In a volte-face that goes against the reforms-friendly sentiment that businesses are celebrating, the government has decided that existing airports will only be upgraded or modernised by the state-owned Airports Authority of India (AAI).
It is a departure from the public-private partnerships (PPP) model adopted for the Delhi and Mumbai airports.
“I am not keen on brownfield (expansion of existing airports) privatisation,” civil aviation minister Praful Patel (52) said after assuming office on Monday. “This is being done to provide a level-playing field to the AAI. Private players can develop new private airports.”
He said the government planned to get Air India listed on stock markets through an initial public offering (IPO).
“The IPO would, however, not affect the public-sector character of the airline and it will not be privatised,” said Patel.
He said this was an “area of intent” and refused to give a time frame for the launch.
In its last term, the UPA decision to privatise Delhi and Mumbai airports had triggered howls of protests from Left leaders and unions who charged the government with “handing over family silver to private hands”.
At present, 35 non-metro airports are being developed through the PPP route, while AAI is developing the Chennai and Kolkata airports.
Unlike Delhi and Mumbai, where airports were handed over to private consortia GMR and GVK, respectively, in non-metro airports, only the city-side (non-aeronautical) aspects such as parking, hospitality and other recreational facilities, have been handed over to private developers.
At present, there are 127 operational airports owned and operated by AAI. It now appears the entire modernisation of the remaining 86 appears would be carried out by the state-run body.
Analysts, however, were not convinced about AAI’s ability to raise funds for modernisation.
While the development of the 86 airports in the 11th Plan period (2007-12) would need an investment of close to $10 billion (Rs 45,000 crore), Patel did not specify the ways through which AAI would raise the funds.
There is a separate greenfield (or new airports) policy that empowers state governments to allow private developers to set up airports.
The new airport at Shamshabad, 28 km from Hyderabad and Devanahalli, 40 km from Bangalore are the first greenfield airports developed by private firms GMR and a consortium-led by Bangalore International Airport Ltd.
Private firms have shown interest in developing new airports in Asansol, Durgapur (West Bengal), Bhagalpur (Bihar), Greater Noida (U.P.), Navi Mumbai and Shirdi (Maharashtra) among others.