Ministry of civil aviation explores concept of 'merchant airports' with industry

Apart from ministry officials, representatives of various industry chambers, namely the FICCI, ASSOCHAM and CII; airport operators AAI, DIAL, MIAL, HIAL; consultants and infrastructure companies CAPA, IL & FS, IDFC, ABN-AMRO and the regulatory agencies DGCA and BCAS attended the meeting.

The Government's 'Policy on Airport Infrastructure' puts in place the policy and procedural requirements for development of new airports. As this activity involves a long gestation period, the Government has also been considering various options to expedite development and modernization in this area.

The fact that India expects to add a very large number of aircraft, worth about US$80 billion, by 2020, has lent an added urgency to the issue. The induction of such a large fleet is expected to necessitate an investment of about US$ 30 billion in airport infrastructure alone. Since it would be very difficult to generate such resources in the public sector or even under the public-private-partnership (PPP) route, the Government has felt the need to explore the option of 'merchant airports'.

'Merchant Airports' have been conceptualized as airport infrastructure entirely in the private sector, with private resources and requiring no Government funding. The entrepreneur is expected to set up and operate an airport on the basis of commercial viability, subject to the oversight of the Government in matters related to safety and security.

Such a proposal would dispense with the requirement for investment of Government resources and therefore, a more liberal and only a license based approval procedure could be considered. It is proposed to allow 100% FDI in such airports.

At the meeting it was felt that such airports would be especially useful for creating cargo hubs, thereby providing a thrust to the freight-handling sector.