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Thursday, February 02, 2006

Come Privatize

The biggest news these days is the strike by the airport employees. The problem with both sides in this incident is that everyone is agitated based on mistaken hypotheses.

Let’s first consider the common man, who hates the airport employees for going on strike. He believes that Indian airports will become world class once these pampered employees are put on a leash. Having traveled through quite a few airports around the world, my limited experience suggests that this perception may be wrong. I feel that Indian airports are the most efficient; our airport staff are the most friendly; security and immigration procedures are very efficient, and the airports are also the safest with no terrorist linked incident having originated from any Indian airport. While American and British airports have needlessly cumbersome and suspicious procedures, the East Asian airports only offer a cold commercial experience; and I won’t even consider Charles D’Gaulle as an airport. Most of us who have been to Thailand, Hong Kong or Singapore complain about the lack of shine (read Duty Free Shops) in Indian airports. But believe me, duty free airports are of no use; all around the world they sell the same goods- Gucci, Prada, Versace- which common Indians are unlikely to buy in any case given the skewed value proposition. The more analytically inclined may argue that privatization will bring in funds necessary to make India a global hub like Dubai or Singapore; but for a country to become a global transport hub it also needs a national carrier with sizeable global presence – like BA, Lufthansa, or Singapore Airlines. We are unlikely to have such a carrier for the next 20 years, and so I believe the fund requirements of our airports will be manageable. And believe me, one will never decide whether India is a good or bad investment decision just based on his experience at the airport. What our airports need is a carpet, a little scrubbing of the tiles, better uniforms for the staff, and a little repainting – and one doesn’t need to privatize for that.

Consider the other side- the airport employees. PSU employees dread privatization. They believe privatization leads to loss of jobs, pension, perks, prestige and extended working hours. A few years back, I had the opportunity to work as a consultant with a PSU undergoing privatization. The employees there had termed the monthly KRA meetings (meetings to identifying Key Responsibility Areas) as “Kyu Rakhe Aapko” meetings – such was the dread. But I think layoffs in private sector in India is quite uncommon (unlike in USA). CTCs after privatization can only rise. The worst affected are only the top managers in the PSU who lose much of their control to younger managers post privatization.

Let’s see when this issue dies away. Even when it is resolved, don’t expect any useful changes.


Anonymous said...

Shivaji...I think it's about whether the Govt can afford to invest so much money in airport infrastructure development. Also, why should it, given that the private sector is ready to step in (at least in this case)? After all, shouldn't public money be used for things that benefit a much larger section of the population, considering the people who fly still constitute a relatively miniscule proportion?

As for the job security aspect, I think there's been a detailed discussion of that on many blogs. What's more, we have seen with many disinvestment projects that there have hardly been any job losses.

Anyhow. I agree with you on the safety aspect of our airports and the courteousness of the security staff. However, you paint an overly rosy picture. The facilities themselves are quite poor, particularly at international terminals. Not only that, they are utterly unequipped to handle the increased traffic. I have travelled quite a bit through Singapore, and Changi is simply the best airport I have seen (among airports in India, USA, UK, Melbourne, Sydney and Frankfurt). The facilities provided are just awesome.

Anonymous said...

One point - the security staff are CISF, not AAI employees.

Ameet said...


Mumbai airport needs more than just repainting. The international terminals are a national disgrace. First impressions go a long way, and the international terminal greets newly arriving passengers with filth, incompetence and confusion. The concept of customer service is utterly lacking there. Like the story of the five blind men and the elephant, visitors walk away with a bad taste and a poor impression of India -which disadvantages us in the global playing field.

Can AAI build a new airport? Sure. Do they have any incentive to do it competently and on time? No. That's the fundamental reason behind privatization - help the country catch up to the world by channelizing capitalist greed into infrastructure projects.

Anonymous said...


accepted, Duty Free Shops are not essential nor necessarily valuable, but the more pressing reason for modernization (with or without privatization) is the complete lack of infrastructure in the form of runways, landing slots, and aerobridges. And with airlines ordering a hundred planes at a time, it's only going to get worse.

............ said...

Although I am for privatization, but I think privatization is not the only answer for the betterment of the Indian Airports. Indian Airlines et al. should take active part in strategic alliances such as Star Alliance. This will lead to synergy.

From reference as well as from personal experience the services and infrastructure at Indian Airports need improvement.

Since this is mainly a service industry, the most important factor is the delivery of the service which depends on airport staff/employees of course. Either the HR practices need modification (hire-fire system) or there is need of competition, which can be brought about by privatization.