Thursday, May 06, 2021

Airports Authority of India: Exiting the terminal

The monetisation of operating public infrastructure assets to the tune of ₹2.5 lakh crore by the Narendra Modi-led government will see the Airports Authority of India (AAI) sell its stakes in the country’s top metro airports of Delhi, Mumbai, Bengaluru, and Hyderabad. Collectively, they handle more than half of the country’s overall air passenger traffic. This comes after the AAI took to a public-private model in building new airports and ramping up existing airport capacities, beginning in 2006 with the brownfield expansion of Mumbai and Delhi airports.

An aviation executive, who did not wish to be named, said the decision could have stemmed from the question “How does it benefit AAI to remain invested?” What really benefits the country’s nodal airport operator is the revenue share aspect that is encapsulated in the concession agreements with private airport operators. For example, the share of revenue (gross) to AAI is 46% in case of the Delhi airport and 39% in the case of Mumbai airport. Together, they contribute a bulk of AAI’s revenue (25% in FY18), which makes it one of the few profitable public sector enterprises.

“These two airports have generated ₹29,000 crore till December 31, 2020. Even after the stake sale, @AAI_Official [AAI] will continue to receive this share which will be used to develop aviation infrastructure,” tweeted Hardeep Singh Puri, minister of civil aviation, on March 15. “Those who are raising concerns should also know that @DelhiAirport and @CSMIA_Official [Mumbai airport] are on a 60-year lease; these and the six other airports [that were privatised last year] will be back with AAI after the lease period. So, nothing as they claim, is being ‘Sold Out!’,” the minister tweeted in response to a tweet by Congress leader Rahul Gandhi.

Privatisation, tweeted the minister, is a means of raising resources to fulfil the aspirations of citizens without imposing new taxes. However, not many in the aviation industry see it from the lens of Puri.

Besides AAI’s stake sales, the identification of 13 more airports for privatisation is afoot. Last year, in the first round of airport privatisation, the Adani Group, led by billionaire Gautam Adani, bagged the contracts for the airports in Lucknow, Ahmedabad, Jaipur, Mangaluru, Thiruvananthapuram, and Guwahati. The Adani Group also went on to acquire controlling interest in Mumbai International Airport Limited (MIAL), the entity which owns and operates the Chhatrapati Shivaji International Airport, in Mumbai. MIAL also holds 74% equity stake in Navi Mumbai International Airport Limited, which is building a greenfield airport in Navi Mumbai.

06/05/21 Anshul Dhamija/Fortune

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