Airport privatization and branding

Kamal Baruah

(He can be reached at kamal.baruah@yahoo.com)

The financial stress caused by the Covid-19 probably made the Central Government move in the direction of disinvestment by monetizing public infrastructure assets, government-owned assets and Public Sector Undertakings. And with India becoming to be the world's third-largest aviation market by 2024, the Centre is trying to attract investors to Tier-2, Tier-3 airports by amending the AERA (The Airports Economic Regulatory Authority of India). But AERA (Amendment), 2021 is in the news recently as it seeks to amend the original AERA Act, 2008.

The Airports Authority of India (AAI) was initially running and managing the airports. A change was made later in the civil aviation policy as some private players were also given airports to run for the reason behind to provide consumers with great services. However, airports run the monopoly because cities usually have one airport, which controls all aeronautical services in that area. To safeguard air travellers from misusing the monopoly of private airport operators, the need for an independent tariff regulator in the airport sector was felt.

The AERA Act, 2008 was set up as a statutory body keeping in mind that the country needs to have an independent regulator who has transparent rules and can take care of the interests of the service providers as well as that of the consumers. The AERA regulates tariffs and other charges such as development fee and passenger service fee for aeronautical services for air traffic management, landing and parking of aircraft, ground handling services at major airports.

The major provisions in AERA (Amendment), 2021 propose to amend the definition of a major airport to include a group of airports. The 2008 Act designates an airport as a major airport if it has annual passenger traffic of at least 35 lakh. The government may also designate any airport as a major airport by a notification. It allows AERA to regulate tariff and other charges for aeronautical services for not just major airports with annual passenger traffic of more than 35 lakh, but also a group of airports. The government will be able to club profitable and non-profitable airports as a combination/package to bidders to make it a viable combination for investment under PPP (Public-Private Partnership) model.

The significance of the amendment is that it will help in expanding the air connectivity to relatively remote areas and as a result, expediting the UDAN (UdeDeshKaAamNagrik) regional connectivity scheme. It will also encourage the development of smaller airports. But there is a concern about the lack of clarity in the bill on the criterion for deciding which airports will be clubbed together to qualify under 'a group of airports' definition, whether it will be the passenger traffic of more than 3.5 million or some other factors too.

India's largest infrastructure airport operator AAHL (Adani Airports Holding Limited) under the group's flagship company Adani Enterprises Ltd (AEK), Adani Airports won the mandate to modernize and operate airports – Mumbai, Navi Mumbai, Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram – through the Airports Authority of India's globally competitive tendering process. But there is a hue and cry over trying to change the name of the Chhatrapati Shivaji Maharaj International Airport of Mumbai and Guwahati airport recently.

But a company, which has been given the job to run the airport, just can't change the name of any airport. People in social media have started criticizing the Adani Group but the clarification is that it could be merely made by replacing the previous branding. AAHL must adhere to all the norms and guidelines of AAI in the interest of the aviation community at large.

They got a license to run the management of the airports but have no right to interfere with the name of the airport. The name of the Lokpriya Gopinath Bordoloi Airport, the name after the saviour of the northeast from its merger with the then East Pakistan during the partition of India, should not be changed by AAHL, although it is leased for development to Adani groups for 50 years.

Ironically, the media is misleading the masses. The marketing concept of 'branding' is always there for any corporate funding as a brand is a name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers besides they work for a profit. The larger objective is to reinvent airports as ecosystems that drive local economic development and aviation-linked businesses.