Private participation in airport development: Experts not enthusiastic

With government aiming at greater private participation in airport development, industry experts have sounded a word of caution with some pointing out that successful privatisation cannot be measured solely on how much money the government generates out of it.

They also pointed out that most global investors have "little or no experience" in developing or operating airports. With global economic conditions remaining uncertain, governments across the world were more reluctant to spend cash on infrastructure development and hence sought more private participation, the experts said.

Their views came amid a growing focus by the government on developing non-metro airports through greater private sector involvement to promote regional connectivity in India.

"Ultimately, a successful privatisation cannot be measured solely on how much money can be generated for the government. It must be seen as part of a long-term vision for economic development," said aviation expert Charles Tyler in an article in IATA's journal 'Airlines International'.

Pointing out that there was "no shortage of bidders" for major international airport privatisations, he said, however,in many cases, the companies putting up the cash have little or no experience of developing and operating airports.

"Pension and investment funds have been looking at airports as investment opportunities, for example. In one case, a bidder for a low-cost airport was the country's leading coffee shop operator," Tyler said.Peter Cerda, IATA's director of Safety, Operations and Infrastructure (Americas and Atlantic), said, "There are many unknowns in the aviation industry and boom times can suddenly turn to busts.

"Sometimes (there was) a certain naivety on both sides, with governments and concession companies alike thinking that aviation is glamorous and a free ticket to making money." "At times, you might be forgiven for wondering if the concession company has really done its due diligence," Cerdawas quoted as saying in the article.

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