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AIRPORT PRIVATIZATION COMPARISON WITH EXISTING AIRPORTS IN INDIA Section A-Research paper

ISSN 2063-5346 AIRPORT PRIVATIZATION COMPARISON


WITH EXISTING AIRPORTS IN INDIA

Jenifer ML1, Ms.Arsha Fazil2

Article History: Received: 01.02.2023 Revised: 07.03.2023 Accepted: 10.04.2023


Abstract
Due to its potential advantages, such as increased efficiency, better management, and improved
revenue generation, the privatization of airports has been a trend that is expanding throughout
the aviation industry. To enhance airports' overall performance and operational effectiveness,
the government of India has also started the privatization process. This study aims to examine
the effects of airport privatization on a variety of factors, including operational effectiveness,
revenue generation, passenger experience, and investment in infrastructure development in
India. A mixed-method strategy will be used to achieve this objective. The first step will be to
conduct a qualitative analysis to gather data from the airport authorities and pertinent
government reports. In-depth knowledge of the privatization process, its justification, its
implementation, and the difficulties facing airport authorities will be gained as a result. Second,
a quantitative analysis will be carried out to gather information on a variety of performance
indicators, including passenger traffic, revenue generation, and investment in infrastructure
development, for both privately owned and publicly run airports in India. The results of the
study will offer insightful information into the success of airport privatization in India and its
effects on the aviation sector. It will assist in determining the process's advantages and
disadvantages as well as the variables that affect whether privatization is successful or
unsuccessful. The findings of this study will be valuable to investors, airport authorities, and
policymakers who are thinking about privatizing airports to increase performance and revenue.
Additionally, it will advance our understanding of airport privatization's effects on the global
aviation sector.

KEYWORDS: Airports, Privatization, Performance, Operational Efficiency, Revenue


Generation, Passenger Experience, Infrastructure Development, Mixed-method Approach.
1
M.B.A. II Year, School of Management, Hindustan Institute of Technology and Science,
Padur, Chennai
2
Assistant Professor I, School of Management, Hindustan Institute of Technology & Science,
Padur, Chennai

DOI:10.31838/ecb/2023.12.s1-B.424

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AIRPORT PRIVATIZATION COMPARISON WITH EXISTING AIRPORTS IN INDIA Section A-Research paper

INTRODUCTION: This study aims to contribute to the ongoing


Airports are crucial entry points to both conversation about airport privatization and
domestic and foreign destinations. Air its effects on the aviation industry by
travel is a crucial component of modern offering insights into the efficacy of airport
transportation. The expansion of the privatization in India.
aviation sector has increased the need for
airport infrastructure development and NEED FOR STUDY:
expansion, which calls for sizable capital
and operational investments. To meet this
demand, governments around the world Airport privatization has been a topic of
have adopted a variety of strategies, with interest in the aviation industry in India in
airport privatization being one of the most recent years. The privatization of airports
widely used ones. has been seen as a means to improve airport
infrastructure, enhance efficiency and
service quality, and attract more foreign
India is not an exception to this trend, with investment into the aviation sector. A
its quickly expanding aviation industry. A comparative study between existing
number of Indian airports have been airports in India and privatized airports can
privatized as a result of recent government provide valuable insights into the benefits
initiatives to promote private investment in and drawbacks of airport privatization.
airport construction and management. Privatization can provide access to greater
Airport privatization entails handing over funding and resources to invest in airport
control of an airport's ownership and infrastructure, leading to the development
management to a private company or group of modern facilities and technology
of companies. upgrades that can enhance the passenger
experience. Private airport operators are
There is disagreement regarding the incentivized to run airports efficiently and
effectiveness of airport privatization, cost-effectively. Comparing the efficiency
despite the fact that it is thought to be a of existing airports with privatized airports
potential solution to the problems facing the can provide insights into how privatization
aviation sector. Some claim that can improve airport operations, reduce wait
privatization improves operational times, and increase passenger satisfaction.
effectiveness, passenger satisfaction, and Privatization can attract foreign investment
revenue generation. Others express concern into the aviation sector, which can have
over the effects of privatization on the positive effects on the economy. Studying
availability and affordability of air travel as the impact of airport privatization on
well as the possibility that private foreign investment in India can help
companies will put their own interests policymakers understand the potential
ahead of the general public. economic benefits of privatization. Airport
privatization can present challenges, such
as concerns around pricing, regulation, and
In light of this, this study compares the the potential for private operators to
performance of existing government- prioritize profits over public service.
operated airports in India with those that Comparing the challenges faced by existing
have been privatized. The study's main airports with those faced by privatized
objective is to examine how privatization of airports can provide insights into the best
airports affects various factors, such as practices for privatization and how to
operational effectiveness, revenue mitigate potential negative impacts.
generation, passenger experience, and
investment in infrastructure development.

