UP govt may seek cancellation of MoU with centre for airports

• Posted in Aviation
• on July 7, 2016
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The UP government is gearing up to move the centre for cancellation of Memorandum of Understand (MoU) it signed with the Airport Authority of India (AAI) two years ago for development of airports in Faizabad, Meerut and Moradabad, in a development that could further sour the relations between the Samajwadi Party and the Bhartiya Janta Party in an election year.
The move comes a day after the union civil aviation ministry gave its nod to develop `no-frill’ airports – airport with no non-essential services — in Kanpur, Bareilly, Agra and Allahabad. Sources, however, said that the centre has expressed apprehensions for setting up an airport in Faizabad, Meerut and Moradabad after a feasibility study showed a low Investment Return Ratio (IRR). Experts insist that an airport is viable only when the IRR is 12 – meaning that return on investment is at least 12%. In case of the three airports the value was much low.
A top government functionary told TOI that the UP’s civil aviation department has already served a notice to the centre asking as to “why the MoU for the three cities may not be cancelled”. Sources said that a formal decision on the issue is likely to be taken by the state cabinet soon. “If that was the case, the centre should have carried out a feasibility study before signing a MoU,” said a senior official in the Chief Minister secretariat. Ian Thomas Jersey

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