In-principle approval for bundled airport privatisation

The Centre has given its in-principle nod to lease out 11 airports operated by the Airports Authority of India (AAI) to private players in five bundles under the public-private-partnership (PPP) model. The decision was made at the 149th meeting of the Public Private Partnership Appraisal Committee (PPPAC) held on August 4, according to the minutes and a Record of Discussion issued by the Department of Economic Affairs on August 20.

The five proposed bundles are:

  • Amritsar and Kangra-Gaggal
  • Varanasi with Gaya and Kushinagar
  • Bhubaneswar and Hubballi
  • Raipur and Aurangabad
  • Tiruchirappalli and Tirupati

Each bundle is to be awarded to a single concessionaire for a 50-year concession period. The bundling pairs larger, revenue-generating airports with smaller, loss-making ones, a structure the civil aviation ministry said "seeks to enhance the long-term sustainability of smaller airports through cross-subsidisation from the revenues of larger airports." The airports are currently under AAI, which will act as the sponsoring and implementing agency, with the civil aviation ministry as the administrative ministry.

Cap on airport bundles per bidder

The ministry also told the committee that the number of airport bundles that may be awarded to a single bidder would be capped "to mitigate the risks arising from market concentration and potential over-leveraging, including their possible cascading impact across projects." The modalities of the cap are being finalised and will be submitted as part of the proposal seeking final recommendation by the PPPAC. The meeting record did not specify how many bundles one bidder would eventually be allowed to win.

The proposed cap comes against the backdrop of concerns over the "oligopolistic nature" of India's aviation sector, where private operators such as Adani and GMR have consolidated their presence. At present, Adani Airport Holdings operates eight airports, accounting for about 24-25% of passenger traffic and 33% of air cargo, according to a report by Business Standard cited in the materials. GMR Airports, which operates Delhi, Hyderabad, and other airports, has about 27.5% of passenger traffic, according to the company. Together, they handle more than half of India's air passengers.

The airline sector mirrors this concentration: IndiGo and Air India Group (owned by Tata Group) account for about 91% of domestic passengers as of July 2026, a claim carried by a single outlet.

Politics and market dominance

The previous major privatisation round in 2019 saw six airports - Lucknow, Amethi, Jaipur, Mangaluru, Thiruvananthapuram, and Guwahati - awarded to the Adani Group. The group took over these airports between October 2020 and November 2021. In September 2020, Opposition MPs, including Congress leader K C Venugopal, raised allegations over the award of multiple airports to a single private group.

The market dominance of the two groups is not without historical precedent. The bundling proposal was developed by the AAI after the 2019 privatisation to leverage synergies between larger and smaller airports. The current round is the second major PPP transaction in the aviation sector, following the first in 2018-19.

Details of the transaction

The bidding process will feature a one-stage short-listing, with the per-passenger fee for domestic passenger throughput as the bidding parameter. The concession may also consider cross-sectoral infrastructure experience, rather than just aviation-specific experience, as the ministry's proposal indicates.

The concessionnaire will be responsible for operation, management, and development of the airports, including undertaking capital expenditure sanctioned by AAI. The ministry has also proposed a one-year joint management period involving existing AAI employees, with the concession Directorate required to retain 60% of AAI employees for up to three years. The plan includes triggers for infrastructure expansion based on traffic or capacity thresholds rather than rigid timelines, to avoid creating infrastructure ahead of demand.

The total investment to be made by concessionaires is estimated at Rs 8,622 crore, a figure carried in a single report. The airports were selected using a phased, data-driven approach: 12 major airports were assessed and 6 recommended, while 136 smaller airports were evaluated, leading to the finality of 11 airports in five bundles.

Market sounding and next steps

The ministry will now conduct a market-sounding exercise to assess interest from infrastructure players, as the bundling model is being attempted for the first time. Feedback from potential private-sector participants will be considered before the proposal is finalised and submitted to the PPPAC for final recommendation, followed by approval from the Cabinet Committee on Economic Affairs.

The move is part of the broader expansion of India's airport network, which has grown from 74 operational airports in 2014 to 165, with the government seeking to reach 400 by 2047. Private operators such as Adani Airports, GMR, BIAL, and Zurich Airport continue to expand their footprint, and GMR executive Saurabh Kawla said on an earnings call that the company will bid for new airports privatised, but "will bid at a rational price not creating a loss-making portfolio."

Perspectives

  • Civil Aviation Ministry: The cap on bundles is to mitigate risks of market concentration and over-leveraging, with modalities being finalised. Bundling pairs larger and smaller airports to cross-subsidise smaller ones.
  • Finance Ministry: Concerned about the "oligopolistic nature" of the sector, sought measures to minimize concentration and over-leveraging risks, and asked about the number of bundles allowed.
  • Private operators (Adani and GMR): They have expanded their airport operations. GMR's executive has expressed interest in new privatisation but at rational prices, indicating willingness to participate.

Corrections

  • The figure for IndiGo and Air India's domestic passenger share is as per a single outlet and not independently contested in the provided material.
  • The PPPAC threshold is noted as either above ₹250 crore or above ₹100 crore in different sources; both figures appear in the extract, and the discrepancy is noted.