Line of warning

Govt must learn the lessons of Delhi's Airport Express

The relationship between Delhi Airport Metro Express Private Limited, or DAMEPL, controlled by Reliance Infrastructure, and the Delhi Metro Rail Corporation, or DMRC, seems to have broken down irrevocably. DAMEPL has pulled out of its 30-year contract to operate the Airport Express line and has asked that it be paid termination costs of 130 per cent of the adjusted equity and 100 per cent of the debt due for the joint venture; this could amount to as much as Rs 2,800 crore. The DMRC has contested the demand, but has started running the line alone from July 1. The showpiece line's troubles should receive considerable attention, since its failures are emblematic of lacunae in the government's approach to public-private partnership (PPP) in infrastructure. The government, having decided that India both needs upgraded infrastructure and lacks the public funds to build it, has focused in its planning on partnerships with the private sector. But, as the Airport Express' story reveals, the government does not appear to have prepared sufficiently for the problems that may arise in this approach.

Reliance Infrastructure won the bid to operate the Airport Express on the assumption that it would carry 40,000 people a day. In effect, it has even at its best been carrying half those numbers, around 17,000. As a result, much advertising space has gone unsold. Unsurprisingly, it is making losses; it costs Rs 7 crore a month to run, but the revenue from tickets and advertising is only Rs 3 crore. That is presumably what lies behind the private sector operator's unwillingness to persist with the project; DAMEPL appears to have decided that the prospects of a turnaround in the line's fortunes are not great. The question is, of course, whether the original estimate of 40,000 metro riders was reasonable - another example of how auctions can lead to unrealistic estimates in the hope of renegotiation later. PPP projects have to work out how this problem can be avoided.

The project was built at a cost of Rs 5,700 crore, with Reliance spending Rs 2,285 crore and the DMRC paying Rs 3,415 crore. Given the ridership of the Airport Express, it appears that this was a waste that India could ill afford. What went wrong? For one, it appears that construction standards were shoddy. The point of the line was that it was a high-speed rail link that would allow travel at 120 kilometres an hour between central Delhi and the airport. However, in 2012, faults were detected in over 250 of the "bearings" that hold the line in place and prevent derailments; the bearings would snap at high speeds. That meant that the speed of the train was drastically lowered, and a planned 17-minute trip began to take as much as 45 minutes - which made it difficult to attract riders, as the ticket price of Rs 150 became extremely unattractive for a regular metro-rail ride. Charges are still being traded between Reliance, the DMRC, and the Malaysian-based construction contractor as to the reasons for this fault. Meanwhile, the scheduling and track layout itself minimised the attractiveness of the Airport Express as an option for travellers. It shut down before midnight, for example, opening at 5.15 am - whereas most international flights take off and land in Delhi between midnight and 4 am. And the Airport Express did not even run to Terminal 1 of Delhi airport, the terminal through which most of Delhi's cost-sensitive passengers fly; nor did it connect seamlessly with the rest of the Metro. The government intends to launch PPP-financed infrastructure worth Rs 1.15 lakh crore in the coming months, according to the prime minister. If the lessons of the Airport Express are not learned, then much of it may meet the same fate.