Tuesday, December 04, 2018

Next round of airport privatisation to be easier than Delhi, Mumbai

The government does not want the next round of airport privatisation to go the Air India way. With that in mind, a high-level government committee has set conditions that are easier to comply with, a source close to the development said. For instance, even a bidder with no prior experience in airport development will be allowed to participate in the privatisation process. While net worth of the companies will be among the key criteria, bidders will be asked to absorb employees of the airports for at least five years.
Soon after the Union Cabinet cleared private management of six more airports on November 8, a high-level committee headed by NITI Aayog Chief Executive Officer Amitabh Kant finalised the guidelines and conditions for the privatisation process.
“Airport Authority of India will do a single stage bidding process which will only evaluate eligibility criteria based on financial capability,’’ another source said.
The airports chosen for operation, management and development through a public-private partnership (PPP) model are those in Lucknow, Ahmedabad, Jaipur, Mangaluru, Thiruvananthapuram, and Guwahati.
This is the second wave of airport privatisation in India — 12 years after Delhi and Mumbai airports were privatised in 2006. For Delhi and Mumbai, airport operation experience, either standalone or in a consortium, was a mandatory condition for bidders. In the new round, airports would be bid out for a period of 50 years with freedom on land usage of airports for non-aeronautical purposes.

“In the earlier process, airport developers had sought liberal guidelines for land usage. Hence private owners of the airports will be allowed to use land parcels for non-aeronautical usage like building shopping malls, or developing aerotropolis,” one of the sources said.
For Delhi and Mumbai airport privatisation, 230 and 190 acres of land were allowed to be developed for commercial purpose.

For the six airports chosen for privatisation, the government will not allow airlines to hold a majority stake in the airports as a proposal to permit cross ownership of airlines and airports was ruled out. This would make a company such as Tata Realty ineligible for any controlling interest in airports as it holds stake in Air Asia India and Vistara.
04/12/18 Arindam Majumder/Business Standard