Delhi, Mumbai, Bangalore Airports To Be Completely Sold Off To Private Firms; 13 More Airports To Be Privatized

In a bid to shore up revenues to meet fiscal FY22 target, the Aviation Ministry will be selling off its stakes in private operators of airports in Delhi, Mumbai, Bengaluru and Hyderabad.

The government’s asset monetisation target for FY22 is Rs 20,000 crores. The process of getting approvals is already underway, in a speedy start to the exercise. 

Possible Reasons Behind Decision

The government is in dire need of funds as its Aviation Ministry is still far from recovery after a loss of over Rs 1,000 crore in FY21 thanks to the pandemic.

Another reason for the move might be that the government which owns these minority stakes have not benefited from it in terms of returns or influence over management.

The next step will be to appoint an advisor to oversee the transactions and conduct valuations of Airport Authority of India (AAI)’s stake in airports run by Fairfax group and GMR Infra.

News first broke in last month’s convening of the Core Group of secretaries for Asset Monetisation (CGAM).

An anonymous source has said that the sale of airport stakes will be a key driver of revenue generation.

The Aviation Ministry’s AAI owns 26% each in Delhi and Mumbai airports and 13% each in Bangalore and Hyderabad airports. 

Private Players and their Right of First Refusal

Revenue sharing arrangements between AAI and Delhi (46% of revenues), and with Mumbai (39% revenue) airports will not be impacted with this development. 

This arrangement is not in place between AAI and the Bangalore and Hyderabad airports. 

Fairfax Group which runs Bangalore International Airport, GMR Group which runs Delhi and Hyderabad airports and Adani group which is Mumbai airport’s new owner all have the Right of First Refusal which they will likely exercise. 

They enjoy the right as they are the biggest shareholders.

Future Sales and Developments

The government  will also be selling all its stakes in Air India and 50% in ground handling company AISATS and helicopter operator Pawan Hans Ltd all which will serve to fulfil its targets to generate Rs 2.5 lakh crore of assets. 

But these particular stakes are not expected to raise the kind of money the airport assets liquidation will. 

Likely candidates for future sales are the Sri Guru Ram Dass Jee International Airport (Amritsar), Biju Patnaik Airport, Tiruchirappalli International Airport, Swami Vivekananda Airport, Devi Ahilya Bai Holkar Airport (Indore), and Lal Bahadur Shastri International Airport (Varanasi) by Q1FY22.
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