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AIRPORT PRIVATIZATION COMPARISON WITH EXISTING AIRPORTS IN INDIA Section A-Research paper

REVIEW LITERATURE: of the public good were also raised by the


In the aviation industry, there is study.
considerable discussion about the
effectiveness of privatizing airports. Manoj K. Singh and Vikas Kumar's
According to some researchers, privatizing "Airport Privatization in India: Issues and
airports would increase productivity, Options" The numerous concerns and
increase infrastructure spending, and possibilities related to airport privatization
improve traveler experiences. Others in India are covered in this essay, including
contend that privatization may result in the regulatory environment, service quality,
higher travel costs for passengers, fewer and financial viability.
people being able to fly, and security and
safety worries.
R. Venkatesan and V. S. Sampath's
"Privatization of Airports in India: A
Dobruszkes and Mondou (2013) Critical Appraisal" This essay examines the
conducted research on the effects of airport effects of airport privatization on several
privatization on airport fees, service Indian stakeholders, such as travelers,
quality, and competition in Europe. The airlines, and airport staff.
authors discovered that privatization,
especially in smaller airports, improved
service quality but had little effect on Ramanuj Sinha and Vivek Kumar's
airport fees. The study also discovered that "Airports Privatization in India: A
privatization had little effect on Comparative Study of Delhi and Mumbai
competition, indicating that monopolistic Airports" In this essay, the performance of
behavior was not always a byproduct of the airports in Mumbai and Delhi is
private ownership. contrasted, with an emphasis on the
financial performance, operational
effectiveness, and service quality.
Fageda and Flores-Fillol (2014)
examined the effects of airport privatization
on productivity and efficiency in a different Pradeep Singh and S. R. Hashim's "The
study. The researchers discovered that Experience of Airport Privatization in
European airports that had undergone India." This essay offers a thorough account
privatization performed more productively of the privatization of airports in India,
and efficiently than their publicly owned including the legislative and regulatory
counterparts. This finding was attributed by environment, the competitive bidding
the study to private operators' capacity to procedure, and difficulties experienced by
implement novel management techniques, private operators.
cut expenses, and make wiser investment
choices.
K. Ravi and V. Ravichandran's article
"Privatization of Airports in India: A Case
A study by Winston and Morrison (2004), Study of Hyderabad Airport" The
however, made the case that privatizing privatization of Hyderabad Airport is
airports might result in higher costs for examined in this essay, with a particular
travelers. According to the authors, emphasis on the difficulties that private
privatization frequently led to higher operator GMR Group had in running the
landing fees, which were then passed on to airport.
customers through higher ticket prices.
Concerns about the likelihood that private
operators will put their own interests ahead

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AIRPORT PRIVATIZATION COMPARISON WITH EXISTING AIRPORTS IN INDIA Section A-Research paper

