Airport Authority to bear capital expenditure for two Airports

At Jaipur and Ahmedabad airports the Airports Authority of India (AAI) will bear the capital expenditure even as private developers will only need to concentrate on operations and maintenance (O&M) of the two airports whose terminal buildings are set to be privatised.

“The Airport Authority of India has re-examined the issue related to the project financials of the O&M project for Ahmedabad and Jaipur airports. The concept of project cost will be different in case of these two airports as against the model adopted for privatisation of other airports, including Delhi and Mumbai airports,” said a senior civil aviation ministry official, requesting anonymity.

“The successful bidder for the airport projects will not be required to make capital investments into the airport as AAI will bear such cost,” the official added.

The decision was taken after a meeting among the AAI, Civil Aviation Ministry and the Prime Minister’s Office recently in a bid to make the airport deal lucrative for both domestic and international players.

“The private operators who had shown interest in running the terminal building of the two airports had opined that the scope of revenue generation was limited in the O&M model so they may not find it viable to incur capital expenditure,” another civil aviation ministry official said. The AAI, which operates Ahmedabad and Jaipur airports, had floated a global request for proposals to hand over the operation and maintenance of its terminal building to private players earlier this year. The technical bidding for the two airports is likely to begin from September.

Till March 20, 11 private players, including four global companies, registered for the bid for operating and maintaining Ahmedabad airport and seven private companies, with two global players, registered to bid for Jaipur airport.

Some of the global players in the fray included Daa International that operates Ireland’s state-owned airports and Vinci Airports Singapore, Swiss-based Zurich Airport International and French firm Egis Airport Operation. Among domestic players, GMR Airports, GVK Airports Services and Bengal Aerotropolis showed interest for both the airports. Adani group and Tata Realty and Infrastructure had registered to bid for the Ahmedabad airport.

Earlier, the AAI had made changes to the bidding documents to allow global private players to run the airports for 15 years against the 10 years proposed previously.

The private developers of Delhi International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL) – GMR and GVK respectively incur the capital expenditure for expansion of the Delhi and Mumbai airports. As per the public-private partnership (PPP) agreement, DIAL has to share 45.99% of its revenues with AAI, while MIAL is supposed to share 38.7% of revenues.

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