Winds of change seem to be blowing from the Union finance ministry. These wafts are apparently aimed at enforcing the much-needed corrective measures to ensure competition and fair play in India’s civil aviation sector. According to a report in this newspaper, the finance ministry representative, present at an inter-ministerial meeting deliberating on the award of contracts to private sector players for developing as many as 11 airports, raised concerns over the “oligopolistic nature of the aviation sector”. The representative specifically asked what steps were being taken by the Ministry of Civil Aviation to prevent the possibility of a handful of players cornering the airports being auctioned and minimise the risks of concentration and over-leveraging.
These were legitimate concerns. It is also reassuring to learn that issues arising out of the oligopolistic nature of the country’s civil aviation sector would get discussed and debated at an inter-ministerial meeting of the Public Private Partnership Appraisal Committee (PPPAC). Indeed, the representative of the Ministry of Civil Aviation at the meeting outlined an action plan to address such concerns. The number of airports that may be awarded to a single bidder would be capped in accordance with the norms to be finalised, even though it was immediately unclear at what level the cap would be enforced.Of course, the bigger concern here is how the aviation sector has been allowed to become a playground for a couple of private-sector entities in the country’s airports business. But the fact is that those legitimate concerns expressed by the finance ministry representative would not be addressed just by imposing a cap on the new successful bidders for airports. There is a more fundamental problem that afflicts the regulatory structure of the civil aviation sector that has over the last few decades given rise to the prevailing oligopolistic structure.
