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Corporatising AAI will fuel aviation growth

THE Civil Aviation Ministry is contemplating with the idea of turning Airports Authority of India (AAI) into company by amending laws by March 2010. This was announced by the Minister Praful Patel earlier this month.
He said, “We are looking at corporatising the AAI, turning it into a company from an authority which it is now. Our objective is to list AAI on the stock exchange eventually.'
The move to make AAI into a company will to enable it to raise funds from market for carrying out modernisation of a large number of major airports across the country, he said.
The AAI was formed on April 1, 1995 by merging the National Airports Authority (NAA) and the International Airports Authority of India (IAAI), to create a centralized organization that could effectively manage both the international and domestic airports. Presently, it is owned 100 per cent by the Government of India.
AAI manages and operates 126 airports including 11 international airports, 89 domestic airports and 26 civil enclaves. Only 16 of the 126 airfields operated by the AAI are profitable while the other airports incur heavy losses due to under utilisation and poor management.
“Funding will become easier if it (AAI) becomes a company. The amendment would be placed before Parliament latest by March 2010,” Patel said. AAI is planning to raise Rs 1,000 crore in the current financial by issuing tax-saving bonds for its planned capex requirements. It has sought permission from the finance ministry to issue tax-free bonds to the tune of Rs.5,000 crore.
Patel said the private infrastructure firms, including those involved in airport modernisation, were listed companies and had good standing in the market.
AAI provides air traffic services over the entire Indian airspace and adjoining oceanic areas. The air traffic control operation would be hived off from the authority and made a subsidiary of the proposed company. AAI is currently modernising 35 non-metro airports besides two major airports in Chennai and Kolkata with an investment of over Rs 10,000 crore.
AAI posted a profit of Rs 687.21 crore in 2008-09 on a total revenue of Rs 4,185 crore. With economy in the grip of a slowdown all the airport operators have suffered revenue loss on account of decline in air passengers and aircraft movement.
The budgetary allocation for AAI has been limited to Rs. 99.15 crore, of which Rs. 79.15 crore has been allocated for development of airports.
If the Civil Aviation Ministry is successful in turning AAI into a company by amending law in the Parliament by March 2010, the mordernisation of Indian airports will then be full stern, fuelling the growth of civil aviation in the country, which is a very welcome move.