New concession model for greenfield airports proposed

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SME Times News Bureau | 15 Aug, 2018
In a bid to make the airport sector more attractive to investors, the government on Tuesday proposed shifting from the current revenue sharing model to a fixed aeronautical yield model based on the number of passengers for greenfield airports.

"The present model is revenue sharing... The new model will be based on passengers entering the airport. This will be the most transparent method. With new technology, the headcount is far more easier," Civil Aviation Minister Suresh Prabhu said.

Sharing the draft of the new Model Concession Agreement (MCA) for greenfield airports which will be open for public consultation till September 14, Prabhu said the government was trying to remove regulatory hurdles and make the system transparent and predictable.

"We want the model extremely transparent and something which will not be subject to any controversy... The new regime would mean that the successful dealer will have to provide facilities which will be pre-determined in terms of quality," he added.

As per the new (proposed) transaction structure, the Maximum Blended Aeronautical Yield (MBAY) for 2018-19 is proposed to be Rs 400 per passenger, the maximum amount an airport operator can expect to earn from passengers for its aeronautical services.

The proposed bid parameter for airport operator is 'Concession fee per passenger' payable to concessioning authority in terms of rupees per passenger.

Bids will differ for each airport in line with projected traffic, financial returns and risk profile.