AAI-managed 15 profit-making airports likely to be privatised

In the very first privatisation initiative taken by the National Democratic Alliance (NDA), almost 15 profitable airports, including the facilities at Ahmedabad and Chennai could be put under private management, as part of the broader government move for enhancing India’s aviation infrastructure.

One of the senior government official said, “The Airport Authority of India (AAI) has, by the end of last fiscal, about 15 profit-making airports and these would be the first to be put on the block.” Previously, the United Progressive Alliance (UPA) had privatised facilities at the two biggest national aviation hubs which are New Delhi and Mumbai. Besides the two southern airports in Hyderabad and Bangalore.

Among all the profitable airports which are still under the management of the AAI, New Delhi’s landlord for aviation facilities, are Lucknow, Kolkata, Jaipur, Chennai and Ahmedabad. Earlier government had planned to award only management contracts at AAI-owned airports to private parties. However, attempts to award contracts for Jaipur and Ahmedabad airports did not receive encouraging bidding interest.

In what would virtually be the second wave of airports privatisation in India, one of the world’s fastest-expanding aviation markets, think-tanks are working toward building a model mechanism that would shift management and operating ownership of the auctioned facilities away from the AAI.

One another government official said, “The Prime Minister’s Office has directed the Department of Economic Affairs and Niti Aayog to prepare a model mechanism for taking certain airports out of AAI control and handing them over to private players.”

South Block has also asked the aviation ministry for implementing the plan, with assistance from DEA and NITI Aayog. It has asked to prepare a model concession agreement for greenfield airports and for the redevelopment of brownfield facilities.

The new model concession agreement would take into account all eventualities, including real-estate development on airport land,” said the official cited above.

Analysts welcomed the move, saying that the latest wave of privatisation would drastically improve airport infrastructure in the country.

Managing director and chief executive at infrastructure advisory firm Nestor Consulting, Sanjay Sethi said, “This, by far, is the best solution to improve airport infrastructure. If the government does come out with a proper model agreement, I am sure it will receive immense response from many Indian players that have a lot of appetite left.”

Sethi, added that global players may not be too keen on some of the properties since the airports on offer would include those in relatively smaller cities.