Sucheta Dalal :Wither airports?
Sucheta Dalal

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Wither airports?  

Jun 20, 2005


The best way to attract attention is to flash money. And Indian aviation certainly flashed a lot of money at the Paris air show, what with a completely unknown company called IndiGo (InterGlobe Enterprises Ltd) ordering a headline-grabbing 100 aircraft worth $6 billion from Airbus Industries. It even stole the thunder from the flamboyant Vijay Mallya who had boldly ordered two yet-to-be commercialised models from Airbus.


Every new entrant claims that there is a vast, untapped market in the budget airline space. They also seem to have plenty of financial backers.


What they do not have and cannot ensure is decent and adequate aviation infrastructure. The Delhi and Mumbai airports are bursting at their seams and the work involved in refurbishing, upgrading and expanding smaller airports ought to have begun already, in order to be ready to land the new planes ordered by Indian aviation hopefuls.


Instead, most infrastructure issues are still on the discussion table and unless these are addressed quickly, the stage will be set for another round crash landings by the new airline companies.


Kingfisher’s A380s


Vijay Mallya made a splash by ordering five A380s and A350s each at the Paris Show. But he is either a super-optimist or an oracle. Both these aircraft have yet to be commercially launched and the double-decker A380, which is the world’s largest aircraft and scheduled to be delivered to Kingfisher by 2011 has its own special requirements, which the best airports in the world are worried about. The super jumbo jet, says The New York Times, will be a burden and risk, even to the world’s biggest airports. They will need to invest $100 million to buttress ‘‘runways for a plane that can weigh 544 tonnes on takeoff’’, wide taxiways and extra terminal space. While leading airports are worrying about the feasibility of setting up such facilities, it is unclear whether these issues are even on the radar of the Civil Aviation Ministry and the Airport Authority of India Ltd. After all the A380 cannot possibly evacuate 1,000 people with one or two step-ladders rolled up to the plane; and the confusion over baggage collection as well as police and customs clearance can only be imagined. Major international airports such as Frankfurt are adding additional gates to create A380 infrastructure, while Paris is putting up an entire satellite terminal (some say 30 miles from the Charles de Gaulle airport) to handle the aircraft. In fact, only time will tell whether India and other destinations will be ready to land the A380, or whether it will end up like the Concord — an exotic bird limited to a few destinations.


Grey market


The primary market boom has also revived the dubious grey market in unlisted companies that had caused grief to thousands of investors in the early 1990s. These are illegal trades that play on investor greed and bet on a new issue listing on stock exchanges at a substantial premium to offer price. The biggest grey market in recent times has been in the shares of Provogue, the apparel company which announced a massive over-subscription last week. The shares were offered in the price band of Rs 130 to 150 and grey market premia quoted at Rs 60 over the upper end of the price band, but soared to over Rs 125 after the issue opened strongly. Clearly, operators are aiming to list the share at twice the offer price. What is shocking, however, is that the grey market is being run by a broker who is on the Investment Committee of a Private Sector Mutual Fund. Clearly Sebi Chairman M. Damodaran’s reprimand to the industry hasn’t even begun to cover all the dubious practices prevalent in the industry. Meanwhile, Sebi needs to cool down the IPO manipulation before it creates another disaster. As the Sebi chairman knows, that the quickest way to cut out fake over-subscription in the institutional segment is by insisting on pro-rata allotment. This will certainly have a sobering impact on the entire primary market.


Stanchart responds


Last week we reported that Standard Chartered Bank was arrogating to itself the right to share personal data of consumers with ‘‘other parties’’, by seeking a negative consent from customers under the guise of complying with Reserve Bank rules. The bank has now made amends and promised to protect customer privacy. It has sent us a copy of a letter sent out to investors, which says, ‘‘The Bank regrets the confusion created due to the aforementioned letter and assures its customers that the intention of the Bank is to share the data/information only with the agencies mandated by RBI. The bank would like to further assure you of our commitment to maintaining the privacy of your information.’’ Standard Chartered’s quick response is welcome, but it is more likely to endear itself to its customers if it gets its collection agents to deal more tactfully with customers, who are not chronic defaulters or cheats.


-- Sucheta Dalal