Airports Authority of India to monetize 5% of land assets beginning April
According to a real estate consultant, Airports Authority of India could fetch about Rs17,000 crore through its land monetization exercise
Mumbai: Airports Authority of India (AAI) will begin the process of selling about 2,750 hectares of land, or 5% of its land assets, in the year starting 1 April, as the state-owned airport operator seeks to boost its non-aeronautical revenue, chairman Guruprasad Mohapatra said.
Mohapatra said that the company will start the process by leasing land to hotel chains and has already identified land at airports in Lucknow, Raipur, Tirupati, Jaipur, Bhubaneswar, Varanasi, Kolkata and Amristar for development in the upcoming fiscal.
“We have floated RFP (request for proposal) for construction of hotels at Amritsar, Bhubaneswar and Kolkata airports, which would have a lease period of 60 years, Mohapatra said, adding that AAI has received interest from companies which want to develop a five-star hotel and a three-star hotel at Bhubaneswar.
“This will have to be approved by the cabinet and aviation ministry,” Mohapatra added.
According to a real estate consultant, AAI could fetch about Rs17,000 crore through its land monetization exercise. It is expecting between Rs2 crore to Rs2.5 crore per acre, the consultant, who did not want to be identified, added.
A hectare is 2.47 acres.
However, the consultant was sceptical about the airport operator’s ability to monetize its entire land bank.
“These markets do not have sufficient depth to absorb such huge land parcels (for commercial usage). So they (AAI) will perhaps be able to monetize only about a third or one-fourth of the total land bank in the smaller cities and towns, subject to various conditions including suitability of land or restrictions of usage over these lands,” the person cited above said.
AAI has also started construction of multi-level car parks with commercial facilities at Chennai, Ahmedabad, Pune Calicut, Jaipur and Amritsar.
The finance minister had in the 2018 budget announced a change in rules to allow monetization of AAI’s land assets.
AAI currently owns more than 55,000 hectares of land at airports across the country.
The public sector airport operator expects revenue of Rs13,200 crore in 2017-18, against an expenditure of Rs9,900 crore, Mohapatra said, adding that the company’s profit after tax is expected to be around Rs2,100 crore during the period.
AAI also expects its non-aeronautical revenue to rise by 30% to about Rs2,769 crore during 2018-19, against Rs2,130 crore during the last fiscal, Mohapatra added.
The company, which plans to invest about Rs15,000 crore over the next 3-4 years on upgrading its airports, has allocated Rs4,086 crore as capital expenditure for 2018-19.
“The capex fund requirements are proposed to be met through internal reserves and borrowings in the ratio of 40:60. Initially, AAI intends to go in for borrowings of Rs1,500 crore from the domestic market (during 2018-19) for which action has already been initiated,” Mohapatra said.
AAI’s capex plan for the 2016-17 to 2021-22 period, which stands at about Rs20,178 crore, will be funded through internal resources and borrowings during 2018-19.
Majority of this money will be used to develop and expand airport capacity.
AAI will be exploring all options available for borrowings such as bonds, loans, external commercial borrowings, and masala bonds, Mohapatra said.
Over the next four to five years, AAI will ramp up capacity at airports including Chennai, Srinagar, Pune, Dehradun, Lucknow, Mangalore, Jaipur, Goa, Agartala, Guwahati, Leh, Patna, Trichy, Vijayawada, Port Blair, Agartala, Calicut, Trivandrum and Jabalpur. Expansion work has already been awarded at Guwahati and Agartala airports and tenders have been called for Chennai and Lucknow airports, Mohapatra said, adding that work on the remaining airports will be awarded during 2018-19.
AAI has also introduced master concessionaire model for F&B (food and beverage outlets) and retail facilities at 12 airports (Trivandrum, Calicut, Lucknow, Guwahati, Goa, Srinagar, Amritsar, Indore, Bhopal, Raipur, Trichy and Bhubaneswar) and has added 3,835 sq. metres of space for F&B, Mohapatra said.
“With master concessionaire model for F&B at 12 airports, the expected revenue is to the tune of Rs158.7 crore per annum (2018-19) as against previous revenue of approximately Rs15 crore (2017-18),” Mohapatra added.
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