Pre-qualification bids called for Chennai, Lucknow airports

    By IANS,

    New Delhi : The government Tuesday invited pre-qualification bids for companies which are interested in managing the Chennai and Lucknow airports by issuing request for qualification (RFQs).

    Support TwoCircles

    “The RFQ for selection of the prospective bidders for Chennai and Lucknow airports has been invited,” the civil aviation ministry said in a statement.

    The RFQ was issued following the inter-ministerial task force recommendations for operation, management and development of select airports on public private partnership (PPP) basis, it added.

    Under the PPP model, management and operations of Chennai, Kolkata, Ahmedabad, Jaipur, Lucknow and Guwahati airports will be awarded to private players for a concession period of 30 years from the Airports Authority of India (AAI).

    “Bids will be invited for the project on the basis of the premium in the form of revenue share to the AAI for award of the concession. The premium shall constitute the sole criteria for evaluation of bids,” the statement said.

    “The selected bidder shall be required to protect the interest of the existing employees of the airports.”

    The ministry added that no applicant will be entitled for the award of more than two airports out of the six which are to be awarded by the AAI. Applicants will not be eligible for award of more than one airport from Kolkata, Chennai and Ahmedabad.

    The RFQ will be preceded by the issuance of request for interest (RFI) and request for proposal (RFP).

    Sources in the ministry had earlier said that the government is willing to allow 100 percent equity by private companies to manage the airports, but negotiation on the same may come later on in the concession process.

    However, as a precautionary step the concession agreement will include a provision for issue of a golden share from the private players to the AAI in accordance with a shareholders’ agreement that would form part of the concession agreement.

    In previous cases of operation, management and development agreement (OMDAs) like Delhi, Mumbai, Hyderabad and Bangalore airports, the AAI has held equity in the managing company.

    The AAI currently has 26 percent equity each in Delhi and Mumbai airports and 13 percent each in Hyderabad and Bangalore airports under the OMDAs which it had signed with the private joint venture (JV) partners.

    AAI gets 49 percent share in the revenue generated by the Delhi and Mumbai airports’ operating company.

    Apart from allowing 100 percent private equity, the government is mulling pre-determined airport charges that will be levied once the airport operations are awarded under the OMDA.

    This will allow greater transparency in fixation of passenger charges after a recent hike in levies at Delhi and Mumbai airports.

    “The concessionaire can levy tariffs for aeronautical services including the user development fee (UDF) as may be determined by the Airports Economic Regulatory Authority (AERA). The RFP would indicate the parameters for determining charges for aeronautical services as well as the UDF,” the statement added.

    AERA’s stand on the matter is crucial as it will give more clarity on the revenue generation scope for the projects.

    AERA is the market regulator which determines aeronautical and non-aeronautical charges at private and AAI run airports which handle at least 1.5 million passengers annually.