Highlights:
- As part of the National Monetisation Plan, the government also intends to award 25 airports to private companies over the next four years.
- AAI’s earnings took a hit from Covid as it recorded loss of Rs 1,962 crore in FY21 and was forced to borrow Rs 1,500 crore from SBI.
The Central government expects to complete the privatisation of 13 airports currently controlled by the Airports Authority of India (AAI) by March as part of the very first major asset monetisation exercise in an honest attempt to use the funds raised for additional public investments.
“We have provided a list of 13 airports to the aviation ministry that are to be bid out on PPP (public-private partnership),” AAI chairman Sanjeev Kumar told in an interview. The objective is to finish bidding on these airports by the end of current fiscal year.”
He went on to say that the bidding strategy will be based on the per-passenger revenue model, which has already been implemented and is successful, and that “the Jewar Airport (in Greater Noida) was also bid out on the same approach.”
Last month, the AAI board of directors approved the privatisation of 13 airports, six big and seven small, by early next year as part of the government’s ambitious National Monetisation Pipeline (NMP). By the financial year 2024, the Centre hopes to attract Rs 3,660 crore in private investment in airports.
Kumar further stated that despite the Covid-19 pandemic, investors will be eager to secure these projects because the disease has only short-term effects on businesses and the airports are provided for 50 years.
AAI has intended to combine seven small airports with six large ones: Varanasi with Kushinagar and Gaya, Bhubaneswar with Tirupati, Amritsar with Kangra, Raipur with Aurangabad, Trichy with Hubli and Indore with Jabalpur.
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As part of the NMP, the Centre intends to award 25 airports over the next four years, including the 13 mentioned above. Through a public-private partnership, the government granted six airports to billionaire Gautam Adani’s Adani group in 2019: Ahmedabad, Jaipur, Lucknow, Thiruvananthapuram, Mangaluru, and Guwahati (PPP).
Many analysts believe that the Centre’s decision to relinquish authority and privatise airports ensures AAI a large stream of revenue regardless of how well the privatised airports operate financially.
AAI’s earnings fell significantly as a result of the coronavirus pandemic, with the organization recording a substantial loss of Rs 1,962 crore in FY21 and being forced to borrow Rs 1,500 crore from the State Bank of India to fulfill working capital obligations, including salaries. However, with the Covid situation improving and passenger traffic increasing, AAI will not need to borrow for working capital needs this year. Kumar stated, “Our capital expenditure will continue as planned. To meet the capital expenditure requirements for this fiscal, we have borrowed Rs 1,000 crore. Further, based on the future funds’ requirement, a decision on additional borrowing will be undertaken.”
