Three airports leased out through PPP

India’s Union Cabinet has approved a plan to lease out the airports located at Ahmedabad, Lucknow and Mangaluru through Public Private Partnership (PPP) to Adani Enterprises Ltd

July 3, 2019

The PPP contracts are vetted by an appraisal committee and supports the UDAN connectivity scheme

The contract covers airport operation, management and development for a lease period of 50 years

Presently, airports managed under PPP include Delhi, Mumbai, Bengaluru, Hyderabad and Cochin

Government had offered six airports, Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram and Mangaluru

India’s Union Cabinet has approved a plan to lease out airports at Ahmedabad, Lucknow, and Mangaluru through a Public-Private Partnership (PPP) to Adani Enterprises Ltd, an Indian conglomerate. The contract follows an official bidding process. The international airports, currently run by the Airports Authority of India (AAI), are among India’s busiest with fast-growing traffic. The contract covers airport operation, management, and development under PPP for a lease period of 50 years. The PPP contracts are vetted by an appraisal committee and support the UDAN connectivity scheme.

In November 2018, Government of India had approved leasing out of six AAI-run airports – Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram, and Mangaluru. PPP in the airport has brought world-class infrastructure at airports, delivery of efficient and timely services to passengers while boosting 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 the top 5 in their respective categories by the Airports Council International (ACI) in terms of Airport Service Quality (ASQ). While PPP projects have helped set up 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 strong traffic growth at the five airports that were privatized over a decade ago has caught investor attention.

Operators and investors from around the prefer brownfield airport expansion projects, mainly the ones having more than 3-4 million passenger capacity. Driven by the steady rise in air traffic, the airport sector has provided strong opportunities to attract private and foreign investment. India’s domestic traffic grew by 18.3 per cent to reach 243 million in 2018, and is expected to reach 293.3 million by 2020. Meanwhile, international traffic grew by 10.4 per cent to reach 65.5 million in 2018, and is expected to reach 76 million by 2020.

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