Govt pours cold water over AAI plans on realty

Govt pours cold water over AAI plans on realty

Tells House Panel it is not equipped for the job

Govt pours cold water over AAI plans on realty

After registering losses over the past several years, the Airports Authority of India (AAI) has planned to maximise non-aeronautical revenue to mop up money, but the Ministry of Civil Aviation is not optimistic about its capacity to do so.

AAI Chairman R K Srivastava, who assumed office early this month, believes that adopting best global practices in the commercial exploitation of available assets would help in augmenting non-aeronautical revenue.

Srivastava has outlined his priorities in a message to his colleagues but the ministry appeared to have thrown up its hands even before as it told a Parliamentary panel that AAI could “not fully harness” non-aeronautical revenue from parking, cargo facilities, hotels, passenger amenities and shopping “due to inherent constraints”.

AAI-run airports are likely to incur a loss of at least Rs 1,112.39 crore in 2014-15, a rise from Rs 1,087.48 crore incurred in the last fiscal. These figures could rise, as the allocated expenditure is not included in these calculations. It is to be seen whether the losses will surpass Rs 1,546.84 crore incurred in 2012-13.

Srivastava noted that maximising non-aeronautical revenue is the new global trend to make airports a self sustaining commercial enterprise. With the changing times and emerging global trends, the AAI is now expected to work as a commercial enterprise, he said.

“Many airport operators across the globe have augmented the share of their non-traffic revenue to the tune of 50 per cent or even more. This is certainly achievable, if the emerging trends in the country for the development of infrastructure by different wings of the government through monetisation of immovable assets and land available with government and its allied organisations are emulated and adopted,” he said.

Eyeing cargo segment
Srivastava was of the view that the AAI needs to make concerted efforts for augmenting the business potential in the cargo business, which has not been exploited to its full potential.

“The AAI needs to work out a new strategy to capture and develop its share of the market in the cargo sector,” Srivastava added. However, the Civil Aviation Ministry does not appear to share this. The ministry said that airports at New Delhi, Mumbai, Bengaluru and Hyderabad, which are now running on PPP mode, had increased non-aeronautical revenue substantially, which is about 50 to 60 per cent of total revenue.

“Whereas, in AAI airports, non-aeronautical revenue even today is restricted to 16 per cent,” the ministry was quoted in the report tabled in Parliament last month.
The main issue before the Airports Authority of India is the difficulty in getting encroachment removed from its land, it said.