- PPPAC has given in-principle approval to the Ministry of Civil Aviation's proposal for the privatisation of 11 airports across five bundles, with an expected investment of ₹8,622 crore.
- The proposal will now move towards securing the PPPAC's final approval, after which it will be presented to the Cabinet Committee on Economic Affairs (CCEA) for consideration.
- The 11 airports include Amritsar, Kangra, Varanasi, Gaya, Kushinagar, Bhubaneswar, Hubballi, Raipur, Aurangabad, Tiruchirappalli, and Tirupati.
- The AAI Board approved the proposal on May 23, 2022, which includes 5 major airports bundled with 6 smaller airports.
- The airports will be leased out under the PPP model for a concession period of 50 years.
- The bidding parameter will be the per-passenger fee charged for domestic passengers handled at the respective airports.
The Public Private Partnership Appraisal Committee (PPPAC) has granted in-principle approval for the privatization of 11 Airports Authority of India (AAI) airports in five bundles, with an anticipated investment of ₹8,622 crore by private operators.135
The airports include Amritsar, Kangra, Varanasi, Gaya, Kushinagar, Bhubaneswar, Hubballi, Raipur, Aurangabad, Tiruchirappalli, and Tirupati. This initiative aims to enhance operational efficiency and financial viability in the aviation sector.
The proposal will now proceed to secure final approval from the PPPAC before being presented to the Cabinet Committee on Economic Affairs (CCEA) for consideration. The airports will be leased under 50-year concession agreements, with the bidding parameter based on the per-passenger fee for domestic travelers.26
To mitigate risks of market concentration, the Ministry of Civil Aviation has proposed capping the number of airport bundles awarded to a single bidder. This decision follows concerns over oligopolistic concentration in the sector, particularly after the Adani Group's previous acquisition of all six airports in the last round of privatization.
The investment breakdown shows that the Bhubaneswar-Hubballi bundle requires the highest investment at ₹2,725 crore, while the Varanasi-Gaya-Kushinagar bundle follows at ₹2,467 crore. The projected equity returns for these bundles are promising, with the Varanasi-Gaya-Kushinagar bundle estimated to yield an equity internal rate of return (EIRR) of 18.6%.
The proposed structure also includes provisions for retaining 60% of AAI employees for up to three years, ensuring a smooth transition to private management.
“The five bundles include Amritsar-Kangra, Varanasi-Gaya-Kushinagar, Bhubaneswar-Hubballi, Raipur-Aurangabad, and Tiruchirappalli-Tirupati, with the Bhubaneswar-Hubballi bundle requiring the highest investment at ₹2,725 crore. The ministry has proposed capping the number of bundles a single bidder can win, following the Adani Group's sweep of all six airports in the previous round.”
