Centre gives in-principle nod to lease -out 11 AAI airports in five bundles
The Ministry of Civil Aviation has received in-principle approval to lease out 11 Airports Authority of India (AAI)-managed airports, grouped into five bundles, to private operators through a public-private partnership (PPP) model.
Before seeking final approval, the Ministry will conduct "market sounding" — informal consultation with prospective investors and operators — to gauge interest and refine bundle composition.
The bundling strategy pairs larger, revenue-generating airports with smaller, currently loss-making or under-utilised facilities, intended to enable cross-subsidisation so that profitable airports help sustain investment in smaller ones.
This marks a third round of AAI airport monetisation, extending the PPP leasing model used in the first (2006, Delhi/Mumbai) and second (2019–21, six airports) rounds.
PPP Model for Airports: OMDA Framework
Airport privatisation in India uses the Operation, Management and Development Agreement (OMDA) — a long-term concession contract under which AAI retains ownership of the airport land and assets while a private concessionaire is given exclusive rights to operate, manage, and develop the airport for a fixed concession period (commonly 50 years). The concessionaire pays AAI a share of revenue (or a fixed/per-passenger fee) in return.
Key Details
- OMDA-based leasing does not transfer land ownership; AAI remains the asset owner and lessor.
- The government's newer approach for the current round selects operators based on the highest revenue share offered per passenger to AAI, intended to improve transparency and bidder comparability.
- The Airports Authority of India Act, 1994 (as amended) is the enabling statute empowering AAI to lease out airport management to private parties while retaining statutory oversight (safety, air navigation services remain with AAI/DGCA/AAI's ANS arm).
The 11 airports would be leased under this same long-term OMDA-style PPP concession structure, continuing the model pioneered for Delhi and Mumbai airports in 2006.
Precedent: 2019–2021 AAI Airport Privatisation Round
In the second round of AAI airport monetisation (2019–2021), six airports — Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram, and Mangaluru — were leased out via competitive bidding under the PPP-OMDA model, in addition to Mumbai airport which had already been under private operation since 2006. This round established the precedent of large-scale competitive bidding for airport operating rights, with private consortia winning multiple airports in a single bidding cycle.
Key Details
- Bidding criterion in that round was the highest per-passenger fee offered to AAI.
- AAI reported recurring savings (running into hundreds of crores annually) from no longer having to fund operations/capex at the leased airports.
- The current (third) round explicitly builds on this precedent but adds a "bundling" innovation — pairing profitable hub airports with smaller regional ones in the same bid package.
The five-bundle structure in the current round is a refinement of the earlier single-airport bidding approach, designed to make smaller/unviable airports attractive to bidders by packaging them with profitable hubs.
National Monetisation Pipeline (NMP) and Asset Monetisation Framework
The National Monetisation Pipeline, launched by NITI Aayog in August 2021, is the government's broader framework for unlocking value from existing public infrastructure assets (roads, railways, power transmission, airports, warehousing, etc.) through long-term leasing to private investors, without transferring ownership. Airports were identified as one of the priority sectors under the NMP, targeting the leasing of a defined number of AAI-managed airports over a multi-year period.
Key Details
- NMP relies on "monetisation" (leasing/concessioning existing brownfield assets), distinct from privatisation (which involves ownership transfer) or greenfield investment.
- Airports formed one of the highest-value asset classes identified under the NMP aviation sub-sector.
- Monetisation proceeds are meant to be reinvested by AAI into new airport infrastructure and expansion, including smaller regional airports.
The 11-airport, five-bundle leasing plan operationalises the airports component of the NMP framework, continuing the government's asset-recycling strategy in aviation infrastructure.
UDAN Scheme and Regional Air Connectivity
UDAN (Ude Desh ka Aam Naagrik), launched in 2016, is the government's Regional Connectivity Scheme aimed at making air travel affordable and boosting connectivity to underserved and unserved airports, partly funded through a levy on flights on major routes and viability gap funding for operators on regional routes.
Key Details
- UDAN airports are typically smaller, low-traffic facilities that struggle to attract private investment on a standalone basis.
- Bundling such UDAN-linked smaller airports with larger, profitable ones (as in the current lease plan) is intended to make them commercially viable for private operators while sustaining regional connectivity goals.
Several of the smaller airports being bundled with larger hubs in this round are UDAN-linked regional airports, showing how monetisation and regional connectivity policy goals are being combined in the bundling design.
- 11 AAI airports are to be leased in 5 bundles under a PPP/OMDA-style long-term concession model.
- The bidding criterion under this model is typically the highest revenue share (per-passenger fee) offered to AAI.
- Second-round precedent (2019–21): 6 airports leased via competitive bidding (Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram, Mangaluru).
- The AAI Act, 1994 is the statute enabling AAI to enter into such management/operation agreements.
- The National Monetisation Pipeline (launched August 2021 by NITI Aayog) is the umbrella policy framework under which this leasing exercise falls.
- "Market sounding" — informal industry consultation — precedes formal approval and bid documentation in this round.