Wednesday, April 25, 2012

Is PPP model right for modernization of Airports in India?

Airline companies are in trouble in India is a fact well known. But that does not seem to have deterred passenger traffic. In fact, as more and more people look to enter Indian shores, modernization of airports, especially in non metros, has become important. That is why the civil aviation ministry may revert to the public-private partnership (PPP) model. This is to modernize 35 non-metro airports and a few large ones in cities. One of the reasons for this is the Airports Authority of India (AAI) lacking sufficient funds to undertake modernization on its own.

Having said that, it may have to get ready to face stiff opposition from airport employees. For instance, the AAI had to invest substantially on its own in the modernization of Chennai and Kolkata airports. This is because employees opposed the PPP route. However, the Delhi and Mumbai airports have been modernized through PPP. Not everything is hunky dory with PPP either. The main problem that the PPP model faces is execution delays and cost overruns. But with the AAI strapped for cash, allowing private players to enter this space seems to be the only option.

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