New Delhi [India], August 24 (ANI): The Public Private Partnership Appraisal Committee (PPPAC) has granted in-principle approval for the privatisation of operations, management and development of 11 airports, proposed to be offered to private players in five airport bundles, according to official sources.
The decision was taken at the meeting of the PPPAC held this month, where the Ministry of Civil Aviation presented five project proposals involving 11 airports.
Under the proposed model, the airports will be bundled in pairs or groups, with each bundle to be awarded to a single concessionaire for a 50 year concession period. According to sources, the government has proposed the bundling model with the objective of improving the financial viability of smaller airports by leveraging revenues and operational synergies from larger airports.
As per the proposal, the private concessionaire will be responsible for the operation, management and development of passenger terminals and city-side infrastructure at the airports. The Airports Authority of India will continue to handle Air Traffic Control and Communication, Navigation and Surveillance (CNS) services. AAI's wholly owned subsidiary, AAI Cargo Logistics and Allied Services Company Limited (AAICLAS) will continue to undertake cargo operations.
The concessionaire will also be responsible for the sanctioned capital expenditure identified by AAI within three years from the Commercial Operations Date, besides capacity augmentation expenditure in subsequent phases subject to traffic or capacity-based triggers.
The PPPAC also raised concerns over the oligopolistic nature of India's aviation sector, particularly the risks of market concentration and overleveraging.
According to sources, MoCA said the number of airport bundles that can be awarded to a single bidder will be capped.
The modalities of this cap are currently being finalised and will be incorporated into the proposal submitted for the PPPAC's final recommendation. The government also plans to allow bidders with relevant cross-sectoral infrastructure experience rather than restricting technical eligibility only to companies with aviation sector experience.
PPPAC's approval is currently only "in principle". As per official sources, MoCA will now undertake a market sounding exercise with infrastructure players to assess the response to the proposed airport bundling model. The ministry has said feedback from private players will be reviewed by AAI and necessary modifications will be made before the proposal is brought back to the PPPAC for its final recommendation. The bundling model is being attempted for the first time in the aviation sector with the government seeking to use the revenues and commercial potential of larger airports to improve the long-term financial sustainability of smaller airports. (ANI)
PPPAC gives in-principle nod to private operation of 11 airports across five bundles
