Government plans to award 11 airports in 5 bundles to private players under public-private-partnership model

New Delhi: The government plans to award eleven airports, including those at Varanasi and Tirupati, to private players in five bundles under the public-private-partnership model.

The civil aviation ministry has proposed the engagement of private partners for 11 airports, grouped into five bundles, with each bundle to be awarded to a single concessionaire, according to an official document.

Five major airports are to be bundled with six smaller airports.


Also read: IndiGo co-founder Rakesh Gangwal pledges Rs 300 crore more to IIT Kanpur

The Public Private Partnership Appraisal Committee (PPPAC), at its meeting held on August 4, gave in-principle nod for the civil aviation ministry's proposal.

Under the proposal, Amritsar and Kangra-Gaggal airports will be one bundle while Varanasi, Gaya and Kushinagar will be another. Airports at Bhubaneswar and Hubballi will be in one group, and Raipur and Aurangabad airports will be in another bundle.

Also, Tiruchirappalli and Tirupati airports will be in a separate bundle, according to the minutes of the PPPAC August 4 meeting.

The PPPAC, chaired by Economic Affairs Secretary Anuradha Thakur, apprises Public Private Partnership (PPP) projects in the central sector.

These airports are to be leased out under the PPP model for a concession period of 50 years.

Also read: IndiGo to launch twice-weekly direct flights between Gaya and Bangkok from October 26

As per the document, the number of airport bundles that may be awarded to a single bidder would be capped to mitigate the risks arising from market concentration and potential over-leveraging, including their possible cascading impact across projects.

The total investment to be made by the concessionaires that take over the operations of these airports is estimated at Rs 8,622 crore.

The ministry has proposed providing a one-year joint management period involving existing employees of Airports Authority of India once the airports concerned are bid out to the private players.

"Further, the concessionaire would be required to retain 60 per cent AAI employees up to 3 years. The previous round of transaction provided for 1-year joint management period and 2-year deemed deputation period.

"Historical evidence suggests that such arrangement with the concessionaire has been acceptable to AAl employees," the document said.

The 11 airports for the current round have been selected by a phased and data-driven approach by AAI, as per the minutes of the meeting.

"Initially, 12 major airports were assessed based on passenger traffic, land availability and commercial potential, financial performance, and airport-specific strengths and constraints, of which 6 were recommended for leasing.

"Subsequently, 136 smaller airports were evaluated for possible bundling with the major airports, based on parameters including traffic potential, capital expenditure requirements, geographical proximity, city-side development potential and financial viability," it said.

After filtering, scoring and assessment of alternative major-small airport combinations, AAI Board approved the proposal comprising 5 major airports bundled with 6 smaller airports. The approval was given during the board's meeting held on May 23, 2022.

In 2018-19, the government had awarded six AAI airports under the PPP model.