But as the general elections in 2024 came closer, the plan was put on hold and it is only in February this year that news of the process being revived began to trickle in, announcing the government’s intention of handing over the airports and monetising these assets by the end of FY 2026. As India enters its third wave of privatising its airport assets, there are many gaps that stakeholders have identified that need a closer look.

Two Steps Forward, One Backward

India was late by global benchmarks to enter the airport privatisation era when it embarked on the process in 2004-2006 by privatising four primary airports : Delhi, Mumbai, Bengaluru and Hyderabad and handed them through the public private partnership (PPP) mode to GMR and GVK, which beat other players including an Anil Amabani-led consortium to win these assets. At the time, GVK and GMR were new kids on the block, both fairly well known in the infrastructure space in Hyderabad, their home ground but relatively little known at a national scale.

While the two private Indian players with assistance from a battery of external consultants and airport firms did a competent and reasonably efficient job - the new airports were several notches above what passengers had resigned themselves to under government ownership - many problems arose in the revenue sharing formula that was applied to the process.

“Millions of transactions take place in any airport on a daily basis right from a cup of coffee sold to parking tickets. This led to a lot of dispute and arguments between the consortium and the authorities since the term revenue itself is nebulous and open to interpretation,” said a former joint secretary of the civil aviation ministry (MOCA). He said that the sheer complexity of the financial arrangements turned the private airports into a virtual battleground , leading to an endless number of disputes and court cases.

Another area of dispute was between the airport and the newly formed Airports Economic Regulatory Authority (AERA), a statutory body established under the Airports Economic Regulatory Authority of India Act, 2008, to regulate tariffs and other charges for aeronautical services at major airports.

“Fixing airport charges and tariffs was a new field for the country as there was virtually no expertise in this area,” said a former MOCA secretary. In the absence of any experts or prior experience, becoming AERA chairman became aspirational for many former bureaucrats whether they had any knowledge of the aviation sector or not. This led to more ad hoc tariff setting and confusion for the private airport developers too who were also wet behind their ears in this aspect. Even now, tariff setting by AERA remains a highly contentious issue.

A second problem became clear after the first set of airports were up and running. The new facilities were grand, large and expensive to build. For instance, the actual cost of the Delhi airport project exceeded the original estimate by 43.25%, and the actual built-up floor area exceeded the original estimate by 17.8%, violating the master development plan. This translated into higher charges across the board and led to the airports becoming fairly expensive. More than one airline including foreign ones complained about how expensive Indian airports had become compared with peers globally, an uncorroborated allegation the Indian private airport consortium faced persistently.

Midway Course Correction

Faced with all these issues post the first phase of privatisation, in 2018, the government decided to move from the revenue share model for bidding to a per passenger fee model, where the development of the airport would go to whoever offered the highest fee per passenger. “This was a no-brainer since there can be little argument about how many passengers fly annually from any facility”, said an official associated with the exercise who asked not to be named.

It was on this basis that bids were invited for the next lot of six airports which were won by Adani, who outbid all others by a wide margin. The Adani thinking was “all-or-none” and the group outbid all the others by such a wide margin that many felt that they had overreached.

Members of NITI Aayog and others in government were also uncomfortable with all six airports falling in the lap of one private developer but there was no stipulation in the bidding process that forbade all six facilities being developed by a single player. Adani had simultaneously trained his eyes on both Mumbai International Airport Limited - which would also mean Navi Mumbai as MIAL had the first right of refusal and on the new Noida International Airport at Jewar.

What is lesser known is the big regret for the group was losing the Jewar bid to Zurich Airport International. The passenger fee of ₹401 per passenger offered by Zurich was far above Adani’s ₹360. In fact, even GMR at ₹351 would have beaten the Adani bid since GMR had the first right of refusal with a 10 percent margin.

The handover of the six airports and the changeover of ownership of MIAl were steeped in many controversies. Government and industry sources at the time were both taken aback and wary of the aggressive bidding by Adani Airports Holdings Limited (AAHL), which outbid all the others by a steep margin. The decision to hand over these six facilities to one single bidder was also a controversial one as many felt it was like putting too many eggs in a single basket. The ability of the developer to deliver on all facilities at one go was a question mark especially since the Adani group was already mired in its own share of controversies. It would be fair to say that the airport privatisation exercise in India has been a learning exercise for all.

Change in The Air. And on the Ground

The Adani airports have by and large seen vast improvement and expansion since the takeover. Of the six, the Ahmedabad airport - the homebase of the group - has been transformed. The annual passenger capacity has now increased to 8 million (from 5 million) for Terminal 1 while it has increased to 8.8 million (from 2.5 million) for Terminal 2. In general, passengers say that the old or the new airport cannot be compared in the same breadth, so sharp is the improvement.

