Saturday , October 16 2021

6 airports receive the Center's call for privatization; AAI to keep small rates

On Thursday, the government decided to privatize six airports. Those selected for action, management and development through the public-private partnership (PPP) model are Lucknow, Ahmedabad, Jaipur, Mangaluru, Thiruvananthapuram and Guwahati.

This is 12 years after the Delhi and Bombay airports were privatized in 2006. The decision was made at the meeting of the Council of the European Union. "After the modernization of Delhi and Mumbai airports in the PPP model, we have seen a significant improvement in the quality of airports, and the flow of tourists has increased, so we decided to build another six airports under this model," said Minister of Law and Justice Ravi Shankar Prasad. A group of secretaries from the Ministry of Civil Aviation and the departments of economic affairs and expenses, headed by NITI Aayog Chief Executive Officer (CEO) Amitabh Kant, will decide on the sales outlines. Sources in the government have said that airports will be auctioning for 30 years and a selected private player will receive a controlling stake. "The authorities of the India airport (AAI) will have a smaller share, as is the case at Delhi and Mumbai airports. The private player will have at least 75% of shares," said the official who is aware of development. The auction will take place in the income distribution model, in which bidders are obliged to pay a specified share in gross revenues to AAI. This is the so-called concession fee. The winner is the bidder who will pay the highest fee. The same model was used during the privatization of airports in Delhi and Mumbai.

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According to the agreement, the GMR Airport operator GMR must share 45.99 percent of its revenues from AAI every year.

GVK, which serves the Mumbai airport, has 38.7% of revenue. AAI profits depend to a large extent on the income received from these two airports. He deserved about 100 billion dollars from GMR and GVK. Industry experts believe that selected airports for privatization will also receive attractive offers. "The offer is likely to attract a good response from global operators, as all six airports are growing fast with solid catchment areas and low uncertainty. The concession fee is likely to be higher than the limited profits made by AAI currently due to many administrative constraints. to the development of airports inside, "said Amber Dubey, head of the air and defense department at KPMG.

6 airports receive the Center's call for privatization; AAI to keep small rates

To cope with the haste in the Indian sky, the government announced plans to launch a huge project for the construction and modernization of airports. This would mean a total expenditure of around 2 trillion over the next 10 years, preparing it to serve 1 billion air travels per year. The government expects the lion's share of investments to come from private players. The decision to change the privatization model took place after AAI's plans to transfer only the operations and maintenance (O & M) of the air terminals in Ahmedabad and Jaipur ended in impasse. Industry sources claimed that private players stayed away because they said that the O & M terminal at airports is unattractive. Under this model, only private operations such as terminal maintenance and parking at the airports in Jaipur and Ahmedabad have been transferred to private developers. The management of the major airport developers welcomed the Thursday decision, but warned that the investment appetite would depend on the terms of sale. "If the conditions of sale are simple and attractive, bidders will have a lot of interest, we will analyze the details and make a decision," said R K Jain, general director of the Mumbai international airport.

Six airports are

  • Lucknow
  • Ahmedabad
  • Jaipur
  • Mangaluru
  • Thiruvananthapuram
  • Guwahati

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