Govt to monetise 25 airports over 4 yrs, to fetch ~20,782 cr

The government will sell its shareholding in four privately-run airports (Delhi, Mumbai, Hyderabad, and Bengaluru) and is tentatively valuing its stake at ~10,000 crore.

The stake sale in these four airports, along with monetisation of 25 other Airports Authority of India (Aai)-run airports, including those in Chennai and Kozhikode, is a part of the national asset monetisation pipeline announced by Finance Minister Nirmala Sitharaman on Monday.

The monetisation value of 25 AAI airports is pegged at ~10,782 crore, based on estimated capital expenditure at the airports. The monetisation will be completed over the next four years.

The government holds 26 per cent stake each in Mumbai and Delhi airports and 13 per cent stake in Hyderabad and Bengaluru airports.

A market approach has been adopted for determining indicative valuation of AAI stake in the four JV airports and based on recent market transactions the indicative value of the stakes is taken at ~10,000 crore, according to the policy document released by NITI Aayog on Monday.

“The valuation of AAI stake in JV airports is only an indicative high level and the actual price discovery will be made from the market transaction. The actual realisation will depend on multiple factors such as transaction timing, market conditions, investor appetite, and transaction terms, it said.

While six Aai-run airports were privatised last year, another six are in the pipeline this year, including those in Amritsar, Bhubaneshwar, Indore, Raipur, Trichy, and Varanasi. These would be hived off by pairing them with smaller less profitable airports.

“Currently, 25 AAI airports have been considered for asset monetisation. Given their nascent stage of actual traffic and expected ramp-up period to achieve a minimum scale of operations, a strategy of bundling such airports with smaller airports is being explored,” according to the NITI Aayog document.

While Chennai is the fourth-largest airport in the country in terms of passengers handling (22 million in FY20), it also includes smaller airports, including Agartala and Imphal. It also includes Rajahmundry, Hubli, and Jodhpur which handled 0.4 to 0.5 million passengers in FY20.

The list of 25 airports also includes Nagpur which is already under a privatisation exercise since 2018. Last week, the Bombay High Court quashed an order cancelling an award letter issued to GMR group for development of Nagpur airport.

“We welcome the airport monetisation announcement as it will bring in more private sector participation and significantly improve the service delivery. We must simultaneously and soon have a new realistic business model for AAI,” said Kapil Kaul, South Asia CEO of aviation consultancy CAPA.