State-owned airports will now be allowed to monetise the huge parcel of land that it holds across the country in order to encourage private sector participation in developing these airports. Finance Minister Arun Jaitley in his speech of the Union Budget 2017-18 proposed a change in the Airports Authority of India (AAI) Act allowing the airport operator to use the land bank for commercial purposes. At present, the act allows an airport operator to use land only for aviation-related services. With 128 airports across the country, AAI owns almost 55,000 acres of land.
The minister also said that airports in Tier-2 cities will be taken for operation and maintenance in a Public-Private-Partnership (PPP) model. Will the move encourage private players to bid for management contracts of airports in cities like Ahmedabad, Jaipur?
According to senior officials in AAI, the two Budget announcements have a history and should be seen in connection. AAI, which functions under the Ministry of Civil Aviation, had applied for relaxation in land usage norms back in 2010 following a request by the country’s private parties.
The move was made after AAI announced city-side development of 15 airports, through private participation. Private players said that not allowing commercial development for non-aeronautical activities will make such projects unviable, as many of these airports have very low footfall. “If the government wants private players to participate in the development of airports at regional cities, it is necessary that those players are allowed to monetise from the commercial development of those,” a senior AAI official said.
A senior official of major private player which owns airport said that the group will evaluate such opportunities. “As an airport operator we are interested in either fully owning or just operation and maintenance of airports, we will evaluate on a case-by-case basis,” he said. Jimmy Vesey Womens JerseyShare This