Q&A: India will grow faster than its peers
Cruising Heights|February 2023
Alvarez & Marsal India (A&M India) Managing Director SUDEEP MEHROTRA and Senior Director VARUN AGRAWAL put together key changes observed in the Indian airport sector over the last decade and the trends that are likely to shape the sector over the next decade in the paper titled: "Airports in India at Inflexion Point". Here, they answer more questions from CRUISING HEIGHTS on their assessment and the key drivers for growth
Q&A: India will grow faster than its peers

How do you think the government's initiative through the National monetisation pipeline will help unlock value in the airport sector? Clubbing airports could be similar to the route dispersal guidelines-clubbing trunk routes with lean routes. It has never really served the purpose at the end of the day. How do you see this working?

The exact nature of the contractual obligation under the proposed NMP plan of clubbing a smaller airport with a large one is still unclear. During the last round of privatization, where the government divested stake in six airports, the concessionaire was expected to transfer the existing asset value of operating airports under the Regulated Asset Base model within one year, along with committing capital expenditure for airports that are undergoing expansion or have planned for it. Under the proposed scheme, if the payment obligations for smaller airports are appropriately structured, then this would help private players mitigate the risks appropriately. Additionally, the non-aero potential for airports is likely to be harnessed better under private control.

Your report makes the argument that if airports like Chennai and Kolkata were privatised the non-aeronautical revenue could see a considerable rise as witnessed in the privatised airports of Delhi, Mumbai and Hyderabad. Would this assessment be correct? And is it simply because government entities by nature do not have the same creative impetus to customer service as a private company? Or is it easier to monetise airport land when you are free of government encumbrances?

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