The Airports Authority of India (AAI) expects to monetise nearly 7,000 acres out of its total land bank of about 1.36 lakh acres and use this land for building shopping centres, commercial offices and conference centres, among others.
The civil aviation ministry has started inter-ministerial consultations on amending the Airports Authority of India Act, 1994, to expand the scope of usage for land owned by the Authority. After the consultations and the Cabinet approval, the government will introduce a Bill in Parliament to amend the law.
“Currently, there are restrictions on the purposes for which we can use the Authority’s land. The amendment (in the AAI Act) will allow us to use nearly five per cent of our total land bank of around 55,000 hectares for other purposes. Some of the land will be used for cargo purposes as well,” AAI chairman Guruprasad Mohapatra told The Indian Express.
The earnings from the monetisation of the land will be used for developing airports across the country. Chapter 3, Section 12 of the AAI Act lays down what is possible for the Airports Authority to do with its land. It allows the Authority to establish and maintain hotels, restaurants and restrooms at or near the airports, establish warehouses and cargo complexes at the airports for the storage or processing of goods.
But it does not say that this land can be used for purposes such as shopping centres, conference centres, commercial offices, commercial or multi-use complexes and training facilities. The proposed amendment in the law will enable the Authority to expand the functions for which it can use its land, much of which is in prime urban locations across the country.
In the Union Budget 2017-18, finance minister Arun Jaitley outlined government’s plans to monetise land bank held by the AAI, which is the third-largest land owner in the country after armed forces and railways. “Select airports in Tier-II cities will be taken up for operation and maintenance in the PPP (public-private partnership) mode.
The Airport Authority of India Act will be amended to enable effective monetisation of land assets. The resources, so raised, will be utilised for airport upgradation,” Jaitley said in his Budget speech. The AAI has lined up a capital expenditure (capex) plan of Rs 17,500 crore to be spent by 2019 for airport development and other purposes. While most of the expenditure will be funded through internal accruals, the authority might go to the market to raise resources in the last year of its capex cycle.
The AAI earned revenues of Rs 10,824 crore in 2015-16, and profit before tax of Rs 3,697 crore. Out of 125 airports of AAI, about 95 are operational of which 71 have scheduled commercial operations. To boost the regional connectivity scheme that offers subsidised flights from unconnected cities, the government has already announced plans for developing and modernising 50 existing AAI airports at an indicative cost of Rs 50-100 crore each. While the Centre will provide budgetary support for airport development, the Authority will also use its resources raised through land monetisation.