India's plan to privatise six airports through the PPP (public-private partnership) route follows the success of such an arrangement for the nation's premier Delhi and Mumbai airports.
The Airports Authority of India (AAI) has announced that it has chosen the airports of Lucknow, Ahmedabad, Jaipur, Mangaluru, Thiruvananthapuram and Guwahati for privatisation.
The recent setback to a move to part-privatise Ahmedabad and Jaipur airports through operation and maintenance contracts also hastened the latest government decision.
The decision comes more than a decade after AAI handed over Delhi and Mumbai airports to private players. Under these arrangements, GMR, the Delhi airport operator, shares 46 percent of annual revenue with the AAI. In Mumbai, GVK shares 39 percent of the revenue. The AAI has so far earned an estimated Rs100 billion from these two airports so far.
Minister of Law and Justice Ravi Shankar Prasad said Thursday that the quality of service in Delhi and Mumbai airports improved vastly after privatisation. "Tourist flows also increased. So we have decided to develop six more airports under this model."
A group of secretaries in the Ministry of Civil Aviation and the departments of economic affairs and expenditure, helmed by NITI Aayog Chief Executive Officer Amitabh Kant, will lay down the policy guidelines.
Sources say the plan is to bid out the airports initially for 30 years with a controlling stake for the successful contractor.
The AAI will have a minority stake as it has done with Delhi and Mumbai airports. The private player will enjoy a 75 percent stake., according to government sources.
The AAI will lay out the terms of the revenue sharing model based on a concession fee, as in the case of Delhi and Mumbai airports.
Experts expect the bids to get a robust response from global players because of the excellent outlook for aviation in India. The government estimates that the development of the six airports will require another Rs2 trillion over the next 10 years.
Under the operation and maintenance model that the government pursued earlier, it only offered some activities such as maintenance of the terminal and parking areas at Jaipur and Ahmedabad airports to private developers.