HIGHER OPERATING EXPENSES
Now, the government plans to sell off its stake in some of these ventures while also expanding the privatisation initiative to more airports.
“I think this strategy of airport privatisation and now bringing in more airports for the private-public partnership model is based out of the government’s initiative to totally develop India,” said Milanka Chaudhury, partner at law firm Trilegal.
Other airports in cities such as Amritsar, Varanasi, Raipur, and Trichy are also expected to go private by March next year.
Industry giants like the Adani Group and GMR Airports, which already operate several privatised airports, are expected to be among the bidders.
Observers said the big draw for private investors is the promise of potential profits that come not just from the aviation industry, but other sectors that contribute to a world-class airport experience such as retail and food and beverages.
“There will be these non-aeronautical businesses like duty-free kiosks, there will be restaurants, and it’s more like a shopping experience within the airport,” said Trilegal’s Chaudhury.
“It also has a lot of commercial aspects to it. So the passengers spend a lot of time and money there, and the government gets a revenue share of that.”
But this transformation could come at a cost.
Higher operating expenses could eventually be passed on to both airlines and passengers, particularly as demand grows, incomes rise, and environmental concerns around aviation intensify.
CareEdge Ratings’ Desai said: “That leads to the higher burden on the airlines as well as the passengers, so that is one challenge we need to (observe).”
