AAI reduces scope of private participation

New Delhi: Private airport developers planning to participate in the development of the country’s 35 non-metro airports, being modernized by the state-run Airports Authority of India, or AAI, will not be given control of the airport’s terminal buildings, reducing the scope of their business.
The civil aviation ministry’s decision could hurt expected private and public investment of some $800 million (Rs3,904 crore) in such airports across the country. More immediately, it would require fresh bids to be sought for the Udaipur and Amritsar airports based on new parameters.
AAI had sought private participation for these two non-metro airports in late 2007 and announced five bidders each in April 2008 from among the nearly two dozen firms that had shown interest in the projects that promised prime land parcels for development.
That plan ran into trouble with AAI objecting to the ministry’s view that control of airport terminal buildings be given to the selected private operators to maximize “commercial exploitation”. In addition, opposition from the Left parties, allies of the Congress-led coalition government at the Centre until early July, caused the selection of a private operator for the Udaipur and Amritsar airports coming to a halt, according to a ministry official who asked not to be named.
Nearly $400 million of private investment was expected in the 35 non-metro airports with AAI spending an equal amount to modernize them. The authority planned to attract private partners at 24 airports first.
According to the new proposal approved by civil aviation minister Praful Patel, clarified in a letter that Mint reviewed, development at such airports now will be limited to “commercial development of property on city side, car park, cargo operations” and excludes control of the terminal buildings at any of the 35 non-metro airports.
18/01/09 Tarun Shukla/Livemint

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Categories: Airports Jan 2009