Airports management contracts likely to be offered in bundles
, ET Bureau|
Updated: Nov 01, 2017, 11.55 PM IST
NEW DELHI: India is considering a proposal to bundle a few airports together while awarding management contracts to private parties, seeking to make business models more attractive and viable for the prospective bidders.
The need for such a move surfaced after attempts by the Airports Authority of India (AAI) to award management contracts for the Jaipur and Ahmedabad airports to private companies did not result in any bids, although both facilities drew initial interest.
“The new plan is to package airports - large regional hubs along with other airports around them – and then call for bids. That has been done in other countries, notably Greece,” minister of state for aviation Jayant Sinha told ET.
To make the bidding process more lucrative, “the management contract will not only give permission to manage the existing terminal, but also any new terminal that comes up at that particular airport in the future,” Sinha added.
Analysts, however, believe that foreign airport operators may not come to India to bid for projects offering just management contracts.
“Any large international player would not want to come to India unless they are offered contracts involving the construction and maintenance of airports, as in the case of Delhi and Mumbai,” said Sanjay Sethi, managing director and chief executive at infrastructure advisory firm Nestor Consulting India. “Privatisation of these two airports has demonstrated that the model has worked and improved airport experience.”
Another analyst said that foreign companies would not come because they were not keen to work at an airport where AAI manages the aeronautical aspects.
“Companies did not want to bid for an airport project where they would have to work with AAI, which would be managing the aeronautical side of the airport. They would come only if the airport is bid out fully,” said another analyst, who did not want to be named.
New Delhi-based AAI owns and manages 125 airports across India, including those in the metro centres of Kolkata and Chennai. As part of its plan to improve service standards at the airports it owns, the state-run AAI had started the process of awarding management contracts and sought bids for Ahmedabad and Jaipur. The target for the new operators would be to improve services and increase non-aeronautical revenues.
Before seeking bids, AAI had rejected twice the Changi Airport's proposal to operate and maintain Jaipur and Ahmedabad airports on the ground that it was "unfeasible" and not commercially viable for the government airport operator.
The need for such a move surfaced after attempts by the Airports Authority of India (AAI) to award management contracts for the Jaipur and Ahmedabad airports to private companies did not result in any bids, although both facilities drew initial interest.
“The new plan is to package airports - large regional hubs along with other airports around them – and then call for bids. That has been done in other countries, notably Greece,” minister of state for aviation Jayant Sinha told ET.
To make the bidding process more lucrative, “the management contract will not only give permission to manage the existing terminal, but also any new terminal that comes up at that particular airport in the future,” Sinha added.
Analysts, however, believe that foreign airport operators may not come to India to bid for projects offering just management contracts.
“Any large international player would not want to come to India unless they are offered contracts involving the construction and maintenance of airports, as in the case of Delhi and Mumbai,” said Sanjay Sethi, managing director and chief executive at infrastructure advisory firm Nestor Consulting India. “Privatisation of these two airports has demonstrated that the model has worked and improved airport experience.”
Another analyst said that foreign companies would not come because they were not keen to work at an airport where AAI manages the aeronautical aspects.
“Companies did not want to bid for an airport project where they would have to work with AAI, which would be managing the aeronautical side of the airport. They would come only if the airport is bid out fully,” said another analyst, who did not want to be named.
New Delhi-based AAI owns and manages 125 airports across India, including those in the metro centres of Kolkata and Chennai. As part of its plan to improve service standards at the airports it owns, the state-run AAI had started the process of awarding management contracts and sought bids for Ahmedabad and Jaipur. The target for the new operators would be to improve services and increase non-aeronautical revenues.
Before seeking bids, AAI had rejected twice the Changi Airport's proposal to operate and maintain Jaipur and Ahmedabad airports on the ground that it was "unfeasible" and not commercially viable for the government airport operator.
