Govt Moves To Stop One Group From Sweeping Airport Privatisation Round Three

India's Ministry of Civil Aviation has recommended capping the number of airport bundles a single bidder can win at two to three in the upcoming third round of airport privatisation, citing concerns about the sector drifting toward a duopoly or oligopoly.

The proposal forms part of the government's review of plans to privatise 11 airports. Officials believe limiting the number of bundles awarded to a single bidder would help maintain competition and provide more players an opportunity to participate in the sector.

Lessons From The Previous Privatisation Round

In February 2019, the Adani Group bid for all six airports offered in the second round and won every single one. The Public Private Partnership Appraisal Committee had received recommendations from the Department of Economic Affairs and NITI Aayog to cap awards at two airports per bidder and to require prior operational experience, but those recommendations were set aside.

The Adani Group subsequently acquired GVK's majority stake in Mumbai and Navi Mumbai airports, bringing its total portfolio to eight facilities handling around 78 million passengers annually, roughly 25% of India's total air traffic.

The ministry made the latest recommendation in response to queries raised by departments represented on the Public Private Partnership Appraisal Committee, which is currently reviewing the privatisation proposal.

What Is Being Proposed

The third round covers 11 airports grouped into five bundles, each mixing metro and non-metro airports to make smaller facilities commercially viable:

• Amritsar and Kangra

• Varanasi, Kushinagar and Gaya

• Bhubaneswar and Hubli

• Raipur and Aurangabad

• Trichy and Tirupati

The ministry has proposed that no single bidder should be awarded more than two to three bundles, equivalent to five to six airports.

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The committee has also sought clarifications on minimum capital expenditure requirements per bundle to ensure smaller airports receive adequate investment, financial and technical eligibility criteria, whether prior airport experience should be a mandatory qualifier, and the extent of land parcels to be included.

If the constituent departments of the Public Private Partnership Appraisal Committee are satisfied with the ministry’s response, an in-principle approval may follow.

Source:

The Hindu