Six more airports on the fast track to being privatized

New Delhi: Driven by the pressure created by the upcoming general elections, UPA-II has finally decided to fast-track the privatization of Ahmedabad, Chennai, Lucknow, Kolkata, Guwahati and Jodhpur Airport Authority of India (AAI) airports. These airports would be functioning and operating under public private partnership (PPP) model.

The Ministry of Aviation would begin issuing request for qualification (RFQ) for a concession period of thirty years to private bidders to “operate, maintain and develop” these airports on a revenue-share model with AAI.

However, discordant with the PPP airports operational within Bangalore, Delhi, Mumbai and Hyderabad, AAI would not be making any investments within the companies of the private bidders as the ministry has decided to permit the private players to possess 100 per cent stake.

Presently, the AAI owns a 26 per cent stake within Mumbai and Delhi while it holds 13 per cent within Bangalore and Hyderabad airports. The Chennai and Kolkata airports were recently modernized by the AAI at a cost of Rs 2,015 crore and Rs 2,325 crore, respectively.

Furthermore, taking leave from the existing practice at the four metros, aviation authorities might set the aeronautical tariff structure for the entire thirty years along with inbuilt clauses pertaining to escalation or when the costs increase to give the bidders a precise idea of revenue generation. Also, bidders might be required to retain the entire staff of these six airports after privatization as AAI is unlikely to absorb them.

Apart from political parties and unions, the International Air Transport Association (IATA) too had opposed the further privatization of airports within India after witnessing the price hikes of private metro airports. For instance, Delhi is now being rated amongst the most expensive airports of the world.

However, as per senior AAI officials, the aviation authority would continue to have a say within the respective private companies that would manage and operate the six airports. The airports would be privatized under the concept of golden share. Under this, the respective state utility formed by the government would not pay anything, yet have a say equal to a 26 per cent shareholder. Additionally, all the meetings of the newly formed company regarding the operation and functioning of their assets would be attended by the state utility which would have the power to intervene when ever deemed necessary.