New Delhi: Aiming to create infrastructure as fast as the growth in air traffic, the government is finalising a policy on ‘Merchant Airport’ to allow private players to build and run airports without government funding.
The government has held a meeting with the private sector and other stakeholders to evolve such a concept and a policy initiative in this regard is likely to be finalised shortly, official sources said.
It is understood that 100% FDI would be allowed in these airports, though the government is yet to take a decision on whether foreign airlines or airport operators would be allowed to participate.
The meeting, convened by Civil Aviation Secretary Ashok Chawla on 16 May 2007, was attended by representatives of industry chambers, airport operators, consultants, regulatory bodies like DGCA and BCAS and infrastructure companies.
‘Merchant Airports’ have been conceptualised as those which are entirely created by private parties with their own resources, without any government funding. These airports would, however, function subject to safety and security oversight of the government.
The participants at the meeting felt that while there were no set international practices which could be used as benchmark for merchant airports, such facilities were required given the massive growth in air traffic, the sources said.
Such airports are expected to come up in areas of high population density and more air traffic, they said.
As large parcels of land would be required to develop these private airports, the assistance of the state governments was necessary, it was felt.
As the entrepreneur was expected to set up and operate these airports, subject to safety and security oversight by the government, the proposal for merchant airports would dispense with the requirement of public investment.
Therefore, a more liberal and license-based approval procedure could be considered, the sources said.
Such airports could be useful in creating cargo hubs, thereby providing a thrust to cargo and freight handling, they said.
The government has already allowed private-public participation (PPP) to develop and modernise airports.
The policy on airport infrastructure has already put in place the procedural requirements for development of new airports.
As airport development has a long gestation period and keeping in mind that India expects to add additional aircraft worth about $80 billion by 2020, the government has been considering expeditious development of such airports.
This would necessitate an investment of about $30 billion, which would be difficult to raise by the government. This prompted the government to consider exploring the option of merchant airports, the sources said.