The private airport operators of Delhi and Mumbai are unlikely to benefit from any relaxation in land usage norms for the Airports Authority of India (AAI).
As the manager of a chunk of the country's airports, state-owned AAI is seeking an expansion in the norms to use its land on the city side of any airport for services that are not aviation-related. As of now, the AAI Act allows an airport operator to use land only for aviation-related services.
The country's private airports operate on an Operations, Management and Development Agreement (OMDA). "That will not change with our land usage norms changing," according to a top AAI official. "They will continue to follow the current norms of land usage," he said.
On the contrary, private airport operators feel an alteration to the law will change the land usage norms for them. The GMR Group says amending the AAI Act will ultimately lead to a change in the existing OMDA, which is based on the Act.
"The OMDA can also change. It has also changed earlier," notes a spokesperson of the infrastructure enterprise.
OMDA permits both Delhi and Mumbai airports to commercially use five per cent and 10 per cent of the total land, respectively, to build hotels and convention centres. Delhi airport has 5,000 acres, while the figure is 2,000 for Mumbai airport.
The 1994-founded AAI, which functions under the ministry of civil aviation, had applied for relaxation in land usage norms following a similar request by the country's private parties.
The development happened after AAI announced to develop the city side of 15
airports, through private participation.
Representatives of the private sector also made a request for the expansion in the current land usage norms, saying this would help in making the project at these airports lucrative, as many of these airports do not attract passengers in a big way.
"The private participants wanted the land usage terms to be expanded to non-aviation related services," says the official. "They also sought an increase in the height of the building that can be built near the airport, so as to make the projects lucrative for them."
AAI is estimated to have a land bank of 45,000 acres across all airports and gets only five per cent of the total revenue from non-aero services. It operates 126 airports - 16 international, 89 domestic and 26 civil enclaves. Only 14 of the airports it owns make profits.
Analysts feel such permission cannot come with blanket approval. Reason: the multiplicity of authorities involved.
Deloitte Touche Tohmatsu notes the land around every airport is also governed by norms of the city's administration.
"Their approval is required for any construction," points out Amrit Pandurangi, senior director of the accountancy firm. "The state government's view also needs to be taken."
AAI had, in 2009-10, registered a profit of Rs 712 crore (Rs 7.12 billion) in 2009-10. On a revenue of Rs 4,615 crore (Rs 46.15, billion) it expects annual earnings to grow by Rs 100 crore (Rs 1 billion) through the user development fee collection at various airports.
The authority has also asked for permission to raise Rs 5,000 crore (Rs 50 billion) through a debt-free infrastructure bond. In the past, the finance ministry has declined it permission to do so.