Leases on PPP to club loss-making with profitable airports

18 Mar 2021 CW Team

After leasing out Thiruvananthapuram, Mangalore, Ahmedabad, Lucknow, Jaipur and Guwahati airports on a public-private partnership model (PPP), AAI had selected Bhubaneswar, Varanasi, Amritsar, Raipur, Indore and Trichy airports for the second round of privatisation.

According to media sources, the AAI now plans to club the following airports before offering them to prospective bidders:

Jabalpur airport with Indore
Jalgaon airport with Raipur
Jharsuguda airport with Bhubaneswar
Kangra airport with Amritsar
Kushinagar and Gaya airports with Varanasi
Salem airport with Trichy

According to the Ministry of Civil Aviation (MoCA), this line-up is in accordance with AAI's proposed new model under which a profitable airport and a non-profitable airport will be clubbed before being put on the block. One of the primary reasons behind this is to liberate AAI resources tied up with these airports.

Civil Aviation Minister Hardeep Singh Puri had stated in the Parliament that the criteria for selection of airports for PPP mode included quantitative aspects such as growth rate in revenue, total operating costs, total terminal area, per passenger operating costs, air traffic movement, occupancy rate, cargo volumes, and passenger numbers, among others.

This is in addition to qualitative aspects such as expansion possibility, future development plans, capacity utilisation, economic attractiveness of the location, net state domestic product, urban population, etc.

Airports that reported profits in the financial year ended 31 March 2020:

Amritsar: Rs 92 lakh
Bhubaneswar: Rs 34.22 crore
Indore: Rs 4.47 crore
Trichy: Rs 22.85 crore

Raipur and Varanasi airport reported losses of Rs 26.65 crore and Rs 1.6 crore, respectively. The smaller airports being clubbed with these main assets, Jharsuguda, Gaya, Kangra, Jalgaon, Jabalpur and Salem, reported losses of Rs 16.29 crore, Rs 24.68 crore, Rs 9.72 crore, Rs 3.72 crore, Rs 19.24 crore and Rs 8.76 crore, respectively. Kushinagar did not report any loss.

In the Budget for 2021-22, Finance Minister Nirmala Sitharaman had said that as part of the asset monetisation programme, the centre plans to privatise AAI-owned airports in Tier-2 and Tier-3 cities.

Most of these smaller airports mainly depend on the government's regional connectivity scheme—Ude Desh Ka Aam Nagrik (UDAN) for daily operations. Additionally, the Varanasi-Kushinagar-Gaya circuit was deemed important by the government for tourism purposes.

Image Source

Also read: AAI to sell stake in Hyd and B’luru airports

Also read: Next stage of airport privatisation to begin in April

Airports have been identified by the Airports Authority of India (AAI), alongside the already shortlisted six other airports for the next round of airport privatisation, sources told a prominent media house. After leasing out Thiruvananthapuram, Mangalore, Ahmedabad, Lucknow, Jaipur and Guwahati airports on a public-private partnership model (PPP), AAI had selected Bhubaneswar, Varanasi, Amritsar, Raipur, Indore and Trichy airports for the second round of privatisation. According to media sources, the AAI now plans to club the following airports before offering them to prospective bidders: Jabalpur airport with Indore Jalgaon airport with Raipur Jharsuguda airport with Bhubaneswar Kangra airport with Amritsar Kushinagar and Gaya airports with Varanasi Salem airport with Trichy According to the Ministry of Civil Aviation (MoCA), this line-up is in accordance with AAI's proposed new model under which a profitable airport and a non-profitable airport will be clubbed before being put on the block. One of the primary reasons behind this is to liberate AAI resources tied up with these airports. Civil Aviation Minister Hardeep Singh Puri had stated in the Parliament that the criteria for selection of airports for PPP mode included quantitative aspects such as growth rate in revenue, total operating costs, total terminal area, per passenger operating costs, air traffic movement, occupancy rate, cargo volumes, and passenger numbers, among others. This is in addition to qualitative aspects such as expansion possibility, future development plans, capacity utilisation, economic attractiveness of the location, net state domestic product, urban population, etc. Airports that reported profits in the financial year ended 31 March 2020: Amritsar: Rs 92 lakh Bhubaneswar: Rs 34.22 crore Indore: Rs 4.47 crore Trichy: Rs 22.85 crore Raipur and Varanasi airport reported losses of Rs 26.65 crore and Rs 1.6 crore, respectively. The smaller airports being clubbed with these main assets, Jharsuguda, Gaya, Kangra, Jalgaon, Jabalpur and Salem, reported losses of Rs 16.29 crore, Rs 24.68 crore, Rs 9.72 crore, Rs 3.72 crore, Rs 19.24 crore and Rs 8.76 crore, respectively. Kushinagar did not report any loss. In the Budget for 2021-22, Finance Minister Nirmala Sitharaman had said that as part of the asset monetisation programme, the centre plans to privatise AAI-owned airports in Tier-2 and Tier-3 cities. Most of these smaller airports mainly depend on the government's regional connectivity scheme—Ude Desh Ka Aam Nagrik (UDAN) for daily operations. Additionally, the Varanasi-Kushinagar-Gaya circuit was deemed important by the government for tourism purposes. Image Source Also read: AAI to sell stake in Hyd and B’luru airports Also read: Next stage of airport privatisation to begin in April

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