The central government plans to privatise 11 airports by grouping them into five bundles under a public private partnership (PPP) model aimed at using revenues from larger airports to cross subsidise smaller ones and improve long-term sustainability. The plan is intended to attract private investment for infrastructure upgrades while maintaining regulatory oversight by state agencies.

The five groupings identified in minutes of an August four meeting of the Public Private Partnership Appraisal Committee (PPPAC) pair Amritsar with Kangra-Gaggal; Varanasi with Gaya and Kushinagar; Bhubaneswar with Hubballi; Raipur with Aurangabad; and Tiruchirappalli with Tirupati. The minutes note that central sector PPP projects above Rs 2.5 bn require PPPAC appraisal.

The committee gave an in?principle nod to a proposal from the Ministry of Civil Aviation (MoCA) to award each bundle to a single concessionaire for airport development and management. The ministry signalled that the number of bundles that may be awarded to a single bidder will be capped to mitigate market concentration and over?leveraging, with cap details to be worked out before final clearance.

The Airports Authority of India (AAI) adopted a phased, data?driven approach to identify airports suitable for PPP and bundling, assessing 12 major airports on passenger traffic, land availability, commercial potential and financial performance, of which six were recommended for leasing. Subsequently, AAI evaluated 136 smaller airports for bundling based on traffic potential, capital expenditure requirements, proximity and city?side development potential.

Under the proposed contracts the private concessionaire will operate, manage and develop passenger terminals and city?side infrastructure for a concession period of 50 years while AAI will continue to provide air traffic control and communication, navigation and surveillance services. AAI Cargo Logistics and Allied Services Company Ltd (AAICLAS) will retain cargo operations. The proposal provides for a one?year joint management period with existing AAI staff after which concessionaires must retain 60 per cent of AAI employees for up to three years. Before final PPPAC recommendation, MoCA will conduct market sounding with infrastructure players and AAI will review private operator feedback; the ministry did not respond to requests for comment.