Airports Authority is trying to monetize land near airports

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The Airports Authority of India (AAI) is working on a draft amendment to the 1994 AAI Act that will allow the state-run airport operator to monetize land plots near airport terminals across the country, said two officials at the be aware of the issue.

Under the existing provisions of the AAI Act, the authority may only use the land for airport-related functions.

“The amendment to AAI Act, 1994 is currently in a draft stage. Legal advice has also been obtained from the Ministry of Justice and Justice. At the same time, the authority has identified land parcels, where AAI can start the process once final approvals are obtained,” said one of the two officials, who requested anonymity.

AAI has 55,000-60,000 acres of land in more than 150 locations, including airports and airstrips. “Out of 150 airports, there are more than 50 airports where the country data is clear and suggests that redevelopment will be possible without any roadblock. They should be first in line once the cabinet approves the proposal,” said the second official, also seeking anonymity.

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AAI’s plan to unlock additional revenue from a tangible asset such as land was proposed in the National Civil Aviation Policy, 2016. “There are restrictions on the use of land allocated for airport commercial use. The Department of Civil Aviation will explore ways to unlock its potential by liberalizing end-use restrictions for existing (excluding public-private partnership) and future AAI greenfield and brownfield airports, and future greenfield and brownfield airport projects under PPS,” the policy stated. In 2017, AAI had identified phased land for development on the city side near airports in Lucknow, Raipur, Tirupati, Bhubaneswar, Varanasi, Kolkata, Amritsar and Jaipur. It had also begun construction of parking garages multi-storey commercial facilities in Chennai, Ahmedabad, Pune, Calicut, Jaipur and Amritsar, alongside plans to build hotels at Amritsar, Bhubaneswar and Kolkata airports.

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To date, revenues from non-aeronautical sources at AAI’s major airports represent approximately 23% of total airport services revenues.

AAI posted a total turnover of 6,841 crore in FY22, up from 4,867 crore in the previous year. Turnover was 12,837 crore during FY20 non-covid year.

The organization has suffered losses since the outbreak of the pandemic due to a sharp drop in air traffic. AAI is expected to have incurred a loss of 800-900 crore in FY22.

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Under the airport development program announced by the Center in 2021, AAI has started developing new and existing airports with an expected capital expenditure of 25,000 crores over five years, including construction of new terminals, extension and modification of existing terminals, extension and reinforcement of existing runways, aprons, airport navigation services infrastructure, control towers and engineering blocks.

So far, the government has given approval in principle for setting up 21 greenfield airports in India. Of these, eight airports – Sindhudurg and Shirdi in Maharashtra, Durgapur (West Bengal), Pakyong (Sikkim), Orvakal (Andhra Pradesh), Kannur (Kerala), Kalaburagi (Karnataka) and Kushinagar (Uttar Pradesh) – have been operationalized.

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