Friday, April 30, 2010


I am sure many of you must have spent some time at the ‘still being created’ Delhi International Airport before taking a flight. It looks slick and is full of joints that sell burgers, beer, books and what not. It even has a spa. Of course, it is a different matter that a 'wee bit' of rain flooded the world class airport and that flights get routinely disrupted during winter because of fog. For a few burgers and other stuff , each one of us taking a domestic flight, is paying Rs.200 to GMR – the company that is behind modernisation of the Delhi airport – and each one of us, going out of India pays Rs.1,200 to GMR. Now hang on. You will find the media littered with reports and PR pieces about the great new Terminal 3 that is coming up. I am sure you will get more beers and burgers there. But rest assured, you will probably end up paying even more to GMR as user charges!

Busy as we are with the IPL scam and other matters of grave interest to the Indian citizen and consumer, hardly any hack is paying any attention to this organised loot that is happening. When GMR wanted to charge Rs.200 and Rs.1200 more from each outbound passenger, the logic it gave was that the project was becoming unviable without that money. The company also gave a commitment that it will submit details of costs and other estimates justifying the extra charges by September 2009. In the meanwhile, India got a spanking new regulator in the form of Airports Economic Regulatory Authority (AERA). By March 2010, when GMR had forgotten or failed to file those numbers, AERA threatened that it will be compelled to withdraw the excess charge. Managers at GMR responded by saying that all details will be filed by April 6, 2010. I may be wrong, but I think no such report has been filed yet by GMR. Meanwhile, it is reported that GMR has made close to Rs.600 crore by selling usage rights to stores, franchises and builders.We now hear that the project cost has gone up from Rs.8,975 crore to Rs.12,700 crore!

So this is a double whammy for the consumer. First, you and I are fed with stories about how world class, how unique and how great the new airport will be. Then we are subtly told to be ready to pay substantially more as user charges to GMR when the new Terminal 3 becomes operational in July. GMR is a private risk-taking company whose principal job is to chase profits and take risks. In any other same situation, if the cost of the bid submitted by GMR went up by almost 50%, it would be punished by the markets as a failure of entrepreneurship and management. But this is India, where markets are subservient slaves of a system we all know as crony capitalism. And the newly formed AERA appears to be a toothless tiger, unable to stop this loot. But why single out GMR? Most Indian companies and entrepreneurs love the Indian system of capitalism, because it rewards them even when their estimates and decisions are plain wrong. And consumers like you and me can go to hell.

Just wait for July to see how a media campaign for even higher user charges will be unleashed.


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