DIAL-ling a new future PDF Print E-mail
Tuesday, 07 June 2016 03:50
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Sameedh's edit

A dramatic transformation in a decade

At a time when there is little appetite for public private partnerships for large infrastructure projects—both on the part of the government and the private sector—the success of Delhi International Airport Limited (DIAL) on its 10th anniversary is worth preening over. To be sure, the airport was born in controversy, first over the way the contract was being handed out—not to DIAL, at that point—and later over whether advance rentals from 5% of the airport land that was to be used for hotels/malls/offices were to be considered ‘revenue’ to be shared with the government-owned Airports Authority of India (AAI) though it was on the basis of the revenue-share offered that DIAL won the contract. If you leave that aside for now, the airport has been a stunning success in more ways than one. From being ranked 101st in the Asia-Pacific region in 2006, it has been ranked second for the second year in a row. Its passenger handling capacity is up from 18 million a year to 62 million and will go up another 15 million once the new terminal is constructed—peak aircraft capacity, up from 38 per hour to 78 is set to rise to 105 once the new runway is running. Not surprisingly, AAI’s revenues to which DIAL contributes around 18-20% is up nearly three times, as are profits. Obviously, it was India’s growth that fuelled this passenger traffic, but the reverse also holds true—had there not been a world-class airport, the traffic would have choked.

Whether AAI would have been able to create a DIAL, or the PPP successes in Mumbai, Bangalore and Hyderabad is a counter-factual that can never be answered, but the experience of AAI’s other airports or that of Air India or ITDC suggests it would have been difficult. More than anything else, DIAL shows just how much attention the government has to pay to proper drawing up of contracts—that would have prevented the ‘revenue’ mishap—and how critical it was to have an airport regulator before the privatisation; the fact that the regulator and DIAL are locked in a battle over whether airport charges need to be dropped puts a check on the monopoly powers of any infrastructure provider. Most important, DIAL showed the way for financing capital-intensive infrastructure projects even for firms that weren’t cash-rich, a model followed everywhere after that. In this case, 5% of the airport land was given to DIAL to develop commercially, to leverage to build the airport—more important, the revenues from the land were to help keep the airport charges reasonable. On DIAL’s 10th anniversary, let’s learn the lessons from it, not throw the PPP baby out with the bathwater.


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