Privatization of Airports

Privatization of Indian Airports: A Significant Development in Aviation Sector

A big change is taking place in India’s aviation sector. The Centre is moving towards airport privatization. Is this a successful move? Will this lead to India having, in terms of infrastructure, world-class airports? Or will it create a burden on passengers? Let’s discuss all the aspects related to this development in this article.

Privatization aims to make airports more effective and to boost the exchequer’s revenues as well. The pandemic has disrupted air travel and has hit the trust of travelers.

Privatization of airports means that the lease of these airports for a fixed period of time has been given to private companies. Govt of India has now approved the privatization of three more airports in India. Right now this makes for a total of 9 private airports in India.

In this phase, private enterprises will not only maintain and operate the airports but will also carry out and optimize the operations. The security of these airports will remain with the armed forces of Govt. 

Privatization’s key goals are: 

  • Competitiveness and operational performance changes 
  • Implementation of new management models and marketing skills that are efficient and profitable 
  • Reducing the financial role of the government and public investment in the industry
  • Grant of access to private investment

Along with the Airports Authority of India (AAI), a specific public-private partnership (PPP) based model has been approved and is now in operation at 6 airports.

As India seeks to accelerate efforts to boost infrastructure development, it plans to privatize more airports. This is a unique development in the aviation sector of India.

The government stated that the PPP model helped to establish world-class airports and to provide passengers with reliable and quality services as well. In addition, revenue and work on the construction of airports and air transport infrastructure in India have also helped increase. AAI’s revenue from the PPP operating model has also helped to build infrastructure facilities in Tier 2 and Tier 3 cities and to upgrade airports to international standards there.

30 to 35 AAI-owned airports will be privatized as PPPs by 2025. Six airports, namely, Lucknow, Ahmedabad, Jaipur, Mangalore, Thiruvananthapuram, and Guwahati, have been privatized so far.

As previously noted, the six airports privatized under the PPP to date are Ahmedabad, Thiruvananthapuram, Lucknow, Guwahati, Mangalore, and Jaipur. Two of these airports are in the south (Kerala and Karnataka), one in the north (Lucknow-Uttar Pradesh), one in the northeast (Guwahati-Assam), and two in the west (Ahmedabad-Gujarat and Jaipur-Rajasthan). Mangalore and Thiruvananthapuram are in the south.

Background of The Development

After the privatization of Delhi and Mumbai airports by the private companies GMR and GVK, respectively, this was the second major privatization process for airports. 

The Adani Group is responsible for the management and maintenance of the current airport properties under the lease terms of the PPP pact. The design, engineering, finance, construction, and growth aspects of the additional air-side, terminal, city-side, and land-side facilities for the airports will also be taken care of.

The AAI implemented the per-passenger fee model as per a survey, which is a modification of the revenue-sharing model used earlier in the privatization of the airports of Delhi, Mumbai, Bangalore, and Hyderabad. 

Key Takeaway

This is a significant development in the aviation field of India. We will have to see and understand what it takes to fly in and out of a privatized airport with travel restrictions because of the pandemic.