$1.4 Billion Boost For Indian Aviation: Foreign Operators Lap Up AAI’s Bid To Privatise Six Airports

Major international airport operators, including Flughafen Zurich AG which operates Zurich Airport in Switzerland and Changi Airports International which operates Singapore’s Changi Airport, have shown interest in the Indian government’s plan to privatise six airports, reports Mint.

Apart from these two entities, other notable names looking to get involved include German company AviAlliance, US-based investment firm Global Infrastructure Partners (GIP) and Australian investment manager AMP Capital.

Indian companies such as Anil Ambani led Reliance infrastructure, the National Investment and Infrastructure, the Adani Group, as well as indigenous airport operators GVK and GMR will probably also participate in the bidding process.

The six airports which will be open to private bids are Ahmedabad, Jaipur, Lucknow, Thiruvananthapuram, Guwahati and Mangaluru. These airports are currently managed by the Airports Authority of India (AAI).

According to director and practice leader, transport and logistics at Crisil Infrastructure Advisory Jagannarayan Padmanabhan, redevelopment plans for these six airports may bring in investments of up to $1.4 billion.

Padmanabhan stated that India’s previous experience with privatisation has been generally positive.

“Delhi, Mumbai, Bengaluru and Hyderabad have been decent money spinners for their private sector owners. Even the six that are now up for privatization are all profitable and have been giving more than 10 per cent compound annual growth rate over the last 4-5 years. Besides this, Jaipur and Ahmedabad are in crying need for capacity augmentation,” he explained.

This latest round of airport privatisation will be different from previous such exercises, as unlike the 30 year concession period that used to be offered, this time AAI is offering 50 years. Also, the revenue sharing model is being done away with in favour of a per passenger fee to be paid to AAI.