Govt may tweak terms, airports’ upgrade in jeopardy

India’s ambitious project to modernize 35 non-metro airports may miss its deadline, with the ministry of civil aviation deciding to revise terms.

The ministry had already pre-qualified some companies, including Tata Power and Reliance Energy, for bidding for the Amritsar and Udaipur airports. Lanco Infratech , Maytas Infra , GMR Infrastructure, and Larsen and Toubro were also shortlisted.

The ministry had planned to upgrade 24 airports by 2009 and 11 by 2010, with a total investment of more than Rs 10,000 crore. “When the government first invited RFQs (requests for qualification), it planned to give the mandate to the winning bidder for commercial operation, maintenance of terminal buildings, cargo managment and city side development. Now, it wants to give out only cargo managment and city side development,” said a person familiar with the development, asking not to be identified.

“Changing the terms of the modernisation programme, after the government pre-qualified private players, is equal to changing the goalpost after starting a game,” said Kapil Kaul, chief executive (Indian subcontinent and West Asia) of the Centre for Asia Pacific Aviation, an international aviation consulting firm. “Handling cargo and city side development will result in mere real estate development than airport development,” he said.

A senior government official said nothing had been finalised on changing the terms, though there was a provision to do so. The Airports Authority of India has pointed out major human resource problems with the private companies taking over commercial operations and maintenance of terminal buildings, city side development and cargo handling.

“The fear of labour unrest and re-allocation of these Airports Authority of India staff have resulted in changing the rules of airport modernisation,” said a person familiar with the move.

A senior executive with Tata Group, who did not want to be identified, said this would send wrong signals to domestic and international investors.

“Sincerely, we do not want to make these airport projects real estate projects. Therefore, we are telling private players to set up only airport-related activities at the airport surroundings,” said VK Kalra, executive director who is responsible for key infrastructure development with the Airports Authority of India.