Session.
The Left parties and airport unions have also been opposing privatisation of airports.
On the public-private partnership path chosen by India to develop major airports as well as 35 non-metro airports, Bisignani said while aviation infrastructure has to be constructed very fast in India, "let us be very careful about the role of the private parties. The airport regulator should be independent and have a very strong mandate."
"If the private parties do not fulfil their part of the commitments, there should be a provision in the agreement that the agreement itself can be withdrawn," he said, stressing the need to have appropriate regulations in place before allowing private firms to get into airport business.
The Mexican experience, he said, had shown that the private companies, which had committed to invest a certain amount of money, did not do it but continued to increase user charges and made considerable profits, he said.
The IATA chief also referred to the London-Heathrow airport private process and said the airport regulator's handling of the situation was "very inefficient" and "not effective". This had led the private parties to make very high profits.
"Private investors could also abuse the monopolistic situation," Bisignani said and referred to the Hong Kong experience where "IATA finally won the battle" and convinced the local government not to go ahead with privatising the airports.
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