Source: Business Standard, July 20, 2017
New Delhi: To attract more private players towards operating Indian airport projects, the government has made a policy change that will allow the private party to not have to make any capital investment in the project. Instead, the government–owned airport operator, the Airport Authority of India (AAI), will make the investment and the private player will share the revenue with AAI.
The decision is understood to have been taken after a high-level meeting between the AAI chairman and the Prime Minister’s office after private players appeared reluctant to participate in the bidding process for the operation and maintenance (O&M) of the Ahmedabad and Jaipur airports. Major airport operators said that the scope of revenue generation through only O&M of airport terminals was too low. The new model is likely to enforce more discipline among developers. Over the past decade, private airport operators have run up costs in excess of estimates and then had tariffs changed upwards to compensate. For instance, the cost of modernising the Delhi and Mumbai airports more than doubled to $3 billion each.