Government open to 100 percent private equity in six airports

The government is willing to allow 100 percent equity by private companies to manage six government-owned airports.

Under PPP model, management and operations of Chennai, Kolkata, Ahmedabad, Jaipur, Lucknow and Guwahati airports will be awarded to private players for a concession period of 30 years from the Airports Authority of India (AAI).

"The government is open to discuss the prospect of allowing 100 percent equity in the airport's operating company by private players," sources in the civil aviation ministry said.

"If an understanding on the same is achieved then unlike the existing operation, management and development agreement (OMDAs), the AAI will not hold any equity in the managing company, but will have revenue share from the operating company."

According to the sources, request for qualification (RFQs) will be issued soon for companies which are interested in Chennai and Lucknow airports. This will be preceded by the issuance of request for interest (RFI) and request for proposal (RFP).

However, in the previous cases of Delhi, Mumbai, Hyderabad and Bangalore airports, the AAI will not hold equity in the managing company.

The AAI currently has 26 percent equity each in Delhi and Mumbai airports and 13 percent each in Hyderabad and Bangalore airports under the operation, management and development agreement (OMDA) which it had signed with the private joint venture (JV) partners.

AAI gets 49 percent share in the revenue generated by the Delhi and Mumbai airport's operating company.

Apart from allowing 100 percent private equity, the government is mulling pre-determined airport charges that will be levied once the airport operations are awarded under the OMDA.

This will allow greater transparency in fixation of passenger charges after a recent hike in levies at Delhi and Mumbai airports.

"AERA (Airport Economic Regulatory Authority) is looking into the matter so that once the final tender is issued every detail of revenue generation is clear to all parties," the sources added.

AERA is the market regulator which determines aeronautical and non-aeronautical charges at airports which handle at least 1.5 million passengers annually.