Economy

Can Changi manage Ahmedabad, Jaipur airports without bidding?

Can Changi manage Ahmedabad, Jaipur airports without bidding?

Airport Authority of India’s (AAI) proposed tie-up with Singapore’s Changi Airport to operate and manage Jaipur and Ahmedabad airports might help improve efficiency and non-aeronautical revenue but experts doubt if airport management contracts can be awarded without bidding.

“We welcome the move as management and commercial competence is missing at AAI. The terms and tenure of engagement are not clear and we are not sure if Changi will get to manage both the airports without bidding,” said Kapil Kaul, chief executive officer of Centre for Asia Pacific Aviation (South Asia).

While the government has scrapped plans to privatise airports, it is open to giving management contracts to private and global entities. AAI has signed an MoU with Singapore Cooperation Enterprise, a Singapore government agency, proposing Changi Airports International manages Ahmedabad and Jaipur airports.

A formal agreement with Changi has not been signed yet. The public-private partnership for Mumbai and Delhi airports covered operations, management and development of two airports. However, the scope of the proposed project will be limited to operations and management of existing infrastructure of Ahmedabad and Jaipur airports. There will be no leasing of airport premises.

“We will hold discussions with Changi Airport and the partnership model will be decided after negotiations,” said AAI chairperson R K Srivastava.

“It is a government to government arrangement,” he added. When asked about the absence of bidding, Srivastava said the government had sovereign right to enter into such agreements.

According to an AAI executive, Changi would be responsible for terminal management. Air side operations (management of runway, taxiways etc) would remain with AAI. Changi is expected to earn a management fee for managing the airports.

“We can use Changi’s expertise in optimal floor plan for terminal and work towards increasing passenger flow amongst other things,” the executive said.

In FY15, Ahmedabad and Jaipur airports handled 5.05 million and 2.2 million passengers respectively. According to AAI’s FY14 annual report, it earned Rs 814 crore from non-aero nautical operations, 13.5 per cent higher than the previous year. The specific figures for Ahmedabad and Jaipur were not available. Changi Airport did not respond to an e-mail query on the issue and directed it to Singapore Co-operation Enterprise.

The MoU covers aspects like design, planning, traffic and commercial development, service quality and operations and management at Ahmedabad and Jaipur airports. The scope of the pact can be extended to include other airports, too. The MoU was signed during Prime Minister Narendra Modi’s two day visit to Singapore last month.

In August, government scrapped the privatisation of four major airports – Chennai, Kolkata, Jaipur and Ahmedabad. While the airports at Chennai and Kolkata will continue to remain under the complete control of AAI, fresh bids will be invited for Jaipur and Ahmedabad from private players. “These bids would only be for operations and maintenance contracts,” government officials had then said.

Changi Airport owns over 36 per cent in Bengal Aerotropolis Projects at Durgapur. Initially, Changi had taken 26 per cent stake in the project which was hiked to 36.32 per cent this year. The airport began operations in May.

 
[“source-businesstoday”]

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