India: Master document for airport infra development to be out by August

The Centre would put in place a new model concession agreement (MCA) by August that would guide development of airport infrastructure across the country, including the Rs 20,000 crore mega international airport proposed at Jewar, Uttar Pradesh.

The MCA is being drafted by consultancy firm KPMG and would be out for stakeholder consultations by July end. In a recent meeting to review policy actions in the sector, junior civil aviation minister Jayant Sinha wanted the officials to prepare the MCA document on priority basis, as it will be the reference book for developing Jewar airport.
KPMG executives gave a presentation during the meeting and set August 14 as deadline for releasing the final MCA to stakeholders. They discussed various parameters such as tariff structure, concession period and annual escalation in yield, among others, in the run-up to submitting a draft of the key document.

State-run Airports Authority of India (AAI) has hired KPMG for drafting the MCA, the key document that spells out the policy and regulatory framework for implementation of a PPP project.

“Exact time for releasing the transaction structure for the greenfield side for public consultation would be finalised shortly,” said the minutes of the meeting reviewed by Financial Chronicle.

The national civil aviation policy (NCAP) requires calculation of airport tariff in all future greenfield projects on a “hybrid till” basis unless any other model is specified. Accordingly, non-aeronautical revenue to the tune of 30 per cent would be used for cross-subsidising airport charges.

The policy stresses increasing non-aeronautical revenue by better utilisation of commercial opportunities of city side land. An airport industry executive said that various state governments planning to build airports would use the Centre’s model concession agreement as a key reference point but they would be free to entirely adopt it or not.

“Its success would depend on investor interest in upcoming airport projects as they would bid keeping the terms of the document in mind,” he said wishing not to be named.

Junior aviation minister Sinha has advised the consultant to study all the best global practices before finalising the MCA so that any possible gaps could be avoided. Among other issues, the minister also wanted to know the steps taken for increasing the number of slots from 67 now at the congested Delhi airport.

Further, he directed the AAI to collect data of parking bays available at all airports including PPP and joint venture (JV) airports and share the details with airlines. This will help carriers plan their fleet and network expansion in the country.

Source: Deccan Chronicle. India.

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