Indian airports privatisation meeting draws 70 participants

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The Indian government has begun the long-awaited privatisation of airports in four cities with a presentation before interested parties from around the world. In the past week roadshows were held in London and Delhi. Aeroports de Paris, ACSA of South Africa, Cintra Concessionaires, BAA, Alterra, and Hochtief, which is involved in the new Athens airport and Dusseldorf, were among the 70 airport operators, merchant bankers and financial institutions who participated in the London roadshow last Friday.

The meeting gave a detailed presentation on the airports at Delhi, Mumbai, Kolkata and Chennai by KPMG, advisers to the Civil Aviation Ministry and Airports Authority of India (AAI). Launching the presentation, Civil Aviation Secretary K Roy Paul stressed on the government's commitment to complete the proposed transaction "within the current financial year" and invited foreign and Indian investors to bring in their talents to make these airports world class. KPMG's presentation focussed on the restructuring of the Indian civil aviation sector, the advantages of the four cities and their airports, and the main features of the proposed transaction structure. The new operators, expected to be in place by early next year, will take responsibility for duty-free and commercial management at the airports.

AAI chairman S K Narula briefed the interested parties on the past cargo and passenger traffic in these airports and their projections, besides the "untapped potential" to enhance commercial revenue from these airports which were hubs of economic activity. The parties were also informed that the term of the management contract was proposed to be 30 years with the transaction divided into an upfront payment and annual payment linked with the traffic volume.

The procedure allows bids for all four airports, but each operator will be allowed to run only two airports. "The party which wins the contract to run Delhi airport will not be allowed to run Mumbai airport also, though they will be permitted to pick up either Kolkata or Chennai airports. The idea behind not allowing the same party to run both Mumbai and Delhi is to avoid cartelisation," official sources said.

An earlier roadshow in Delhi was attended by Zurich, Malaysia, Frankfurt, Singapore Changi and Copenhagen airport groups besides some top Indian and international companies such as Larsen & Toubro, Tatas, Birlas and Mitsui. The government plans to invite Request for Proposal of Interest (RFPOI) next month.