An aerial view of Mumbai airport _ Reuters
An aerial view of Mumbai airport _ Reuters

With increasing air connectivity to smaller towns in India and availability of cheap flight tickets, the domestic air traffic volumes in the country are heavily skewed in favor of small cities.

According to a travel portal Make My Trip, only one fourth of domestic air traffic comes from metros, nearly 75% comes from smaller cities.

However, the infrastructure at these airports, mostly managed by state-owned Airports Authority of India (AAI), has not kept pace, resulting in overcrowded and poorly maintained terminals and check-in counters as well as flight delays.

With 10 of the 126 airports operated by AAI together handling 30 million passengers a year, the Narendra Modi government wants to attract private players in exploiting the commercial opportunity of terminals with such heavy footfalls, reports Business Standard.

As per the proposal, the terminal management of an airport will be bid out for a period of 15 years, during which the bidder will pay a pre-fixed rent to AAI based on the revenue it can generate per passenger. Secondly, all capital investment in the terminal will be made by AAI.

The operator, without investing capital, will have the scope to maximise its revenue from non-aeronautical activities such as food and beverages business, duty-free shops, leasing of terminal space, and running car rentals or parking, the daily added.

This model is being used for the privatization of terminals at the Ahmedabad and Jaipur airports. Minister of State for Civil Aviation Jayant Sinha calls this model a win-win situation. “AAI will earn rent while the private player which will operate the terminal now has the opportunity to maximise income from the terminal by increasing the service quality of the terminal,” Sinha said.