Signed in November last year, a Memorandum of Understanding between the Airports Authority of India (AAI) and Singapore Cooperation Enterprise (SCE) is gaining ground. The agreement is tofacilitate cooperation in mutually agreed areas of civil aviation services and airport management. A team from Changi Airports International (CAI) is to visit the two airports identified for development, Jaipur and Ahmedabad, to look into modalities and assess the scope of work, a ministry of civil aviation official told AIN.
SCE was formed to facilitatepublic sector collaboration projects, build long-term partnerships with foreign governments, and generate economic spin-offs for Singapore’s private sector. On a visit to Singapore in November, Indian Prime Minister Narendra Modi announced the Indian government was exploring collaboration with Singapore’sChangiAirport to operate two airports in India. The MOU includes design, planning, traffic and commercial development, service quality and operations and management.
Privatization plans for two other airports–Chennai and Kolkata–were scrapped last year, and they will continue functioning under AAI. A formal agreement with Changi Airport has not been negotiated yet for Jaipur and Ahmedabad.
“A need was felt that in order to ensure high standards of service at Ahmedabad and Jaipur airports, AAI may enter into operation and maintenance [O&M] contracts, either with or without the responsibility of maximization of non-aeronautical revenue in the terminal building (excluding land on city side and air side). The city side and airside will continue to be managed directly by AAI,” said the Ministry of Civil Aviation in a statement.
While O&M contract models are common around the world for entire airport operations, AAI does not have any previous experience operating O&M turnkey contracts. “In order to implement the decision, it was necessary to ensure that a suitable entity be engaged for undertaking the O&M contract at Ahmedabad and Jaipur airports,” the statement added. The official said these two airports would be pilot projects with more airports to follow based on the model.
Under the government-to-government agreement, it is likely Changi will manage the retail space inside the terminal buildings and the car parking spaces. The operations of the airports will remain with AAI; the official made it clear that Changi would not be permitted to pick up a stake in the airports. “They may at best charge a success fee, over and above the fee for O&M expertise, but there is no question of AAI diluting any stake in either airport.”
Once the Changi team visits the two airports, the O&M contract is likely to be discussed, according to RK Srivastava, chairman and managing director, AAI. “It is possible that Changi decides that the procurement of some services at the two airports should be done via a tender. Let the team come and more details will emerge,” said RN Choubey, secretary, Ministry of Civil Aviation.
Jaipur and Ahmedabad are among the top 16 of around 100 AAI-owned airports in India. With their hinterlands expanding, traffic is forecast to increase substantially.
Meanwhile Changi Airports India, a subsidiary of CAI,is the largest single shareholder in Bengal Aerotropolis Projects Ltd (BAPL) after it increased its staketo over 32 percent in May 2014. It secured the aerodrome license last year to start operations. The airport has offered a tax holiday on fuel for six years in an attempt to attract airlines.