PPPAC in-principle nod for privatisation of 11 airports
The Public Private Partnership Appraisal Committee (PPPAC) granted in-principle approval for the privatisation of operations, management and development of 11 Airports Authority of India (AAI) airports, grouped into five bundles, to be awarded to private concessionaires.
The five bundles are: Amritsar and Kangra-Gaggal; Varanasi, Gaya and Kushinagar; Bhubaneswar and Hubballi; Raipur and Aurangabad; and Tiruchirappalli and Tirupati.
Each bundle is proposed to be awarded to a single concessionaire under a 50-year concession period, with private investment across all bundles estimated at about ₹8,622 crore.
The next steps involve a final recommendation by the PPPAC followed by Union Cabinet approval before the bidding process for concessionaires can begin.
The Ministry of Civil Aviation (MoCA) indicated that, given concerns raised about oligopolistic concentration in India's aviation sector, the number of bundles that can be awarded to a single bidder will be capped.
Public Private Partnership Appraisal Committee (PPPAC)
The PPPAC is the apex inter-ministerial body responsible for appraising and according approval to Central Sector infrastructure projects proposed under the Public-Private Partnership (PPP) mode above specified financial thresholds. It functions under the Department of Economic Affairs (DEA), Ministry of Finance, which also services it through a dedicated secretariat (the Private Investment Unit, earlier called the PPP Cell, set up in 2006).
Key Details
- PPPAC is chaired by the Secretary, Department of Economic Affairs; members include Secretary, Department of Expenditure; Secretary, Department of Legal Affairs; and the Secretary of the line ministry sponsoring the project (here, the Ministry of Civil Aviation).
- PPPAC appraisal is required for Central Sector PPP projects above a specified capital cost threshold; projects below the threshold can be appraised by the respective ministry's own Empowered Committee.
- PPPAC approval is "in-principle" at this stage; the process moves next to a final PPPAC recommendation and then requires Union Cabinet approval before implementation (bidding) can proceed.
The 11-airport privatisation proposal has cleared the PPPAC's in-principle stage — an intermediate but necessary checkpoint in the Central government's institutional process for approving large PPP infrastructure projects, distinct from final Cabinet sign-off.
Legal basis for airport privatisation — AAI Act, Section 12A
Airports in India are primarily owned and operated by the Airports Authority of India (AAI), a statutory body constituted under the Airports Authority of India Act, 1994. Section 12A of the AAI Act empowers the central government to lease AAI airports to private entities for their management, operation and development "in the public interest" or "for improving the services," providing the legal basis for airport privatisation via the PPP route.
Key Details
- AAI was formed in 1995 by merging the erstwhile International Airports Authority of India and the National Airports Authority.
- Section 12A was inserted into the AAI Act to specifically enable leasing of airports to private parties.
- India's airport privatisation history began with Kochi (1999, first fully private greenfield airport), followed by Delhi and Mumbai (2006, PPP-mode brownfield privatisation), then Bengaluru and Hyderabad (greenfield PPP), and more recently the 2019 award of six airports (Lucknow, Ahmedabad, Mangaluru, Thiruvananthapuram, Jaipur, Guwahati) to a single private operator following a Cabinet decision.
The current 11-airport, five-bundle plan is the next phase of this ongoing privatisation programme, applying the same statutory (Section 12A) and PPP-appraisal (PPPAC) mechanisms used in earlier rounds.
Bundling model and market concentration concerns
The government's "bundling" approach pairs smaller, less commercially viable airports with each other (or occasionally with a larger one) into a single package, so that a private concessionaire can cross-subsidise weaker assets using revenue from stronger ones within the same bundle — intended to improve the financial viability of loss-making regional airports under the UDAN (Ude Desh ka Aam Naagrik) regional connectivity scheme's broader push to expand air connectivity to smaller cities.
Key Details
- UDAN was launched in 2016 under the National Civil Aviation Policy to make air travel affordable and expand connectivity to underserved and unserved airports, with a subsidy/viability-gap-funding mechanism for airlines on regional routes.
- Concerns over "oligopolistic" concentration arose after a single private group won all six airports auctioned in 2019, prompting scrutiny of whether one entity should be allowed to control a large share of India's privatised airport capacity.
- The Ministry of Civil Aviation has indicated it will cap the number of airport bundles a single bidder can win in this round, to preserve competitive diversity in airport operations.
The 11-airport plan's five-bundle structure and the proposed bidder cap reflect a direct policy response to the concentration concerns that emerged from the 2019 six-airport privatisation round.
- 11 airports to be privatised via 5 bundles: (1) Amritsar + Kangra-Gaggal, (2) Varanasi + Gaya + Kushinagar, (3) Bhubaneswar + Hubballi, (4) Raipur + Aurangabad, (5) Tiruchirappalli + Tirupati.
- Concession period proposed: 50 years per bundle, awarded to a single concessionaire.
- Estimated private investment across all bundles: approximately ₹8,622 crore.
- Legal basis: Section 12A, Airports Authority of India Act, 1994.
- Appraisal body: Public Private Partnership Appraisal Committee (PPPAC), chaired by Secretary, Department of Economic Affairs, Ministry of Finance.
- Next steps: final PPPAC recommendation, followed by Union Cabinet approval, before the bidding process begins.