Govt aims to start next phase of airport privatisation in 2025-26 Budget

Airport privatisation plan is likely to materialise post the Budget 2025.

The central government is looking to start the next phase of airport privatisation and development under the public-private partnerships (PPPs) model after the Budget for 2025-26, three officials aware of the development told Moneycontrol.

"The cabinet note on the next phase of airport privatisation is nearly complete and will be submitted to the Ministry of Finance next week, before being sent for Cabinet approval," a senior government official from the Ministry of Civil Aviation said.

He added that the central government is eager to start the process before the end of 2024-25 with pre-bidding consultations likely to start after the Budget 2025.

Another government official told Moneycontrol that the work on starting the next phase is being fast-tracked so that an announcement can be made in the upcoming Budget by the Finance Minister.

"Final approvals for the airports to be considered in the new phase will come from the Cabinet, we have reconsidered some airports that were earlier part of the privatisation plan," the second official said.

Emails sent to the Ministry of Finance and the Ministry of Civil Aviation remained unanswered till the time of the publishing.

As part of the central government's National Monetisation Pipeline (NMP), 25 Airport Authority of India (AAI) airports have been earmarked for leasing out between 2022-2025. These include the airports in Bhubaneswar, Varanasi, Amritsar, Trichy, Indore, Raipur, Calicut, Coimbatore, Nagpur, Patna, Madurai, Surat, Ranchi, Jodhpur, Chennai, Vijayawada, Vadodara, Bhopal, Tirupati, Hubli, Imphal, Agartala, Udaipur, Dehradun and Rajahmundry.

The government is planning to lease out the airports to improve their management by utilising private sector efficiency and investment.

"States and passengers are the ultimate beneficiaries of enhanced airport infrastructure and facilities created by a private partner, who operates, manages and develops the leased airport under PPP," Union Minister of State for Civil Aviation Murlidhar Mohol had said in a reply in the Rajya Sabha in August.

As part of this phase of airport privatisation, AAI plans to invite bids for operation, management and development of 13 airports in the public-private-partnership mode first, the third official said. He added that this will include seven major airports which will be clubbed with smaller airports.

The seven major airports include Vijayawada, Bhubaneswar, Tiruchirappalli, Indore, Raipur, Amritsar and Varanasi, which will be clubbed with smaller airports including Kushinagar (in Uttar Pradesh), Gaya (Bihar), Hubballi (Karnataka), Aurangabad (Maharashtra), Jabalpur (Madhya Pradesh), Tirupati (Andhra Pradesh) and Kangra (Himachal Pradesh).

Last year, the central government had put its airport privatisation drive on slow track due to elections in a number of states and the 2024 general elections.

In May, Adani Airport Holdings (AAHL) told investors that it is keen to add more airports to its portfolio by participating in government tenders inviting bids for the privatisation of at least 25 airports. In a presentation Adani Enterprises stated that 30-35 airports held by the state-owned Airports Authority of India (AAI) were slated for privatisation by 2025.

AAHL currently runs airports in Trivandrum, Mangaluru, Ahmedabad, Jaipur, Lucknow and Guwahati, which it bagged in early 2019. Its biggest asset, however, is the Mumbai airport, which it took over from the GVK group in 2021. With all AAHL airports combined, the Adani Group controls 23 percent of India’s total passenger traffic.

Similarly, GMR Airports Infrastructure had in February said that it is actively pursuing inorganic opportunities overseas, especially in the Middle East, South Asia, the Philippines, and Jakarta, while within India, it is looking at available brownfield opportunities.

Saurabh Chawla, Executive Director of Finance and Strategy at the GMR Group had said that with regulatory clarity improving over the last 10-15 years, India's airport sector is in a sweet spot.

"The interpretation of the concession agreement was a major concern in the earlier part of of privatisation of airports. But now, both the regulator and the companies in this space understand the whole dynamics and the reasons behind their provisions," Chawla had told CNBC-TV18 in July.