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Airports privatisation: Govt taking relook at UPA’s plan

With airlines complaining of high airport charges in the country, the government is having a relook at the process of privatisation of six major airports started by the previous UPA dispensation.

Civil Aviation Minister Ashok Gajapati Raju has suggested fresh broad-based consultations between the Centre and states and with airport developers, airlines, passenger associations and travel operators before finalising the model concession agreement for construction and operation of airports through public-private partnership (PPP).

The UPA-II government had early last year launched the PPP process for modernising six airports at Kolkata, Chennai, Jaipur, Guwahati, Ahmedabad and Lucknow. But the process could not be concluded due to reported difference of opinion between the Civil Aviation Ministry and the Planning Commission on the model concession agreement and issues like revenue sharing and the period of lease. The process was finally stalled after the general elections were announced.

Official sources said discussions were now being held to elicit views of all stakeholders to draft the model agreement clearly to ensure transparency and avoid grievances of stakeholders at a later stage.
The problem of high airport charges and other related issues affecting the airlines have triggered fresh debate among the parties concerned, they said, adding fresh discussions were necessary to ensure that privatisation did not increase airport charges and costs.

An Inter-Ministerial Group (IMG), including officials of Finance and Civil Aviation Ministries and the Planning Commission, has started the process of revisiting matters like revenue-sharing model and the master concession agreement in public-private partnerships (PPP) in airports. 

While airlines have been complaining of exorbitant charges making some Indian airports the costliest in the world, the sources said the airlines have estimated that the cost of turning around an aircraft at a large airport operated by a private-led airport operator in India was about $6,000, compared to $2,300 at Singapore's Changi Airport. Regarding the newly-modernised airports at Kolkata and Chennai, the sources said the Airports Authority of India (AAI) had invested about Rs 2,500 crore to upgrade them.
The ministry was now evaluating whether it would be right to hand over their management to a private-led consortium now or whether AAI be allowed to continue with the job or some other model adopted. The concern was expressed after the Comptroller and Auditor General and the Parliamentary Standing Committee on Transport, Tourism and Culture had raised objections to the master concession agreements adopted in case of the modernised airports at Delhi, Mumbai, Hyderabad and Bangalore.

Earlier during the UPA-II regime, the Civil Aviation Ministry had disagreed with the Planning Commission's model concession agreement on issues like revenue sharing, 'shared till' and the period of lease.

While the plan panel wanted the selected private party to share with AAI only the aeronautical revenue, the ministry sought that the entire revenue earned from aeronautical and non-aeronautical sources, like hotels, shops and eating joints, should be shared with AAI.

It also insisted on 'shared till' advocating that non- aeronautical revenue should be used for cross-subsidising airport tariff charged from users like airlines and passengers.

The ministry sought that the airports should be leased for a period of 30 years and an extension for another 30 years should not be granted automatically but only after a review of the work done by the selected bidder.
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