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The government plans to award 11 Airports Authority of India airports to private players under the public-private partnership model, grouping them into five bundles. The proposed airports include Varanasi, Tirupati, Amritsar, Bhubaneswar and Raipur, along with six smaller airports. The Public Private Partnership Appraisal Committee has given in-principle approval to the proposal, under which each bundle will be awarded to a single concessionaire for 50 years. The total investment by private operators is estimated at INR 8,622 crore. The government has also proposed measures to protect the interests of existing AAI employees during the transition.
The government plans to lease 11 airports to private operators under the public-private partnership (PPP) model, with the airports grouped into five bundles. The civil aviation ministry has proposed awarding each bundle to a single concessionaire, according to an official document.
The five major airports will be paired with six smaller airports. Amritsar and Kangra-Gaggal will form one bundle, while Varanasi, Gaya and Kushinagar will be grouped together. Bhubaneswar and Hubballi will form another bundle, while Raipur and Aurangabad will be paired in a fourth. Tiruchirappalli and Tirupati airports will constitute the fifth bundle.
The Public Private Partnership Appraisal Committee (PPPAC), chaired by Economic Affairs Secretary Anuradha Thakur, gave in-principle approval to the civil aviation ministry’s proposal at its meeting earlier this month. The PPPAC is responsible for appraising PPP projects in the central sector.
The airports will be leased under the PPP model for a concession period of 50 years. The total investment expected from the private concessionaires taking over the airport operations has been estimated at INR 8,622 crore.
To reduce concentration risks, the government plans to cap the number of airport bundles that can be awarded to a single bidder. The measure is intended to limit risks related to market concentration and excessive leveraging, which could have an impact across multiple projects.
The civil aviation ministry has also proposed a one-year joint management period after the airports are awarded to private players. During this period, existing Airports Authority of India (AAI) employees would work alongside the new concessionaire.
The concessionaire would subsequently be required to retain 60% of AAI employees for up to three years. The government said the previous round of airport transactions included a one-year joint management period and a two-year deemed deputation period, an arrangement that had been acceptable to AAI employees.
The 11 airports were selected through a phased and data-based assessment by AAI. Initially, 12 major airports were evaluated using factors such as passenger traffic, land availability, commercial potential, financial performance and airport-specific strengths and constraints. Six of these were recommended for leasing.
AAI then assessed 136 smaller airports for possible bundling with the major airports. The evaluation considered traffic potential, capital expenditure requirements, geographical proximity, city-side development potential and financial viability.
After evaluating different combinations of major and smaller airports, the AAI Board approved the proposal to bundle five major airports with six smaller airports. The approval was given at a board meeting in 2022.
The latest proposal follows the government’s earlier airport privatisation programme, under which six AAI airports were awarded under the PPP model in 2018-19.
Source PTI
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