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Stop airport monopolies PDF Print E-mail
Tuesday, 15 September 2020 07:05
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Shobhana edit 

 

While entrepreneurship is to be encouraged in any economy, facilitating monopolistic trends can be harmful not merely for consumers using the concerned products or services but also for other stakeholders operating in the particular ecosystem. The absence of competition, in any sector, is unhealthy, and it is the responsibility of sector regulators to ensure there are enough players in the space and that there is a level playing field. Again, the regulator must regulate fairly else the troubles of smaller stakeholders and consumers could be compounded; going by past evidence, few regulators in India have done much to encourage competition or to take action against those abusing their dominant positions.

In this context, it is somewhat surprising that little has been done to prevent a single player from acquiring control over a chain of airports across the country. Having successfully bid for six airports, the Adani group has now taken over the Mumbai airport, thanks to the inability of the GVK Group to retain control over the asset. It is unfortunate that the GVK Group received no support to help it overcome the stress due to the stringent lockdown enforced by the Centre.

At a time when banks are working to help scores of promoters revive their businesses, by recasting loans and offering moratoriums, the GVK Group, which has been running the Mumbai airport for years, could surely have been given some support; indeed, the probe by central investigative agencies into its operations need not have disrupted negotiations with lenders and investors.

With one of the country’s busiest airports, and licences for more under its belt, the Adani Group will enjoy enormous clout. Indeed, it is somewhat disconcerting to think the group will also be operating the Navi Mumbai airport. It is time the regulator revisited the rule of the ROFR—or the right of first refusal—because it is somewhat unfair to the competition not to be allowed to bid in the first round.

Indeed, if the same operator controls two large airports—in close proximity—as is the case in Mumbai, it would also hurt other stakeholders. Already, customers are suffering because the business models—based on revenue sharing—are skewed in favour of promoters. Today, customers have no option but to bear the higher charges that airports levy—as user development fees—to recoup revenues.

A regime in which there is just one dominant player with a disproportionate market-share will leave the other stakeholders—retailers and providers of other services—with very little bargaining power. Without undermining the financial muscle or the strategic acumen of the Adani Group, building six airports is not an easy task. The country should not find itself in a situation where it is short of infrastructure because the build-out of the airports has been delayed.

 
 
 
 

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