New Delhi: The Airports Authority of India (AAI) is planning a voluntary retirement scheme (VRS) for its workers displaced as a result of the privatization of the New Delhi and Mumbai airports.
AAI is the government’s airports regulator and runs most other airports in the country.
The New Delhi and Mumbai airports, ranking among India’s busiest, were privatized by the Union government two-and-a-half years ago.
The proposed VRS is expected to cost at least Rs1,000 crore and will cover some 4,000 AAI employees at the two airports. Under the terms of privatization agreements, the costs have to be shared by the private consortia running them.
The airports were handed over as a public-private partnership in May 2006 to a GMR Infrastructure Ltd-led consortium that runs Delhi International Airport (P) Ltd (DIAL), and GVK Infrastructure and Power Ltd-led consortium that runs Mumbai International Airport Pvt. Ltd (Mial), with a condition that the two firms will retain the AAI employees—numbering at least 2,000 each—for the first three years.
Under the agreement, DIAL and Mial were to offer and try to absorb about 60% of these employees. But so far, just 5% of the workers at these two airports have accepted the offer by the airport companies. By May, most will return and join AAI, resulting in a huge surplus pool. AAI, according to data of March last year, had 19,180 employees, including those at the Delhi and Mumbai airports.
“We are working to accommodate (the Delhi and Mumbai airport AAI staff) in other airports and a VRS will be offered to those who do not want to relocate,” said an AAI board member, who asked not to be named.
A senior civil aviation ministry official estimated the proposed VRS plan could cost at ;east Rs1,000 crore. The official arrived at the figure considering that an average of Rs25 lakh would have to be paid to each employee under the scheme.
The official, who requested anonymity, said the ministry expects most employees serving the airports for decades “would prefer to take VRS” than shift to places such as the North-East where many small airports are coming up on the back of Union government funding.
“And we are now going to pursue these two companies to share the costs under the provisions of Omda,” this official added.
Omda is short for operations management development agreement or the privatization agreement.
Omda terms mandate DIAL and Mial share VRS costs, this official insisted, estimating the airport companies would have to cough up about Rs500 crore. The agreement prescribes that if less than 60% of AAI employees are absorbed at the two airport developers, then the companies shall pay “retirement compensation” for the difference between that benchmark and the number of workers who take employment at the new airport firms.
By that rule, DIAL and Mial will have to bear retirement costs for some 55%, or 2,200, of AAI workers at the two airports.
AAI’s proposed VRS plan comes at a time when air passenger traffic is falling and airport revenues this fiscal year are expected to fall even as staff costs continue to rise. In fiscal 2008, AAI bore Rs947.58 crore in employee costs (not including the Delhi and Mumbai workers), a jump of 13.5% from Rs834.92 crore in the previous year. AAI’s revenues grew 15.1% to Rs4,289.21 crore in the year to 31 March from Rs3,726.23 crore in fiscal 2007, but officials at the regulator fear revenues will fall this fiscal year and the next in a decelerating economy.
Besides Delhi and Mumbai, which account for around half the country’s passenger traffic, AAI-run Bangalore and Hyderabad airports with substantial traffic, too, have shut in the last one year as new private airports were commissioned at the cities. The closing of these two airports alone will impact AAI’s revenues by about Rs200 crore annually. Many AAI workers were shifted to other places while some continue to be deployed at the old airports.
Another AAI official, who moved on from the company last year, said most of the workforce that has been left out at Delhi and Mumbai belongs to the lower paid group C and D employees, comprising housekeeping staff. “Mostly civil engineers, electrical engineers have joined them (DIAL, Mial) because they like the private environment. But the group C and group D employees have not been taken in. Their performance is not up to the mark as the private sector wants,” this official said, asking not to be named.
An expert said the transition from DIAL and Mial back to AAI for the government workers would likely be “complex”, but the VRS should be extended to a larger group of people.
“I don’t know if VRS can be offered in select areas (of Delhi and Mumbai) only,” said Robey Lal, a former AAI board member and now India head of industry group International Air Transport Association. “I don’t see only 4,000 employees being offered VRS. AAI ought to undertake a manpower study, and in the disciplines with excess manpower is where VRS ought to be offered.”