Context:
The Government of India is advancing the third round of airport privatisation, proposing 11 airports for leasing to private operators as part of its broader strategy to mobilise private investment, modernise infrastructure, and unlock value from brownfield assets.
Key Highlights:
Privatisation Proposal and Coverage
• The Ministry of Civil Aviation has placed the proposal before the Public Private Partnership Appraisal Committee (PPPAC).
• 11 airports, grouped into five bundles, include:
– Amritsar, Kangra
– Varanasi, Kushinagar, Gaya
– Bhubaneswar
– Hubli, Raipur
– Aurangabad, Tiruchi, Tirupati
• The government targets launching tenders by March 2026, following PPPAC appraisal and Union Cabinet approval.
Policy Framework and Financial Targets
• Airport privatisation is part of the National Monetisation Pipeline (NMP), which envisages leasing 25 airports to raise ₹20,782 crore.
• The NMP (launched in August 2021) aims to mobilise ₹6 lakh crore (FY22–FY25) via brownfield asset monetisation.
• The upcoming Asset Monetisation Plan 2025–30 proposes reinvestment of ₹10 lakh crore into new infrastructure.
Rationale for the Third Round
• Focus on smaller airports (0.1–1 million passengers annually) with high traffic growth potential and significant investment needs.
• Objective to enhance operational efficiency, service quality, and capacity expansion.
Concerns and Regulatory Oversight
• Risk of market concentration and monopolies, highlighted by earlier acquisitions by large conglomerates.
• Rising User Development Fees (UDF) and airline costs, as observed in some privatised airports, raise affordability concerns.
• The Airport Economic Regulatory Authority (AERA) is shifting towards service delivery–based performance benchmarks, with penalties for non-compliance.
Future Outlook in Civil Aviation
• Government plans to build 50 new airports in the next five years.
• Target of 550 million passengers per annum (mppa) handling capacity by FY26, reflecting rapid growth in air travel demand.
Relevant Prelims Points:
• Privatisation: Transfer of management or ownership from public to private sector.
• National Monetisation Pipeline (NMP): Strategy to unlock value from public infrastructure assets through leasing.
• User Development Fee (UDF): Passenger fee for airport infrastructure development.
• PPPAC: Apex body evaluating PPP projects before Cabinet approval.
Relevant Mains Points:
• Airport privatisation reflects a shift from public asset ownership to asset optimisation.
• Balancing efficiency gains with consumer protection and competition is a governance challenge.
• Role of independent regulators (AERA) is critical in preventing rent-seeking and ensuring service quality.
• Infrastructure monetisation has implications for fiscal consolidation and long-term growth.
Way Forward:
• Ensure competitive bidding and anti-monopoly safeguards.
• Strengthen regulatory capacity of AERA for tariff and service oversight.
• Transparently reinvest monetisation proceeds into regional connectivity and new airport creation.
• Align privatisation with UDAN and inclusive aviation goals.
UPSC Relevance:
GS 3 – Economy, Infrastructure
GS 2 – Governance
Prelims – PPP models, Infrastructure policies