Answer:

Introduction:

The development of airports in India through joint ventures under the Public-Private Partnership (PPP) model has been a transformative process, albeit with several challenges. Initially, this model was implemented in major airports like Delhi and Mumbai, and has since expanded to other locations.

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Key Developments:

• Economic Regulation and Land Monetisation: One of the main areas for improvement in the PPP model is economic regulation. The absence of a defined economic regulatory framework during the initial awarding of concessions for major airports like Delhi and Mumbai led to debates on the application of a single, hybrid, or dual till system by the Airport Economic Regulatory Authority (AERA). This lack of clarity has resulted in issues related to airport charges and the management of project costs.
• Increased Charges: The PPP model has led to higher charges at airports, which has been contentious for airlines. In some cases, taxes and fees constitute a significant portion of the average gross fare, impacting the affordability of air travel for passengers.
• Financial Viability of Airlines: The financial struggles of Indian airlines have affected airport cash flows due to delayed payments of aeronautical charges. The failure of airlines like Kingfisher also posed risks to airports, particularly those where the airline had a significant market share.
• Bilateral Policy and Long-Term Strategy: The fluctuating nature of India’s bilateral policy, alternating between liberalisation and restricted access, has made it difficult for airports to develop long-term strategies. This inconsistency affects their ability to plan for traffic flows and infrastructure needs.
• Challenges with Greenfield Projects: The development of new airports, or greenfield projects, faces hurdles such as land acquisition, budget overruns, and inadequate surface connectivity. These challenges have been particularly evident in the delayed construction of the Navi Mumbai airport.
• Regional Airport Development: While the government has encouraged the development of regional airports to boost connectivity, many of these projects have not been economically viable. Only a small percentage of the operational airports managed by the Airports Authority of India (AAI) are profitable, highlighting the need for a more sustainable model.
• Focus on Non-Metro Airports: There’s a need to focus on commercial opportunities and city-side development to make non-metro airports more viable. However, some of these airports are constrained by limited land, affecting their development potential.
• Cochin International Airport Limited (CIAL) Model: CIAL, as the first PPP airport in India, serves as a role model for other airport projects in the country. It has successfully focused on developing non-aeronautical revenues and controlling capital expenditure.

Conclusion:

While the PPP model has brought significant improvements and expansion to India’s airport infrastructure, it also presents multiple challenges that need to be addressed. These include regulatory frameworks, economic viability, strategic planning for long-term growth, and a focus on both metro and non-metro airports. Addressing these challenges is crucial for the continued growth and efficiency of the aviation sector in India.

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