The government is planning to allow private airport operators to build shopping complexes, conference centers and commercial offices near the airports. This potential change is under discussion to amend the Airports Authority of India (AAI) Act, 1994, as reported.
Now, the AAI Act is only permits the airport operators to develop hotels, restaurants, warehouses and cargo complexes and does not permit commercial office buildings and shopping complexes. If so, it would create a vibrant aerocity model of maximizing the commercial value of airports that could be developed if this change is made.
This proposal is consistent with India’s on-going privatization effort; 11 airports in tier 2 cities like Varanasi and Bhubaneswar are to be offered to private operators. The government also plans to monetize 25 airports in four years and generate ₹20,782 crore revenue from it.
Some experts think that this step will improve airport valuations, more investors will be attracted and the aviation infrastructure will be modernized. However, a challenge remains as a bid to amend the AAI Act in 2017 met legal challenges from Delhi and Mumbai airport operators.