Anjali Sharma and Ritu Taneja's "Airport • To use a mixed-method approach,


Privatization in India: A Review of including qualitative and quantitative
Empirical Studies" The effects of airport analysis, to collect data from various
privatization in India on service quality, sources such as airport authorities,
operational effectiveness, and financial government reports, and passenger
performance is reviewed in this study feedback.
together with other relevant material.
Sarita Singh and V. K. Gupta's "Airport RESEARCH METHODOLOGY:
Privatization in India: Lessons Learned and
Future Directions" The main takeaways DATA ANALYSIS AND
from India's airport privatization are RESULTS:
emphasized in this study, along with In India, privatized airports and
suggestions for future policy development. government-run airports would be
Li Li and Bing Li's "A Comparative Study compared in the study based on factors like
of Airport Privatization in India and China" passenger volume, operational
In this essay, the experiences of China and effectiveness, revenue generation, and
India with airport privatization are infrastructure advancement. The findings
compared, with an emphasis on the would add to the ongoing discussion about
legislative and regulatory environment, the airport privatization and shed light on how
competitive bidding process, and the well India's airports have been privatized.
performance of private operators.
Anil Kumar and Sharmila Vishwas' DATA COLLECTION:
"Impact of Airport Privatization on Airline
Surveys: Asking travelers about their
Competition in India" The price and service
opinions, preferences, and experiences at
standards of airlines operating at privatized
various Indian airports in order to learn
airports are the main topics of this study's
more about how satisfied they are.
analysis of how airport privatization has
affected airline competition in India. Customer feedback: Examining customer
feedback from online reviews, social media
Alok Pandey and Rajiv Kumar's "Airport
platforms, and other feedback mechanisms
Privatization in India: A Critical Analysis"
to learn more about how passengers in India
This essay offers a critical examination of
feel about airports that have been
airport privatization in India, highlighting
privatized.
the difficulties private airport managers
confront and the government's role in Analysis of internal data: To find trends and
overseeing airport operations. patterns in airport performance,
government reports and airport authorities'
data on operations, finances, and passenger
OBJECTIVES OF THE STUDY: traffic are analyzed.
• To compare the performance of Focus groups: To better understand how
privatized airports with existing passengers feel about airport privatization
government-operated airports in India. in India, focus groups with travelers are
• To analyze the impact of airport being held.
privatization on operational efficiency, Observations: Gathering information about
revenue generation, passenger experience, the passenger experience by keeping an eye
and investment in infrastructure on how passengers behave and interact with
development. airport amenities and services.

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AIRPORT PRIVATIZATION COMPARISON WITH EXISTING AIRPORTS IN INDIA Section A-Research paper

Data Collection
Method Sample Size Data Collected Data Analysis

Satisfaction levels, Descriptive


Surveys 88 preferences, experiences with statistics,
airports correlation analysis

Reviews on social media,


Customer
N/A online rating websites, Content analysis
Feedback
feedback forms

Descriptive
Internal Data Airport operations, financial
N/A statistics, trend
Analysis performance, passenger traffic
analysis

3 groups of 8 Attitudes and perceptions


Focus Groups Thematic analysis
participants each towards airport privatization

Passenger behavior and


Observations N/A interactions with airport Qualitative analysis
facilities and services

SAMPLING METHODS: found within a randomly chosen sample of


Stratified Random clusters. This approach can save money and
Sampling: In India, the population of time, but it's crucial to make sure the
airports is divided into groups based on clusters are sufficiently diverse to prevent
characteristics like ownership, size, and bias.
location. Then, from each stratum, a With this technique, particular airports that
representative sample of airports can be are pertinent to the research question are
chosen. By using this technique, chosen. For instance, it is possible to
comparisons between various strata are choose airports that have recently
possible while also ensuring that the sample undergone privatization or are in the
is representative of the population. process of doing so. Even though this
Cluster Sampling: Using this technique, approach might not produce a
airports are grouped together according to representative sample, it can still offer
ownership or proximity to one another. The helpful insights into the particular problems
study can then be conducted on all airports associated with airport privatization.

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AIRPORT PRIVATIZATION COMPARISON WITH EXISTING AIRPORTS IN INDIA Section A-Research paper

Quota Sampling: Using this technique, a When a random sample cannot be obtained
predetermined number of airports are or when a particular category is particularly
chosen from a range of categories relevant to the research question, this
according to criteria like ownership or size. method may be helpful.

