Saturday, March 11, 2006

Airports Privatisation

A few weeks ago, a lot of media-space was spent on the privatisation of a couple of airports. I found it quite intriguing that there was hardly any discussion on the merits of the privatisation scheme. Don't get me wrong - I'm not a CPI(M) card-holder or anything. But the debates were restricted to what would happen to the airport employees. (In fact, CPI(M) has been able to stall privatisation only because it has been allowed to frame the issue as a problem of job security for the unionized workers. The government should be using its PR skills to get the other aspects into focus as well.)

To get back to the point, here is my problem: When you assign a private firm to take care of an airport for 30 years, how does a private monopoly solve the problems of a public monopoly?

Competition incentivises better performance. Privatisation - without competition - does not. Anyone who believes privatisation alone is the answer should consider the recent expose by NDTV (or CNN-IBN? They're both almost identical anyway) on how private customer records can be bought for a paltry amount from Airtel, Hutch, Standard Chartered and HDFC. (Aside: I burst out laughing when the private eye said it is difficult to get info out of nationalised banks, but not so in other banks that have computerised records) Or just try calling the customer-care numbers of any mobile operator/bank. Customer-service, huh? Even with competition, these private players don't do a good job of serving their customers. What if there was no competition?

Having said that, I'm not denying the benefits for customers due to the entry of private operators in banks and telecom sector. But I'd attribute those benefits to competition. So I'm back to square one - how does privatisation of airports help improve their infrastructure?

2 Value-adds:

Blogger madatadam said...

maybe the idea is to take the responsibility off the shoulders of the over-cautious, ponderous state and place the burden on the more vibrant individuals out there who will somehow find a way?

March 11, 2006 3:33 PM  
Blogger Sudheer Narayan said...

There will be interlocks for service levels and stuff da... some incentive in terms of ranges of revenue sharing mechanism..

March 14, 2006 10:26 AM  

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