After spending thousands of crore for modernisation and development of airports in the country, the Government is now willing to allow private parties to pick up 100 per cent equity stake at six other airports developed by Airports Authority of India (AAI), including Chennai and Kolkata
The Civil Aviation Ministry would issue Requests For Qualification (RFQ) document in a few days for Chennai and lucknow airports. The RFQ for four more airports at Jodhpur, Guwahati, Ahmedabad and Kolkata would be issued in the next few weeks, top Ministry officials said.
These airports are likely to be leased out on concession basis to private consortia for 30 years, while the AAI, which has spent thousands of crore on developing them, would get a revenue share that would be discussed with the selected private parties during the bidding process, they said.
According to the present policy, 100 per cent foreign and private investment is allowed for greenfield airports but not for the brownfield ones.
Maintaining that the AAI might not have any equity participation in the private airport companies, they said the AAI would get a revenue share from these firms and continue to be the actual owners of these airports.
The revenue share could be higher than 46 per cent the AAI is getting out of Delhi and Mumbai, where it owns 26 per cent stake. This is because the modernisation costs already put in by the state-run airports body would also be included in it, they said.
The AAI would also have a ‘golden share’ which would enable it to have members on the Board of the private airport firms, the officials said.
The private bidders for the six airports would not need to have any previous experience in airport development or management and could hire professional bodies to run the show, they said giving examples of GMR and GVK hiring Fraport and Zurich Airport companies for the job.Once finalised, RFQ document would be issued by the Key Infrastructure Development (KID) Cell of AAI. After RFQ, which is a response-seeking process to identify the participants for the bidding, Requests for Proposal (RFP) document would be issued giving out the details of the privatisation process.
Asked why the AAI would not have any equity stake even after spending thousands of crores for modernisation and upgrade of these six airports, the officials said it has no say in operation and management even at the existing private airports, so why should it invest in equity.
AAI has 26 per cent share in private airports of Delhi and Mumbai and 13 per cent in Hyderabad and Bangalore. AAI modernised Kolkata and Chennai airports at a cost of Rs2,325 crore and Rs2,015 crore respectively and upgraded the infrastructure at remaining four airports at a sizeable cost.
The privatisation bid has come under severe criticism from airlines, apart from the global airlines’ body IATA.
Indian airlines have said their financial bottomlines had been adversely affected due to major hikes in landing, parking and navigation charges at Mumbai and Delhi airports.
“When you privatise something, it is not necessarily forever. It is a breathing spell... To give time to catch your breath,” Gittens had said.
Earlier this month, the International Air Transport Association (IATA) sent a letter to Civil Aviation Secretary KN Shrivastava saying privatisation of airports “will only serve to fuel a further round of increases in the airport cost environment, adding to costs for passengers and the airlines”.
In the letter, IATA’s Regional Vice President (Asia Pacific) Maunu von lueders said the airlines were “justifiably concerned with any unnecessary private shareholding that may increase the focus on profit-maximising and as a result increase cost to the users.”
“The need for private sector funding is not obvious since the airport upgrading has already taken place with full funding provided through AAI,” he said.
If external management expertise was required for managing these airports, it could be achieved without transferring ownership to the private sector. “A better way” could be through awarding management contracts to an entity with expertise in this domain, leuders said.