Home » Viability of the project and a reasonable rate of return are not ensured by the policy makers.

Viability of the project and a reasonable rate of return are not ensured by the policy makers.

Viability of the project and a reasonable rate of return are not ensured by the policy makers.

Satyan Nayar, Secretary General, Association of Private Airport Operators, shares his views on private participation in aviation infrastructure with Janaki Krishnamoorthi.

How successful has been the PPP model in the development/modernisation of India´s airports?
The modernisation of Delhi and Mumbai Brownfield airports and setting up of three new PPP Greenfield airports at Cochin, Hyderabad and Bangalore have shown that PPP is a successful model for development of airport infrastructure in the country. These airports have not only created world class infrastructure but have also been adjudged as the best airports in the world by ACI in their respective categories consistently including for the year 2015. Apart from transforming the airport from a public utility to a commercial enterprise with a higher degree of efficiency, these airports have also significantly contributed to the reduction of airlines´ operational costs, by reducing their turnaround time. The PPP arrangement has also put huge funds at AAI´s disposal by way of revenue sharing . Many studies have proved that there is substantial contribution by the PPP airports to the country´s GDP in addition to providing huge employment

What are the road blocks to private sector participation?
Consistent and forward looking investor friendly regulatory regime is critical, which is absent today. Viability of the project and reasonable rate of return to the investors are not ensured by the policy makers. Though the government had intended to go for a 30 percent hybrid Till regime it is yet to be implemented. The threat of CAG and RTI applicability to PPP Projects creates an uneasy environment as it is likely to put greater emphasis on procedural orientation as against performance orientation. There are unexplainable delays in bidding, land acquisition and environmental clearances which in turn delay projects, indefinitely in certain cases. In the absence of long term debt funding option, developers are burdened by the long gestation period. The prevailing high tax regime is not favourable either.

Today, the sector does not have a structured National Civil Aviation Policy, a National PPP Policy, Hub policy or a modern set of acts and rules to govern the sector.

Which are the potential areas that are likely to open up opportunities for various private players?
The important sectors with huge opportunities are airport development, which is a basic infrastructure requirement for connectivity; MRO – as Indian carriers are expected to add two to three times their fleet size in the near future; air cargo – as air freight traffic is expected to increase five times by 2032; ground handling which is expected to grow significantly; real estate development which apart from airport related, will also include other connected activities; multi nodal access to airports and technological upgrades in all areas.

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