Centre Clears Plan to Lease 11 AAI Airports Under Five Bundled Contracts
The Center has given in-principle clearance for leasing 11 AAI airports through five bundled public-private partnership concessions. The proposed 50-year leases will include airport operations, administration and development.
Eleven airports owned by the Airports Authority of India (AAI) will be leased out through five combined concessions, a decision that came after lengthy discussions between various government ministries. Consequently, the airports' leasing has been approved in principle by the Public Private Partnership Appraisal Committee (PPPAC).
This is a major milestone in the Centre's strategy to involve the private sector in these airports' management, operations, and development. Amritsar-Kangra, Varanasi-Gaya-Kushinagar, Bhubaneswar-Hubballi, Raipur-Aurangabad, and Tiruchirappalli-Tirupati are the five airport bundles that have been planned.
How Private Firms and AAI will Work Jointly?
At its 149th meeting on August 4, the PPPAC reviewed the proposals and gave its in-principle approval to the five packages. Furthermore, the Center had already been investigating the possibility of merging bigger and smaller airports, so this change is not surprising. Smaller facilities will be able to weather the storm with the help of larger airports' cross-subsidization efforts. The airports' operations, administration, and growth would all be encompassed in the concessions that are being considered.
In addition, the paperwork indicated that a concession term of fifty years would be in place. It is worth mentioning that AAI would be the entity in charge of sponsoring and carrying out the planned transactions. The MoCA will conduct a market-sounding exercise with infrastructure players to gauge investor interest in the proposed transaction structure following the in-principle clearance. The initial effort at the bundling model will take into account comments from possible private sector players before the plan is revised and sent to PPPAC for a final decision.
Smaller facilities can increase their viability by bundling with larger airports under the suggested approach, which also seeks to involve the private sector in airport development and operation. In addition, the idea has been in the works for a few months within the union government.
Private Players will Redefine Airport Experience
This change would perhaps facilitate the long-term sustainability of smaller airports by attracting private sector funding and operational knowledge to airport development. This plan was the result of prior government talks regarding the potential PPP leasing of over ten airports owned by AAI. Following the most recent PPPAC decision, the proposal will move on from the consultation stage to the engagement of possible investors, after which the committee will receive MoCA's final recommendation.
In 2019, Adani Enterprises was granted Ahmedabad, Lucknow, and Mangaluru airports under 50-year PPP concessions, marking the most recent round of AAI airport lease-outs. Also, by October 2021, all six airports—Jaipur, Guwahati, and Thiruvananthapuram—which were part of the original six-airport package, had been awarded to private concessionaires.