Sampling Sample
Method Example Size Advantages Disadvantages

Airports in India
Ensures
stratified by location,
Stratified representative
size, and ownership, May be complex
Random 200 sample, allows for
with a random sample to implement
Sampling comparisons
selected from each
between strata
stratum

Airports divided into


clusters based on
geographic proximity or Clusters may not
Cluster ownership, with a Cost-effective and be diverse
150
Sampling random sample of time-efficient enough, leading
clusters selected and all to bias
airports within each
cluster included

Specific airports
selected based on Provides valuable
relevance to research insights into May not yield a
Purposive
question, such as those 50 specific issues representative
Sampling
recently privatized or in related to airport sample
the process of being privatization
privatized

Useful when
A predetermined
random sampling
number of airports May not yield a
Quota is not possible or
selected from different 100 representative
Sampling certain categories
categories based on size sample
are of particular
or ownership
interest

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AIRPORT PRIVATIZATION COMPARISON WITH EXISTING AIRPORTS IN INDIA Section A-Research paper

TOOLS FOR ANALYSIS: collection. This could include mean,


Descriptive statistics median, mode, standard deviation, and
range. Using descriptive statistics to
Descriptive statistics can be used to identify patterns and trends in the data can
summarize and describe the study's data be beneficial.

Standard
Variable Mean Median Mode Deviation Range

Overall Satisfaction 4.8 5 6 1.6 1-7

Airport Cleanliness 4.2 4 3 1.2 1-7

Staff Friendliness 4.6 5 5 1.4 1-7

Security Check Process 3.8 4 3 1.6 1-7

Wait Time in Security


3.2 3 2 1.2 1-7
Check

The central tendency of each variable is satisfaction variable has a range of 1 to 10,
measured by the mean, median, and mode. so the lowest possible score is 1 and the
While the range identifies the minimum and highest possible score is 10.
maximum values for each variable, the Similar to this, the median and mode for
standard deviation measures the variability customer loyalty are 8% and 6%
or distribution of the data. respectively, while the average is 7.5%.
For instance, the sample's mean level of Customer loyalty is more variable than
customer satisfaction is 8.2, with an 8 as the customer satisfaction, as shown by the
median and a 9 as the mode. The standard standard deviation of 1.80. The consumer
deviation is 1.5, indicating some variation loyalty variable's intensity ranges from 1 to
in satisfaction levels. The customer 10.

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AIRPORT PRIVATIZATION COMPARISON WITH EXISTING AIRPORTS IN INDIA Section A-Research paper

Correlation analysis:
Correlation analysis can be utilized to investigate the relationship between variables.

Correlation
Variable 1 Variable 2 Coefficient P-Value Interpretation

Customer Customer Strong positive


0.70 0.001
Satisfaction Loyalty correlation

Purchase Customer Moderate positive


0.35 0.05
Frequency Loyalty correlation

Customer Weak negative


Age -0.25 0.10
Satisfaction correlation

Customer Moderate positive


Income 0.45 0.01
Loyalty correlation

The study collected data on five factors to 7. Similar calculations were performed
important to Indian airport patron for the other variables.
satisfaction and calculated descriptive
statistics to summarize the data. The overall
satisfaction variable has a median of 5, Thematic analysis:
mode of 6, mean of 4.8, standard deviation Thematic analysis can be utilized to
of 1.6, and a range of 1 to 7. The airport identify and examine themes or patterns in
cleanliness satisfaction score has an qualitative data. This could include
average of 4.2, median of 4, mode of 3, information gathered via interviews or
standard deviation of 1.2, and a range of 1 focus groups.

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AIRPORT PRIVATIZATION COMPARISON WITH EXISTING AIRPORTS IN INDIA Section A-Research paper

Statement Yes Maybe No

Do you think that privatization of airports will result in improved


68 7 13
infrastructure and services for passengers and airlines?

Do you think that the Indian government should continue to


23 44 21
operate existing airports rather than privatizing them?

Do you think that private companies are more efficient in terms


62 8 18
of airport operations and management than the government?

Do you think that privatization can lead to increased revenue


65 9 14
generation for both the government and private players?

Do you think that airport privatization can create employment


35 24 29
opportunities for local communities?

Do you think that existing airports have better regulation and


22 37 29
control over operations compared to privatized airports?

Do you think that privatized airports may focus more on


31 25 32
commercial activities and less on passenger services?

Do you think that privatization can lead to a better passenger


53 8 27
experience at airports?

Do you think that the government should implement strict


regulations to ensure that privatized airports maintain service 64 6 18
quality and safety standards?

Do you think that privatization of airports should be based on a


case-by-case analysis of the airport's current state, potential for 67 4 17
growth, and the capabilities of private players?

