11 Airports to Be Offered in Five Bundles
The government has grouped the airports into five proposed bundles:
Amritsar – Kangra
Varanasi – Gaya – Kushinagar
Bhubaneswar – Hubballi
Raipur – Aurangabad
Tiruchirappalli – Tirupati
The bundling model is intended to combine commercially stronger airports with smaller facilities so that revenues from larger airports can help support the operations and development of smaller ones.
50-Year Concessions
Each bundle is proposed to be awarded to a single private concessionaire for a 50-year concession period.
Private operators will be responsible for operating, managing and developing passenger terminals and city-side infrastructure. They will also have mandatory capital expenditure obligations.
AAI Will Retain Key Responsibilities
Privatisation will not mean the complete withdrawal of AAI.
The Airports Authority of India (AAI) will continue to provide Air Traffic Control and Communication, Navigation and Surveillance services.
AAI's wholly owned subsidiary AAICLAS will continue to handle cargo operations.
Bidding Model
Under the proposed model, bidders will quote a per-passenger fee based on domestic passenger traffic.
The concession awards will be determined through a competitive bidding process once the government finalises the transaction structure.
Government Seeks to Prevent Market Concentration
The government is considering a cap on the number of airport bundles that a single bidder can win.
The move is aimed at preventing excessive concentration in India's airport sector, where a small number of private operators already account for a significant share of passenger traffic.
Finance Ministry Flags Oligopoly Concerns
The Finance Ministry has raised concerns over the “oligopolistic nature” of India's aviation sector.
Officials are examining the possibility that excessive concentration could lead to over-leveraging and create risks that spread across multiple airport projects.
Investment and Capacity Expansion
Private concessionaires will be required to undertake approved capital expenditure and future capacity expansion.
Additional expansion will be linked to traffic and capacity thresholds rather than being undertaken prematurely when passenger volumes remain below projections.
Transition for AAI Employees
The proposal includes a one-year joint-management period involving existing AAI employees after private operators take over.
The private concessionaire would subsequently be required to retain 60% of AAI employees for up to three years, according to the proposed structure.
Final Privatisation Process Still Ahead
The PPPAC's in-principle approval does not mean that the airports have already been awarded to private companies.
The Civil Aviation Ministry will now conduct a market-sounding exercise to obtain feedback from potential bidders and assess the proposed bundling structure.
The feedback will then be incorporated before the proposal moves towards final PPPAC recommendation and the subsequent bidding process.
Why Is the Government Bundling Airports?
The government hopes the model will:
Improve the financial viability of smaller airports
Attract private investment
Upgrade airport infrastructure
Improve operational efficiency
Generate resources for AAI's future infrastructure expansion
The bundling model is being used to make airports that may not be commercially attractive on their own more viable for private operators.
Conclusion
The PPPAC's in-principle approval has cleared an important step towards the privatisation of 11 AAI airports through five bundled PPP concessions.
The proposed 50-year concessions combine major airports such as Amritsar, Varanasi, Bhubaneswar, Raipur and Tiruchirappalli with smaller airports. The government is also considering limits on how many bundles a single bidder can win to prevent excessive market concentration.
The proposal remains at the in-principle approval stage. Market consultation, final recommendations and competitive bidding will have to take place before private operators are selected.
