Airport projects may be awarded on a revenuesharing basis
NEW DELHI: The civil aviation ministry on Tuesday proposed a revenue-sharing model for awarding greenfield airport projects to developers that is considered simpler and less prone to disputes about gold-plating of expenses.
According to the proposed model concession agreement, which will be finetuned after feedback from industry, developers will compete to win contracts based on the amount of revenue per passenger instead of the current norm of gross revenue sharing. In the proposed model, airport charges will also be fixed upfront.
Profit-sharing contracts are prone to disputes over costs and are no longer favoured in India. Already, the government has moved to auctions involving revenue sharing in sectors such as oil and gas, to replace profitsharing contracts.
The ministry said in a statement that a reduction in controversies and litigations is likely to attract more investors and lenders to proposed greenfield airport projects such as those in Jewar (near Noida), Bhogapuram (near Visakhapatnam) and Pune. The exact number of greenfield airport projects that are envisaged is not available immediately, but civil aviation minister Suresh Prabhu, who briefed reporters on the new model concession agreement, said it would be announced soon.
“A perspective plan about how many greenfield airports India will need to be built will soon be brought out,” said Prabhu.
Minister of state for civil aviation Jayant Sinha described the new revenue model as revolutionary as it would facilitate the goal of stepping up building airport infrastructure to meet the goal of making air travel more accessible and affordable to people. India wants to achieve the target of one billion passengers a year in 15-20 years, nearly four times the 265 million recorded in 2016-17.
According to the new plan, the maximum charges that airports can levy from airlines—ultimately paid by the consumer—is capped at ₹400 and is partially linked to inflation.