Govt likely to remove restrictions on commercial use of AAI land

The government is considering a legal amendment to increase the scope for commercial exploitation of land by the Airports Authority of India (AAI). People in the know said the civil aviation ministry had started inter-ministerial consultations on amending the Airports Authority of India Act, 1994. After this, the government will introduce a Bill. While this will give the AAI more liberty to commercially exploit around 55,000 hectares, the move is also aimed at increasing the potential of privatising airports in Tier 3 and Tier 4 cities. The Act allows the AAI to establish and.....
The government is considering a legal amendment to increase the scope for commercial exploitation of land by the Airports Authority of India (AAI). People in the know said the civil aviation ministry had started inter-ministerial consultations on amending the Airports Authority of India Act, 1994.

After this, the government will introduce a Bill.

While this will give the AAI more liberty to commercially exploit around 55,000 hectares, the move is also aimed at increasing the potential of privatising airports in Tier 3 and Tier 4 cities.

The Act allows the AAI to establish and maintain hotels, restaurants, and restrooms at or near airports, and establish warehouses and cargo complexes there. But it does not say this land can be used for purposes such as creating shopping centres, conference centres, commercial offices, commercial or multi-use complexes, and training facilities.

The proposed amendment will enable the AAI to expand the functions for which it can use its land, much of which is in prime urban locations of the country. Sources said under the amendment, the government did not want to specify the usage of the land. The ministry wants all activities other than hazardous and polluting ones to be allowed.

“Removing restrictions on land usage will help in improving the finances of the AAI, which have been heavily impacted by the pandemic,” said an official aware of the development.

The state-owned airport operator rang up a cumulative loss of Rs 2,948.97 crore in FY21 -- the first time it has been in the red since inception. Of the 136 airports it operates, 107 were in losses due to the pandemic disruption.

Secondly, giving greater flexibility on land usage will increase the attraction of smaller airports for the private sector to invest. Many of those have limited aeronautical activities.

“Improving the scope for non-aeronautical activities will increase the value of those airports,” the official said.

According to the asset monetisation plan of the NITI Aayog, the government plans to monetise 25 airports over four years to fetch Rs 20,782 crore. Many of those airports are in smaller cities like Bhopal, Imphal, Agartala, and Udaipur.

This is the second attempt by the government to amend the Act. In 2017, when the government made such a move, it faced a legal challenge from Delhi International Airport Ltd (DIAL), a company owned by GMR Group, which operates the country’s largest private airport at Delhi.

The amendment was restricted to existing public-private partnership assets, and this barred Delhi and Mumbai airports from exercising similar flexibility when it came to land use.


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