Although in varying degrees, progress is visible at all the other airports as well although Mangalore, Jaipur, Thiruvananthapuram and Guwahati are yet to show very discernible progress and fully shake off their old AAI feel - change has been slower than the residents expected or anticipated post privatisation. Visible improvements have been made at the Lucknow airport where a new terminal was inaugurated in FY 2024-25, increasing terminal capacity from 4.3 million passengers per annum (MPPA) to 13 million. Guwahati Airport too is currently constructing a new terminal, expected to be completed in 2026, increasing terminal capacity from approximately 2 million to 13 million passengers per annum.

Apart from better facilities at these airports, AAI has gained from the passenger fees paid to it by the Adani Group. In response to queries sent to the group, an Adani spokesperson said that as of December 31, 2024, Adani Airports has paid approximately ₹6,000 crore to AAI. This includes around ₹1,800 crore for assets transferred during the transition, ₹2,400 crore in passenger concession fees from the commencement of operations until 31 December 2024 and approximately ₹1,800 crore for True Up for AAI period (an accounting exercise).

“Not only is AAI earning revenue through the privatisation, the burden of investing in these and the other privatised airports has been lifted, leaving it free to invest in other airports and required infrastructure,” pointed out a former MOCA secretary.

An Adani spokesperson said that the fact that AAI has been able to bolster its revenues demonstrates how the government has successfully monetised its assets through privatisation, adding that since these assets are now privatised, the group would now make the further investments required. A total capital expenditure of approximately ₹33,000 crore for these six airports has been proposed during the current control period (a block of five years). “This allows the government to allocate its capex to other infrastructure projects,” the spokesperson pointed out.

Mind The Gaps

Airlines, passengers and other stakeholders however see much room for improvement in the privately-run airports. While everyone, including AAI chairmans and heads, admit that the private players are doing a far better job than AAI could ever aspire to, there is much scope for improvement that those vested in the sector argue.

To begin with, almost everyone points out that while Indian airports are high on aesthetics - at times bordering on over-the-top “museum like” entities - they remain far less functional or efficient as they have mostly not been built as smooth transit facilities but with point-to-point traffic in mind. A former MOCA joint secretary said that unlike Dubai and Singapore where the entire airport is designed for transit, Indian airports have not been designed with this aspect in mind. A passenger who happens to land at Delhi’s T1 or T2 cannot take a free tram or any seamless connection to T3 to make their way out of the country.

If Indian airports are less functional than many foreign counterparts, getting to and leaving them is both expensive and cumbersome. With poor public transport options and inadequate last mile connectivity, taxis and private cars remain the mainstay of those travelling through most Indian airports. “While a taxi may be fine and an easy option in Tier 2 and Tier 3 cities and towns, better access through public transport would be a game changer in the metros, where congestion on the ground is as much as congestion in the air,” said a senior Air India management member.

Although some terminals in Bengaluru and even Delhi offer air-conditioned buses and metro connectivity to destinations within the cities, they are not the most convenient and easily available option (you have to search upon arrival to find a bus to the city centre) in a majority of cases. Most passengers flying in and out of metro airports are forced to use taxis, even if they find it a stretch on the pocket. “This is one area we urgently need to catch up with airports in the West”, the Air India management member, quoted above, pointed out.

A more recent allegation that has surfaced - particularly in reference to the more recently modernised Adani airports - is how commercial considerations and non- aero revenue seems to be the overriding focus. At Lucknow, in particular, several passengers have told this writer that after the private takeover, the new facility feels more like a large sized “shopping and food mall” than a functional airport, although MOCA sources said that there are restrictions on how much area can be dedicated to commercial spaces.

Recent news reports that private airport operators in India may get to build shopping complexes, conference centres, and commercial offices around airports, expanding beyond just hotels and cargo warehouses, are a further bone of contention.

The government is considering amending a law to widen the scope of commercial exploitation of land by airports in a fresh attempt at their privatisation as some of the airports in tier II cities are not expected to attract enough interest on their own. Many in the sector including government officials have consistently maintained that the whole airport privatisation is more like a “land grab” and that is the primary reason big corporate houses are keen to enter the fray.

Whether or not this allegation has any basis, the fact remains that passengers in India today have far better, larger and more functional airports than what AAI ever managed to deliver. With the kind of growth in air travel in the last decade, one shudders to think what the state of affairs might have been had the private players not entered the fray. Now the burden of delivering infrastructure that matches the country’s ambitions lies firmly and squarely on their shoulders.

Anjuli Bhargava writes about governance, infrastructure and the social sector. The views expressed are personal.