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Centre proposes new bidding model for greenfield airports

Centre proposes new bidding model for greenfield airports

Moots fixed fee per passenger as ‘most transparent method’

The government on Tuesday proposed a new transaction structure for the bid process for greenfield airports, switching from a revenue share model to a fixed fee per passenger to be paid to the concessioning authority.

The Ministry for Civil Aviation is betting that the proposed change to the bid parameters would help ensure affordability of airport services for passengers as well as predictability of revenue for the winning bidder.

“The present model is revenue sharing,” Minister for Civil Aviation Suresh Prabhu said at a press conference. “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,” he addded.

The Maximum Blended Aeronautical Yield (MBAY) in terms of rupee per passenger would be determined by the concessioning authority at the beginning of the tender period. This fee has been fixed at ₹400 per passenger for the financial year 2018-2019. The bids would however differ for each airport in line with the projected traffic, financial returns and risk profile.

Performance indicators

The Ministry has also proposed that tariff regulator Airports Economic Regulatory Authority of India may formulate key performance indicators as part of the bid document and could be revised every five years. This would ensure quality of services by the concessionaire.

The Ministry has invited comments on its proposal until September 14, which would be incorporated in a model concession agreement for airports.