Monday, January 21, 2019

Airport modernisation: New model raises hopes of a take-off

Having failed repeatedly to partially privatise the Ahmedabad and Jaipur airports, with sweetening of conditions proving inadequate for investment, the Union government has changed tack and opted for the public private partnership (PPP) model to redevelop the Ahmedabad, Jaipur and four other airports.

More than 12 years after the Delhi and Mumbai airports were privatised, the facilities at Lucknow, Jaipur, Ahmedabad, Mangaluru, Trivandrum and Guwahati would be going under the hammer in the coming weeks, a move that has been welcomed by experts. “We should see good participation from both domestic and international players,” says Jagannarayan Padmanabhan, director and practice lead at CRISIL Infrastructure Advisory.

Under the new framework the ministry of civil aviation has devised, a longer concession period of 50 years is being offered to prospective developers for greater certainty of returns, besides the elimination of the contentious revenue-sharing bidding criterion. In a departure from the first round of airport privatisation, the bids would be assessed on the basis of the highest monthly per-passenger fee offered to the Airports Authority of India (AAI).
Airport operators have often complained of the high fund outgo under the revenue-sharing model as it is based on gross revenue instead of profits, with the revenues to be shared in case of losses as well. It also limits the operators’ capacity to invest in expansion work. On the other hand, the passenger fee would be decided at the time the contract is awarded, continuing over a five-year period.
21/01/19 Arun Nayal/Financial Express

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