Privatisation: GMR, Adani bid for all 6 AAI airports

NEW DELHI: India's biggest private sector airport operator, GMR Group, and infrastructure major Adani have bid for the six airports- Lucknow, Jaipur, Ahmedabad, Guwahati, Mangaluru and Thiruvananthapuram- that the government plans to run public-private way like the mega hubs at Delhi and Mumbai.
Jaipur and Ahmedabad airports have got seven bids each. Lucknow and Guwahati have got six bids each. Mangalore and Thiruvananthapuram have got three bids each.

The Airports Authority of India (AAI) had in mid-December issued request for proposal (RFP) for these airports. The technical bids were opened on Saturday that showed GMR - which runs Delhi and Hyderabad airports - and Adani Group have submitted bids for all the six airports. The Cochin International Airport Pvt Ltd (CIAL) has bid for one airport, Mangalore. In all, AAI has got 32 bids for the six airports from 10 bidders. Apart from GMR, Adani and CIAL, the other bidders are: AMP Capital Investors (UK) Ltd and PNC Infra (bid for four airports each); Autostrade, NIIF and I Investments Ltd (three airports each) and KSIDC and Sanna Enterprise (one airport each).

"The technical bids have been opened as of now. The financial bids will be opened on February 25," said a senior AAI official. Since every airport has elicited good response, AAI is hopeful that it may be able to hand over operations, management and development of these six growing airports to private players for 50 years as planned. According to the RFP, the letter of award has to be issued to the winning bidder on February 28 and the validity of the bids is till July 31, 2019.

This is the second big round of privatising airports after Delhi and Mumbai were handed out to private players, GMR and GVK, over a decade back. But the revenue share model is different this time.

AAI has had several disagreements with the private airport operators in Delhi and Mumbai over the amount of revenue to be shared. There have been allegations in the past that the private airport operators formed subsidiaries to hive off certain non-aero operations at these airports in a bid to avoid revenue share with AAI as per the privatisation pact.

To avoid such disputes, the authority has now opted for a new model of revenue generation from these six airports' prospective bidders. "The concessionaire shall pay to the Authority, on a monthly-basis, a fee (the 'per-passenger fee') in respect of each passenger (both domestic and international) handled at the airport in accordance with the concession agreement… the concessionaire shall be entitled to collect charges from users of the airport in accordance with the concession agreement," the RFP document says.

This is the first time this method is being tried. The aviation ministry feels that since there can be no disagreement on the number of people flying through these airports, a per-passenger fee revenue share model with AAI will be better. While these are brownfield projects, even Greenfield airport projects being bid out now like Greater Noida will be using this per-passenger revenue share model.

"The concessionaire shall broadly be responsible for operations and management of the existing airport assets as well as for designing, engineering, financing, construction and development of the further/ additional air-side, terminal, city-side and land-side infrastructure for the airport and the operation and management thereof in accordance with the concession agreement and applicable laws," the RFP for one of the six airports says.