New Delhi, September 16:

India’s booming airlines industry could suffer if the country’s airports are not modernized fast, analysts warned, after two top bidders for the expansion of the New Delhi airport dropped out this week. At airports in New Delhi and Mumbai, which handle 63 per cent of India’s air traffic, flights are often forced to circle in the air while waiting for a landing slot, and almost every third plane must wait for at least 15 to 20 minutes before heading to the terminal. With an outdated, short-staffed air-traffic control system, the worst fear is that a signal mix-up could lead to a mid-air collision.

Still, the state-run Airport Authority of India, which operates the airports, invested little in upgrading the infrastructure over the past eight years as political parties debated whether the airports should be handed over to private managers. Earlier this year, the government called for bids from private companies to modernize and operate the two airports. But the process suffered a setback when a three-company consortium including Singapore’s government-run Changi Airport pulled out Monday, objecting to a clause demanding a steep fine if the performance by the new manager fell short of certain revenue and other targets. A day later, another group partnered by Germany’s Hochtief Airport quit, citing similar reasons. Only consortiums that include a foreign partner with expertise in airport operations were eligible to bid.

“An exit by a high-profile investor like Changi is certainly a setback,” said Kapil Kaul, the Indian head of Sydney-based Center for Asia-Pacific Aviation. “Our aviation infrastructure is on the brink of collapse, any further delay in modernizing would be disastrous.” The warning came at a time when demand for air travel is booming.

Several budget carriers launched in the past year are attracting first-time flyers, and officials expect there to be 50 million passengers in India by 2010 from 14 million now. But experts fear the momentum could be lost if airports are not modernised fast, especially when airlines are battling rising fuel costs. “Each deterrent in some way results in slowing the industry’s growth,” Kaul said.

The government admits airport modernization is overdue, but insists it is expediting the process. Ajai Prasad, the top bureaucrat in the civil aviation ministry, said there were still five bidders for the New Delhi airport and six for Mumbai.