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Adani, GMR in fray for new airport projects

The state-owned airports body wants to privatise four airports, Chennai, Ahmedabad, Kolkata and Jaipur, to prop up its revenues

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The firms which have shown interest in modernising and operating these airports are Egis India Consulting Engineers Pvt Ltd, Flemingo DutyFree Shop Pvt Ltd, GMR Airports, Siemens PostaParcel & Airport Logistics Pvt Ltd, Flughafen Zurich AG Postfach, GVK Group, Adani Ports & Special Economic Zone Ltd and Bhara International (India) Pvt Ltd. Two of these ? GMR and GVK – are already operating Delhi, Mumbai, Hyderabad and Bangalore airports on a revenue-sharing basis. As per this financial model, the airport operators are sharing over 30-40% of their revenue with the AAI.

In a move that will help it improve its revenues considerably, the Airports Authority of India (AAI) has begun the process of privatising four of the airports it operates and manages by floating request for qualification (RFQ), to which eight firms, including Adani Ports, GMR Airports, GVK Group and others have responded.

A civil aviation ministry source said these firms have come back with queries on the RFQ after it was recently issued.

"Inputs will be taken from these firms to modify the document and then the final document will be issued for inviting request from proposal (RFP) from them," he said.

The airports that the government is looking to privatise are Chennai, Ahmedabad, Kolkata and Jaipur. The firms which have shown interest in modernising and operating these airports are Egis India Consulting Engineers Pvt Ltd, Flemingo DutyFree Shop Pvt Ltd, GMR Airports, Siemens PostaParcel & Airport Logistics Pvt Ltd, Flughafen Zurich AG Postfach, GVK Group, Adani Ports & Special Economic Zone Ltd and Bhara International (India) Pvt Ltd.

Two of these - GMR and GVK – are already operating Delhi, Mumbai, Hyderabad and Bangalore airports on a revenue-sharing basis. As per this financial model, the airport operators are sharing over 30-40% of their revenue with the AAI.

According to a senior airport executive, who did not want to be named, AAI would be able to earn better revenue through privatisation of the airports than running it on its own.

"There have been studies that show that privatisation will improve government's revenue but it all depends on the economic policy of the government. The increased revenue is used by the AAI to run airports with lower traffic, in which private airports would not be interested," he said.

As per the financial numbers put up by the AAI on its website, it earned a net profit of Rs 734 crore on a revenue of Rs 6,917.38 crore in the fiscal 2013, which was lower than the previous fiscal's net profit of Rs 859 crore. The dip in net profit, according to the AAI official, was due to slowdown in air passenger traffic in that fiscal. The numbers have not been updated for fiscal 2014.

The civil aviation ministry had earlier said that it would go in for privatisation of only Ahmedabad and Jaipur airports and give the Chennai and Kolkata airports on management contracts to private firms. However, it's had a change of heart on it and has gone ahead with privatisation of four airports.

The AAI executive said the government could have been motivated by the revenue that can be generated through privatisation, "The Mumbai and Delhi airports generate very good revenues for the AAI today. That could have motivated the government to privatise all the four of them (airports)," he said.

The AAI Employees Union (AAIEU) held a symbolic demonstration against the airport privatisation at AAI's headquarters in Delhi.

Balraj Singh, general secretary of AAIEU, said they were opposing the move as they have not been consulted on the privatisation decision.

"Why are they doing it? The reason is not money as these airports are earning revenues. After spending thousands of crores (on the four airports), they are now giving it away to private firms on platter, who will make lakhs of crores," he said.

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