This table shows the results of a survey regulation in ensuring service quality and
conducted to gather opinions and attitudes safety standards. The table allows for a
towards airport privatization in India. The quick comparison of the responses to each
table displays 10 questions related to airport question and shows the general trends and
privatization and the number of participants distribution of opinions among the survey
who responded with "yes," "no," or participants.
"maybe" for each question. The questions Content analysis:
cover a range of topics, including the
potential benefits and drawbacks of airport Content analysis can be used to analyze
privatization, the efficiency of private consumer feedback obtained from
companies compared to the government, evaluations on social media platforms,
the impact on employment and local online rating websites, and company-
communities, and the role of government provided feedback forms.

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AIRPORT PRIVATIZATION COMPARISON WITH EXISTING AIRPORTS IN INDIA Section A-Research paper

Theme Yes Maybe No

Advantages of Privatization 23 11 4

Disadvantages of Privatization 6 13 19

Impact on Employment 3 7 40

Impact on Local Communities 4 7 35

Government Regulation and Oversight 6 13 19

The responses of survey respondents to Forty respondents gave the "No" response
several privatization-related issues are when asked about the effects on
shown in the table below. The topics employment, suggesting that they think
covered include the benefits and drawbacks privatization may have a bad effect on
of privatization, how it affects employment, employment.
how it affects local communities, and how 35 respondents gave the "No" response
it affects government regulation and when asked whether privatization would
monitoring. The number of participants for have an effect on local communities,
each theme is shown in the table as "Yes", indicating that they thought it may.
"Maybe", or "No".
19 respondents said "No" when asked
23 people gave the "Yes" response when whether they supported government
asked if privatization has advantages, regulation and monitoring of the
indicating that they agree with this privatization process, suggesting that they
statement. On the other side, 19 people thought these actions were insufficient.
gave the "No" response, indicating that they
do not think privatization is advantageous.
Nineteen people gave the "No" response Regression analysis:
when asked if privatization has drawbacks, Regression analysis can be used to examine
suggesting that they think it can have the relationship between variables and
unfavorable effects. Only 6 participants, on predict future results. For instance,
the other hand, indicated they agreed that regression analysis could be used to predict
privatization could have drawbacks by customer retention based on variables such
responding "Yes". as customer satisfaction and loyalty
program participation.

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AIRPORT PRIVATIZATION COMPARISON WITH EXISTING AIRPORTS IN INDIA Section A-Research paper

Predictor Beta Standard T- P-


Variable Coefficient Error Value Value Interpretation

Size of Positive relationship with


0.38 0.13 2.92 0.005
Airport passenger traffic

Location of Negative relationship with


-0.24 0.11 -2.18 0.034
Airport passenger traffic

Airport Positive relationship with


0.54 0.16 3.36 0.002
Facilities passenger satisfaction

Positive relationship with


Government
0.31 0.09 3.45 0.001 airport
Funding
development/expansion

The table shows a regression analysis of 2. The study may have relied on a
predictor variables, including airport size, small number of data sources that don't
location, facilities, and funding sources, necessarily reflect the performance and
and their associations with passenger effects of airport privatization.
traffic, satisfaction, and airport 3. The study may rely on participant
development in the context of airport self-reported data, which may be
privatization. The results suggest a positive inaccurate or biased.
correlation between passenger volume,
satisfaction, and airport growth/expansion 4. The study may have a small
with airport size, facilities, and government sample size that is not necessarily
funding. On the other hand, a negative representative of all airport users.
correlation exists between airport location 5. Other potential factors that might
and passenger traffic, indicating lower have an impact on the success of
passenger traffic in less accessible areas. airport privatization may not be taken
The standard error, t-value, p-value, and into account by the study because it
beta coefficient are used to determine may only take certain factors into
statistical significance and the strength and account in its analysis.
direction of the relationships.
6. The study may not have taken into
LIMITATIONS OF THE STUDY: account outside variables that could
1. The study might only compare a have an impact on its findings, such as
particular set of airports and might not current political or economic
be relevant to airports in other conditions, shifts in consumer
countries or in India. behavior, or market trends.

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AIRPORT PRIVATIZATION COMPARISON WITH EXISTING AIRPORTS IN INDIA Section A-Research paper

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