Threats and advantages of Airport Privatisation

1. “Airport Privatisation
in India”
Group No : 2

3. Group Members
 Anusha
 Arun
 Ashna
 Aswin
 Athira
 Athira
 Chinju
 Haritha

4. Inroduction to Aviation Industry
 “India is fastest growing aviation market in the
world” – IATA(International Air Transport
Association).
 ‘world’s first official Airmail service’ from
Allahabad – Naini (6 miles / 9.7 km) in 1911.
 First domestic air route between Karachi and
Delhi in 1912 by ‘India Air Services’.

5.  ‘Tata Sons Ltd’ – 1st Indian Airlines founded
by JRD Tata later became Air India(AI).
1948 GOI and AI formed Joint Stock
Company ‘Air India International’.
1953 Indian Airlines(IA) was Nationalized
and focused on domestic Air services. In 2011
IA merged with AI.

6. Airports Authority of India(AAI)
• GOI Constituted ‘International Airport
Authority of India’(IAAI) in 1972.
• ‘National Authority of India’ (NAI) in
1986.
• Merged by a parliament act in 1995 to
form AAI.

7. Functions of AAI
• Passenger facilities
• Air navigation services
• Security
• HRD Training
• IT Implementation

8. AIRPORT ENVIRONMENT IN INDIA
 Present Airport Infrastrucuture in India
• 449 Airports / Airstrips in India.
• AAI – 125
• Civil Enclaves at defense airfields – 27
• PPP - 5

9. Major Airports of India
• “Annual Passenger throughput in excess of
one and half million or any other airport
which has declared by Central Government
through notification”.
• 12 Airports which has >1.5M Passenger
throughput in India.
• Mumbai,Chennai,Delhi,Bangalore,Kolkata,
Hyderabad,Kochi,Ahemdabad,Goa,Trivandr
um,Calicut.

10. PPP(Public Private Partnership)
• A Govt venture or Pvt business which is funded and operated
through a partnership of Govt and one or more Pvt sector
companies.
• Centre for Asia Pacific Aviation(CAPA) , Over the Next 12 years
India’s Civil Aviation Minisrty aims at 500 operational airports.
• Many Domestic as well as International players shows interest in
growth and dvelopment in Aviation sector.

11. Plan of PPP
• A projected Investment of USD 8.5B has been
planned for the development of Indian Airports
during 11th plan.
• 100 % FDI is permissible for existing Airports, FIPB
approval required for FDI beyond 74%.
• Passenger traffic is projected to grow at a CAGR of
over 15% over the next 5 years.

12. • 100% FDI under automatic route is permissible
for green field airports.
• 100% equity ownership for NRIs is permitted
• 100% tax exemption for airport projects for a
period of 10 years.

13. Potential of PPP
• High demand for investments in Aviation sector.
• Favorable demographics and economic growth
point to a continued boom in domestic passenger
traffic and international outbound traffic.
• Greenfield Airport projects planned in resort
destinations and emerging metros such as Goa ,
Pune , Navi Mumbai, Greater Noida, Kannur.
• Modernization or Up gradation of metro airports,
Induction of partners for Chennai , Kolkata are
expected soon.

14. Importance of PPP
• Airport Infrastructure facilities in India is very
poor
• All major airports in the country face Passenger
Traffic problem due to lack of modern facilities.
• Government fail to make further investment in
the airports due to fund constrain.

15. Dis advantages/Threats of Privatisation
• Focuses more on profit maximization, can be an extra Burdon
for passengers/ journey can be expensive.
• Lack of transparency in private sector and stake holders won’t
get complete details about the functionality of the enterprise.
• Companies involved in airport privatization have been allowed
to develop land in and around the airport. While doing so, the
private companies earn huge profits. For example, in 2012,
the Comptroller and Auditor General (CAG) had slammed the
government for giving out the Delhi Airport and its land with
a potential earning capacity of Rs.1,63,557 crore to Delhi
International Airport Ltd (DIAL) that’s controlled by GMR
group, which made a total equity contribution of only
Rs.2,450 crore

16. Conclusion
• Get good infrastructure facility.
• Traffic Problem will be resolved.
• Growth in passenger traffic leading to
improved profit margins resulting from
economies of scale.

17. • Growth in Aviation Industry.
• Can maintain balance benefit for all
stakeholders, Govt, Private Individuals.
• Government should be in a position to
control,monitor,regulate private
companies from time to time