Stable regulatory regime is the need of the hour for the Indian airport privatisation programme as several uncertainties still remain, said ratings agency ICRA in a report on Indian airport infrastructure released on Wednesday.
ICRA observed that Indian air traffic would be lower than the past decade because of the base effect but is expected to remain high with the growing GDP and purchasing power.
According to the report, Airports Authority of India (AAI) can focus more on developing airport infrastructure in the untapped parts of India as privatization has succeeded.
However, the biggest challenge for airport privatization is the capital intensive nature of the projects with long gestation periods. Indian airports privatized during 2004-06 witnessed sizeable cost overruns which were extracted in the form of user charges from flyers, the statement added.
Five of the six airport entities in India – AAI, CIAL, BIAL, GHIAL and DIAL – experienced improved financial performance during fiscals 2010 to 2014 with a consolidated turnover of Rs.11,822 crore and a profit after tax of Rs.1,906 crore, the statement added.