India Airport Privatisation: Operator Cap Proposed

India airport privatisation plans will include a cap on the number of airports individual operators can win in the forthcoming auction of 11 airports, according to a record of discussion made public by the government and reported by Business Standard. The Ministry of Civil Aviation proposed the cap after the Ministry of Finance flagged the "oligopolistic nature" of India's aviation sector, with the 11 airports set to be auctioned as bundles of two or three.

Under the new airport bundling model, the government has paired major revenue-generating airports with smaller, loss-making ones into single bundles, allowing private concessionaires to cross-subsidise the operating and capital expenses of smaller airports using profits from high-traffic hubs, the report said.

The proposed airport operator cap India is aimed at limiting market concentration and over-leveraging, or the taking on of excessive debt, which the government fears could create problems across multiple airport projects. The Civil Aviation Ministry raised this concern with the Ministry of Finance at the 149th meeting of the Public Private Partnership Appraisal Committee (PPPAC) on August 4, according to Business Standard.

The aviation sector oligopoly concern comes as private operators Adani Group and GMR together account for more than half of India's air passengers, according to the report. Further information on airport policy is available through the Ministry of Civil Aviation.

Details on the specific structure of the operator cap, the timeline for the auction of the 11 airports, and further terms of the bundling arrangement were not specified in the available report.

In related financial news, FCNR-B deposits have crossed $65 billion ahead of the RBI's August 31 deadline.