Mumbai: The Airports Authority of India (AAI) has signed an agreement with a Singapore government agency to operate and manage airports in Ahmedabad and Jaipur.

The two airports, along with those in Kolkata and Chennai, were earlier slated to be privatized, but the Indian government formally dropped the plan in August. (mintne.ws/1gWOkKV)

Singapore Cooperation Enterprise (SCE) and AAI signed the agreement during Prime Minister Narendra Modi’s recent visit to the city state, an AAI official said.

SCE is a Singapore agency that helps foreign countries interested in the Singapore development experience.

Once the agreement is finalized, Singapore’s Changi Airports International will take charge of operations and management (O&M) at the two airports under a government-to-government contract, the official said. He said the modalities of the agreement are yet to be worked out, adding the O&M may be for 10 to 15 years. “If this experiment is successful, the government may try this option with other airports," he added, asking not to be identified. The Economic Times on Wednesday reported that AAI has signed an agreement with Changi Airports.

A spokesperson for Changi Airports International referred Mint’s query to SCE, which did not respond to an email.

SCE works closely with Singapore’s 15 ministries and over 60 statutory boards to address the development objectives of foreign governments.

A senior airport consultant welcomed the decision.

It is always better to bring in an international management contractor rather than asking airport firms to rebuild these airports, which were upgraded by AAI, said the consultant,requesting anonymity.

India’s airport privatization has been a haphazard affair all the way. Of India’s six metro airports, four, namely New Delhi, Mumbai, Hyderabad and Bengaluru, are at present run by private operators. The previous United Progressive Alliance (UPA) government wanted more airports to be privatized, despite resistance from airlines who said passengers and airlines will have to pay more to use these airports with upgraded facilities.

In August 2013, the government floated a global tender to give management contracts for airports in six cities—Chennai, Kolkata, Ahmedabad,Jaipur, Lucknow and Guwahati. However, the move did not take off.

In late 2014, AAI completed a 2,400-crore upgrade of Chennai and Kolkata airports. Citing the expensive upgrade, the National Democratic Alliance (NDA) government decided not to go for privatization. The government, however, took a u-turn in January, inviting bids from Indian and international companies to develop airports in four cities—Chennai, Kolkata, Ahmedabad and Jaipur—in public-private partnerships (PPP).

However, in August, the government abandoned the airport privatization plan.

In a 7 August 2013 letter, International Air Transport Association (IATA) regional vice president (Asia Pacific) Maunu von Lueders wrote that the lobby group for airlines appreciates that there is a need for airport infrastructure development in India to facilitate the country’s aviation growth, and that significant capital investment is required, which could be partly provided by the private sector.

“Even if it is a question of bringing in external management expertise to augment the internal expertise of AAI for managing these airports, this could be achieved without the need for transfer of ownership to the private sector. A better way to achieve efficiencies in operations can be through awarding a ‘management contract’ to an entity with expertise in this domain," Lueders had wrote.

IATA represents nearly 260 airlines, comprising 83% of global air traffic.

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