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Good response to airport roadshows

BS Economy Bureau

The civil aviation ministry's two road shows in Delhi and London for leasing out of four airports in the metros have drawn around 80 prospective operators, including airports like Zurich, Stockholm and Frankfurt along with merchant bankers and some equipment manufacturers like Siemens.

The ministry plans to complete the leasing process by December 2002, three months ahead of schedule.

According to government officials, expressions of interest will be called in May, which will be followed by due diligence by the prospective operators.

The bids will be called around August. The airports will be given on a 30-year lease.

Finance minister Yashwant Sinha had said in his Budget speech the process of leasing would be completed by the end of the current financial year.

The government has decided to allow the lease-holders a share in the revenue from air traffic. The operators will be allowed to monitor traffic at the airports.

However, the navigation functions for aircraft overflying the airports would be retained by the government, officials said. Earlier, it had been decided that air traffic control would not be given to private operators.

The government has also decided to do away with the reserve price for leasing out the airports. Prospective bidders will be asked for a time-bound improvement in various airport operations.

Setting monitorable targets were a better option because it would help avoid problems after the signing of the lease between the ministry and the operators, officials said.

The lease-holders would be allowed to decide the landing fees and the parking charges based on a formula that would be linked to the wholesale price index. The lease-holders would also be permitted to levy capital expenditure charges on passengers.

The bid amount, to be calculated on improvement yardsticks, will be split into two parts. This will include the annual rental charges, which has to be at least 50 per cent of the current operating cash flow.

It will also have to be determined by factoring in the flow of passenger traffic through each airport. A report prepared by consultancy firm KPMG will form the basis for the future road shows.

It says the operators will have to attain international norms for immigration checks, customs clearances and cargo handling to qualify as bidders.

Of its total revenue of Rs 18 billion, the Airports Authority of India earns about Rs 10 billion per year from the four airports in metros, up for leasing. Delhi and Mumbai handle over 50 per cent of the total traffic.

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