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AAI, states to develop four airports in partnership

Business Standard:  November, 2015

New Delhi:  In a first, the Airports Authority of India (AAI) has identified several airports it plans to develop through joint ventures with state governments.

A special purpose vehicle (SPV) will be formed to develop the airports at Kushinagar (Uttar Pradesh), Devgarh (Rajasthan), Jharsuguda (Odisha) and Shirdi (Maharashtra), with the respective state governments being equity partners.

"Airports can be developed through the SPV route rather than a stand-alone property of AAI, so that states also become a partner. We have identified a few places such as Kushinagar, Devgarh, Jharsuguda where we are exploring the possibility of an SPV. For Shirdi also, the draft memorandum of understanding (MoU) is pending with the state government," AAI chairman R K Srivastava told Business Standard.

This is the first time AAI will enter into strategic partnerships with states to develop airports through SPVs. At present, states only provide land required for building or expansion of the airports, along with road and power connectivity to AAI. However, at a few as the newly-built Chandigarh International Airport, the Punjab government's Greater Mohali Area Development Authority and the Haryana Urban Development Authority are equity partners.

According to sources, AAI had received requests from states to take over the airports operated by them, which might not be operationally and commercially viable for states. The state-owned airport authority is conducting a techno-feasibility study to identify potential airports and look into more such partnerships.

"By doing this, the state governments also become a stakeholder. We believe the states have more knowledge when it comes to regional connectivity and economic development. This will also allow them to pursue the development around the airport more aggressively," Srivastava added.

The development comes after the government had scrapped its plans to privatise the airports at Chennai, Kolkata, Jaipur and Ahmedabad. These were to be built through a public-private partnership model, which envisaged handing over the operations, management and development of these airports to successful private bidders.