India: New Airport Projects May Be Awarded On Revenue Sharing Basis

The Centre is planning to put in place a system under which new airports coming up in the country will be awarded on the basis of the revenue sharing. According to a Mint report, airport developers will have to compete to win contracts based on the revenue per passenger to be shared with the authority giving the contract. The current system mandates the sharing of a part of the profit from the venture. This will be fine-tuned after receiving industry feedback.

As profit-sharing contracts are prone to disputes, the government has already moved to similar ‘auctions involving revenue sharing’ models in investment-rich sectors such as oil and gas. The Civil Aviation Ministry expects this model to attract more investors as it will likely reduce controversies and litigation.

Minister of State for Civil Aviation Jayant Sinha said that the new policy would make air travel more affordable. India is targeting a billion air passengers by 2033-2038.