If that wasn't bad enough, just a few weeks prior to this, the Bureau of Civil Aviation Security (BCAS) had written to the ministry protesting the new change in policy that allowed private airport operators to security clear baggage, arguing that this should be done by the Central Industrial Security Force (CISF), which is in charge of overall airport security.

The ministry's reply, to justify its policy of September 2007, which allowed this, was truly amazing. After pointing out that such baggage is currently screened by airline staff (public sector carrier Air India does this at most airports) anyway, and that the international practice is to allow airport operators to do this, the ministry made a distinction between anti-hijacking and anti-sabotage.

It said, "CISF has been assigned the duties of 'anti-hijacking' whereas baggage x-ray scan check is an 'anti-sabotage' measure." To put this in perspective, Air India's Kanishka, which got blown up in mid air in 1985 due to a bomb on board, was a victim of "sabotage" while the Kandahar incident, which saw External Affairs Minister Jaswant Singh, escort the terrorists was a "hijack". The ministry's saying the CISF's presence is required to prevent a hijack, but is not required to prevent a sabotage!

More seriously, the ministry's probably right when it says airport operators and airlines regularly do such screening internationally. But in those countries, before this was allowed, elaborate procedures/codes were probably laid down, joint exercises with security personnel were probably carried out, mandatory surprise checks by official security agencies took place, and so on, even there were detailed penalties for levels of lapses.

In India, however, the ministry just decides on its own -- indeed, it even adds "CISF supervision (of the private airport operators' operations) may not be insisted upon." The ministry insists the Bureau of Civil Aviation Security had never raised any objections ("there is nothing on record to suggest that BCAS ...") to the new ground handling policy of September 2007 -- given the Bureau's letter now, that does appear strange. Perhaps the Bureau would care to respond -- did it not make any objections, or did it make them in meetings where they were not taken on the record?

None of this, however, should come as too much of a surprise since it is not the only instance of the ministry not applying its mind fully before taking policy steps. The ministry, for instance, did not insist that an airport regulatory authority be set up before existing airports were privatised or new ones planned.

It is this sequencing issue that lies at the heart of the ugly dispute taking place at the new Hyderabad and Bangalore airports between passengers and low-cost airlines, on one side, and the airport authorities, on the other, over the User Development Fees, ground handling and other tariffs being levied.

While the public outcry and the refusal of low-cost airlines to fly to these destinations rattled the ministry enough to make it ask the airport operators to keep their tariffs in abeyance for a bit, matters are now left to be sorted out by the regulator and, till the body comes up, by the ministry of civil aviation.

But how is the regulator/ministry to deal with the issue? After all, the costs on the airports have already been incurred, they may be high or they may be low, they may have been got through competitive bidding of the big contracts or they may have been got through bilaterally negotiated deals (the latter is more likely to have happened at most of the airports), but the only thing that matters is that they've been incurred already. If the costs are a given, and the traffic easily ascertainable, the UDF and other charges are just a simple arithmetic calculation, aren't they?

The example of the Delhi Electricity Regulatory Commission (DERC) is cited in this context, to argue that the regulator can disallow certain expenses if they're considered excessive. That's possible, but by no means certain. When the DERC lowered depreciation rates for the power distribution firms, they went to court saying this violated their contract, and the courts agreed!

Given the loosely worded contracts and the huge differences over even what constitutes revenue (see "Bumps on the PPP runway," Oct 29, 2007) in the Delhi airport case, a similar outcome in the courts can't be ruled out. Similarly, when the DERC ruled out Rs 533 crore of capital expenses of the Reliance ADAG group firms, this was done by arguing group firm Reliance Energy [Get Quote] Limited had made a killing dealing with fellow group-firms -- expecting the airport regulator to repeat this feat for all airports, for all contracts, is expecting too much.

We've witnessed the first phase of the mess in the country's public sector-driven aviation sector. In the absence of properly-thought-out rules, the next, a privately-driven one, awaits us.