Aviation reforms hit Finance air pocket

In the Finance Ministry view, leaving 74 per cent equity participation for private players is consistent with the overall policy of the Centre on this issue.

The Finance Ministry has also asked the Civil Aviation Ministry to identify a suitable tenure for leasing out the airports. Nearly four years ago when the government was considering leasing out these airports, a tenure of 30 years had been agreed to. The Finance Ministry wants to know whether this will also apply to the present proposal.

If that’s the case, then the Finance Ministry wants civil aviation authorities to consider increase in duration. But Civil Aviation Ministry officials say they have a provision to renew the lease for another 30 years.

This apart, the Finance Ministry also wants specifics on the modalities of transferring the assets to a private operator. On this issue, civil aviation authorities say they had initially proposed that private players be included after upgrading the airports. The cost was worked out to Rs 3,500 crore — Rs 2,000 crore for Delhi and Rs 1,500 crore for Mumbai.

But here again, the Finance Ministry wants the AAI to identify private players at the very outset. The last observation of the Finance Ministry is on the nature of subsidies that would be offered to the private operator in the concessional agreement.

While civil aviation officials say it is too early to come out with a blueprint on the kind of subsidies that would be on offer, the Finance Ministry is of the view that these issues should be settle prior to Cabinet approval.

The plan to restructure and privatise these airports — which account for 52 per cent of air traffic in the country — was specifically highlighted by Finance Minister Jaswant Singh in his Budget speech who promised to develop these two airports into principal hubs of air travel. But more than four months after the announcement, there seems to have been little progress on the issue.