Recently the Air India Privatization process made the headlines for many days and now the government is gearing to complete the privatization process for 13 airports currently run by the state-owned Airports Authority of India (AAI) by the end of this financial year.
As a part of the National Monetisation Plan (NMP), the government plans to award 25 airports in the next four years, including the above 13 – six major ones and seven smaller – Varanasi with Kushinagar and Gaya; Amritsar with Kangra; Bhubaneswar with Tirupati; Raipur with Aurangabad; Indore with Jabalpur; and Trichy with Hubli to private operators.
This includes the six – Ahmedabad, Jaipur, Lucknow, Thiruvananthapuram, Mangaluru, and Guwahati – awarded to the Adani Group in 2019 which was at the beginning of the second phase and comes after the airports of Delhi, Mumbai, Bengaluru and Hyderabad were handed over to other private operators in 2006 in Public-Private-Partnership (PPP).
In an interview with ET, AAI chairman Sanjeev Kumar says “We have sent a list of 13 airports to the aviation ministry that is to be bid out on PPP. The plan is to complete the bidding of these airports by the end of this fiscal.”
He further adds, that the model for bidding would be based on the per-passenger revenue model as it has been used earlier and is successful and the Jewar airport (in Greater Noida) was also bid out on the same model. The government’s ambitious National Monetisation Pipeline (NMP) sets the target of bringing in private investment of Rs 3,660 crore in airports by 2024.
AAI’s earnings dropped considerably due to the Covid-19 pandemic with a recorded loss of Rs 1,962 crore in FY21 and were forced to borrow Rs 1,500 crore from the State Bank of India to meet its working capital requirements that included salaries.
However, with the improvement in the situation and passenger traffic picking up, AAI will not have to borrow for working capital needs this year. Kumar said, “Our capital expenditure will continue as planned. To meet the capital expenditure requirements for this fiscal, we have borrowed Rs 1,000 crore. Further, based on the future fund’s requirement, a decision on additional borrowing will be undertaken.”
It is being estimated that there would be strong interest from investors to grab these projects despite pandemic effects on businesses which are rather short-term compared to the airports that are on offer for the next 50 years. Many experts are also of the view that the Centre’s move to cede control and privatize airports guarantees AAI a significant source of income that is irrespective of how the privatized airports perform financially.