The Indian government has recently announced its plans to further privatize airports in the country. This move is part of a larger initiative to improve the aviation infrastructure and increase efficiency through private sector participation. The third round of airport privatization is set to see a maximum of ten airports being handed over to private entities for operation, management, and development.
Third Round of Airport Privatization
According to the Ministry of Civil Aviation (MoCA) Secretary Pradeep Singh Kharola, the third phase of airport privatization will involve the privatization of 6 to 10 airports. The exact number of airports and the names of the airports to be privatized have not been disclosed yet. However, this development comes as part of the government’s ongoing efforts to enhance the aviation sector by involving private players.
Selection of Airports for Privatization
The Airports Authority of India (AAI) is currently assessing which airports should be put up for sale. This assessment includes both loss-making and profitable airports. The decision to include loss-making airports indicates a strategy to leverage private sector investment and expertise to turn around these airports’ fortunes. In contrast, profitable airports are attractive opportunities for private investors looking to enter the aviation market or expand their existing operations.
Previous Privatization Efforts
In an earlier round of privatization, the government had approved the privatization of 12 airports. This second round saw significant interest from private companies. Additionally, the government has suggested that there could be 20 to 25 airports in the country that may be considered for privatization in the future. This indicates a long-term plan to progressively include more airports in the privatization program.
Focus on Tier 2 and Tier 3 Cities
Finance Minister Nirmala Sitharaman, during the presentation of the Union Budget 2021-22, highlighted the government’s intention to privatize airports located in tier 2 and tier 3 towns and cities. This focus aims to bring better infrastructure and services to smaller cities, potentially leading to increased air connectivity and economic growth in these regions.
Public-Private Partnership in Port Projects
Further emphasizing the role of private participation in infrastructure, the Finance Minister announced that in the fiscal year 2021-2022, seven port projects worth over Rs 2,000 crore would be offered by major ports under the public-private partnership (PPP) model. This move indicates the government’s broader approach to engaging the private sector across various transportation sectors.
Outcomes of First Round of Privatization
The first round of airport privatization was a significant step in this direction, with the Adani Group winning the contracts for six airports: Ahmedabad, Mangaluru, Thiruvananthapuram, Lucknow, Jaipur, and Guwahati. Of these, three airports—Ahmedabad, Lucknow, and Mangaluru—have already been handed over to the Adani group. The success of this initial round has paved the way for subsequent phases.
Second Round of Privatization and Current Status
During the second round of airport privatization, AAI selected several airports including Bhubaneshwar, Varanasi, Amritsar, Raipur, Indore, and Trichi for privatization. The process is ongoing, and it is expected that these airports will soon follow the path of those handed over to private operators in the first phase.
As the government continues with its privatization agenda, the aviation sector is poised for significant changes. The involvement of private players is anticipated to bring increased investments, enhanced operational standards, and improved passenger experiences. With careful planning and execution, this initiative could lead to a more robust and competitive aviation industry in India.
