AAI’s 6 privatised airports will bring in more profit than what AAI would’ve made on its own: Puri

• AAI will earn a profit of Rs 904 Cr For the year 2020-21 as against estimated profit of Rs 530 Cr had it been operated by AAI itself, said Puri

• The profitability of AAl will continue to increase year after year, as PPF is indexed to the Consumer Price Index (CPI), said the minister

New Delhi: Minister for Civil Aviation Hardeep Singh Puri has said that the six airports owned by the Airports Authority of India (AAI) which have recently been privatised will bring in increased profit for the state-run company than what the PSU would have earned on its own. While responding to a question in the Rajya Sabha, Puri said that the bidding parameter for privatising the six AAI airports was per passenger fee (PPF). "It was estimated that on the basis of the PPF offered by the winning bidder for six airports, Airports Authority of India (AAI) will earn a profit of Rs 904 Cr For the year 2020-21 as against estimated profit of Rs 530 Cr had it been operated by AAI itself," said the minister.

'AAI will receive Rs 2,299.26 crore as upfront payment'

The minister asserted that privatisation of airports will result in tangible economic gains for AAI, which can be used by the organisation for development of airport infrastructure in tier-II and III cities. "Further, the profitability of AAl will continue to increase year after year, as PPF is indexed to the Consumer Price Index (CPI). In addition to this, AAI will get back their investment in these six airports to the tune of Rs 2,299.26 crore as upfront payment, which can be used for development of Airport infrastructure by AAl at Tier-Il and Tier-lll cities. Hence, there is a tangible economic gain to AAI by leasing these airports under PPP," Puri told the Upper House of the Parliament.

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Privatisation of airports: Prior experience in airport management not required for bidding

While responding to a question on whether prior experience of operating and managing airports was required to bid for the AAI airports on offer, Puri said that no such criteria existed. "To promote competition, prior operation and management experience in airport sector was made neither a prerequisite nor a post bid requirement for participating in the bid process for six airports."

The backdrop

Adani Enterprises had became India's largest airport operator in a jiffy in 2019 when it bagged a 50-year contract from AAI to operate and manage six airports — Ahmedabad, Jaipur, Guwahati, Lucknow, Mangaluru and Thiruvananthapuram. The decision elicited backlash because Adani Group had no prior experience of operating airports. Also, the conglomerate had bid aggressively for the airports, outdoing its competitors by a huge margin as it offered between Rs 177 to 115 PPF for the six airports. Later, media reports emerged that claimed that the government ignored concerns expressed by the Department of Economic Affairs (DEA), which had suggested in a note that not more than two airports be given to the same bidder because of the huge financial risk involved in the project. Reports said that Niti Aayog, too, had expressed concerns about handing over the entire bunch of airports to Adani Enterprises, saying, ""A bidder lacking sufficient technical capacity can well jeopardise the project and compromise the quality of services that the government is committed to provide."

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