A parliamentary committee has given the green signal to an amendment bill that will enable the government to offer smaller airports in combination with a larger one as a package for Public-Private Partnership (PPP). The significant regulatory tweak is expected to boost the government's efforts to meet the investment requirements to develop and maintain all the airports in the country.
“The Committee realises the huge demand for more airports in the country. The Committee recognises the fact that it is not feasible for Airports Authority of India (AAI) to meet the investment requirements to develop and maintain all the airports in the country. The Committee appreciates the inevitable need for PPP in the development and maintenance of smaller and unprofitable airports,” says the report of the Department-related Parliamentary Standing Committee on Transport, Tourism and Culture, which was tabled in the Parliament on July 22.
AAI had awarded six airports --Ahmedabad, Lucknow, Mengaluru, Trivandarum, Guwahati and Jaipur --for operations, management and development under Public-Private Partnership (PPP) in 2019. Further, the AAI board on September 5, 2019, approved the leasing of six more airports in Bhubaneshwar, Varanasi, Amritsar, Raipur, Indore and Trichy for undertaking operations, management and development through PPP. The idea behind the Airports Economic Regulatory Authority of India (Amendment) Bill, 2021 is to club each of these airports with nearby smaller airports for the purpose of joint development in the PPP mode.
“The clubbing or pairing of smaller or non-profitable airports with profitable airports as a package to bidder or investors for next phase of PPP of airports would ensure integrated development of smaller and non-profitable airports with profitable airports. Further, smaller airports would also be developed faster through professional efficiency of private operators,” the government explained before the committee.
The Civil Aviation Secretary told the parliamentary committee that by clubbing small airports with viable airports, “it will be possible for any private partner to bid for the combination of airports as both put together will become viable; otherwise, these small airports will never get into PPP mode.”
The Secretary further said this would facilitate development of both high traffic volume and low traffic volume airports together in a holistic manner and smaller airports would be developed faster through professional efficiency of privatization. “It would also create scale of operations, making it an attractive proposition and elicit better response from bidders or investors. Pairing of airports is expected to enhance negotiation capacity of airport operators with the airlines for commercialisation and route optimisation and generation of non-aero revenue and lead to improved connectivity to the smaller cities and nearby areas realizing the goal of Atma Nirbhar Bharat,” the Secretary told the committee.
The amendment bill would change existing provisions of the Airports Economic Regulatory Authority (AERA) Act by altering the definition of a “major airport” as existing law does not provide for the determination of tariffs for aeronautical services for a group of airports together. The amendment will insert an enabling provision in the AERA Act for tariff determination of a 'group of airports‟.
“The Committee appreciates the reasons furnished by the Ministry for introducing the instant Bill, since the proposed change in the definition of the term ‘major airport’ to include a ‘group of airports’ would, in effect, enable simultaneous development of smaller and unprofitable airports, alongwith the major airports, in an integrated way. The Committee is of the view that the Bill is needed to address the significant and continuous investment requirements in the airport infrastructure for upgradation or expansion of capacity and modernization of processes and systems in an equitable manner to ensure that the growth in air traffic is managed efficiently. Therefore, the Committee adopts the Bill without any changes,” the committee report says.
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