India to lease out six airports through PPP

The airports ro be leased out are currently run by the Airports Authority of India and are located at Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram and Mangaluru

November 8, 2018

The PPP deals will be vetted by an Appraisal Committee, with support from NITI Aayog, Ministry of Civil Aviation and Departments of Economic Affairs and Expenditure

PPP in airport projects has brought world-class infrastructure, delivery of efficient services to passengers, while augmenting revenue for AAI without making any investment

Presently, the airports being managed under PPP model in India include those located at Delhi, Mumbai, Bengaluru, Hyderabad and Cochin and have been very successful

Increase in air travel in India combined with congestion at most airports, and strong traffic growth at the five airports that were privatized has attracted strong investor interest

India’s Union Cabinet, chaired by Prime Minister Shri Narendra Modi, on November 8 approved the leasing out of six airports across the country that are currently run by the Airports Authority of India (AAI). The airports are located at Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram and Mangaluru. The approval covers airport operation, management and development under public private partnership (PPP). The PPP deals will be vetted by an Appraisal Committee, with support from NITI Aayog, Ministry of Civil Aviation and Departments of Economic Affairs and Expenditure.

PPP in airport projects has brought world-class infrastructure at airports, delivery of efficient and timely services to passengers, while augmenting revenue stream to AAI without making any investment. Development of Greenfield Airports at Hyderabad and Bengaluru have been successful examples of this structure. Presently, the airports being managed under PPP model include Delhi, Mumbai, Bengaluru, Hyderabad and Cochin. The PPP airports have been ranked among top 5 in their respective categories by the Airports Council International (ACI) in terms of Airport Service Quality (ASQ).

While PPP projects have helped create world class airports, it has also helped AAI in enhancing its revenues and focusing on developing airports and air navigation infrastructure in the rest of the country. The increase in domestic and international air travel in India combined with congestion at most airports, and the strong traffic growth at the five airports that were privatized over a decade ago has attracted the attention of several international operators and investors. The airport sector has thus become the top contender among infrastructure sectors in terms of international interest.

International operators and investors have preferred brownfield airport expansion opportunities with having more than 3-4 million passenger capacity. The airport sector may provide an immediate opportunity to attract foreign direct investment (FDI) by adoption of a PPP approach.