CA pp jain
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In view of the fact that there are already a sufficient number of
airports, many of which are not viable, greenfield airports will
normally not be taken up either in the public or private sector without the prior approval of the Government. In the case of the Other Airport category run by private operators, the approval of the DGCA would suffice as at present.
§ A greenfield airport may be permitted where an existing airport is unable to meet the projected requirements of traffic or a new focal point of traffic emerges with sufficient viability. It can be allowed both as a replacement for an existing airport or for simultaneous operation. This aspect will have to be clearly spelt out in the notice inviting tenders.
§ No greenfield airport will normally be allowed within an aerial distance of 150 kilometers of an existing airport. Where it is allowed as a second airport in the same city or close vicinity, the parameters for distribution of traffic between the two airports will be clearly spelt
out.§ The Government may, while permitting a greenfield airport, decide whether it will be in the public or private sectors or be taken up as a joint venture. § Where the Government decides to set up a greenfield airport through
the AAI on social considerations even though the same is not
economically viable, suitable grant-in-aid will be provided to AAI to cover both the initial capital cost as well as the recurring losses.”
2. Promoters
The Central Government, Airports Authority of India, State
Government, a local self Government Institution e.g. Municipality,Corporation etc., a private company, a consortium or a group ofindividuals can act as the promoter for the greenfield airport eitherindividually or jointly.
3. Pre-feasibility Study Stage
The promoter, after preliminary clearance of Ministry of Civil Aviation on his proposal in the first instance, will commission a pre-feasibility report to study the overall potential of the project and see whether the project is attractive enough to warrant detailed study. The study should cover demand, technical, manpower, financial, economic and
social modules of the project. The study may also utilize secondary research and information. The promoter shall submit the prefeasibility report to the Ministry for further approval. The cost of the pre-feasibility will be borne by the promoter.
4. Detailed Feasibility Study Stage
Based on study of pre-feasibility report, the promoter shall again approach the Central Govt. for preliminary clearance of undertaking a detailed Techno-Economic Feasibility Study (TEFS). The Central Govt. after due examination of all modules of pre-feasibility study will determine whether the project shows promise of meeting the financial, economic and social criteria which have been set for public
investment expenditure. In case, the Govt. find it appropriate, it may permit the promoter to take up detailed TEFS.
5. The primary promoter will commission a TEFS including simulation study for conflict free operation by a competent professional body.Cost of TEFS including the simulation study will be borne by the primary promoter. During this phase, the accuracy of variables will be
further improved to see if the project has potential for success. This may require primary research etc.
6. Upon establishing the technical / financial viability through sensitivity analysis of realistic traffic and revenue projections, as emerging from the TEFS, the primary promoter will submit the proposal to the Ministry with full justification, inter alia, enclosing the TEFS and other studies in this regard. Such proposal shall cover the respective State
Government’s commitments to the proposal in respect of acquisition of land, supply of water and power, construction of access roads and other financial support. It is only after TEFS that the most important decision has to be made whether the project should be approved.
7. Site Selection
Site selection for any Greenfield airport will be undertaken by the promoters at pre-feasibility stage only in consultation with Director General of Civil Aviation (DGCA) including AAI, Ministry ofEnvironment & Forest, Ministry of Defence (MOD).
In case, the Greenfield airport is proposed at a location, which has an existing airport, while taking the decision to accord approval for the Greenfield airport, the Government would also decide whether the existing airport would be closed down or the new airport would be a second airport with full-fledged simultaneous commercial operations.
In case, the existing airport is decided to be closed down, the
unrecovered investments of AAI in the existing airport will have to be
compensated by a suitable mechanism such as share in the
concession fee to be given by the greenfield operator to the Govt.
The Government shall, in general, promote competition in setting up
a greenfield airport in addition to the existing one.
If a Greenfield airport is established in lieu of an existing AAI airport,
the existing airport with all assets will revert to AAI. AAI may decide
on the future usage of the airport in consultation with Ministry of Civil
Aviation.
The issue of providing employment to AAI’s employees working at
the AAI airport after its closure has engaged attention of the Govt.
The JVC will absorb AAI employees subject to merit and efficiency in
operational/ management deptt. against vacancies at the airport.
8. Detailed Design Stage and Approval
Based on the TEFS and State Government/Promoters’
recommendations, the Central Government will consider giving
approval for the airport project as per the extant policy. The approval
will be given by the Union Cabinet as per the Civil Aviation Policy.
The Central Government after approval will then go ahead to develop
detailed design of the project which should then result in formulation
of operational plan. At this stage, the project can once again be
reviewed whether it shall meet required criteria.
9. Project Implementation Stage
A Steering Committee is set up by State Govt. / promoter comprising
of officials of the State Govt. and the Ministry of Civil Aviation as this
stage involves coordination and allocation of resources. This
Committee will oversee the implementation of the project, funding
proposal, preparation of tender and other documents, bidding and
selection of the preferred investor. The State Govt./ promoter will
designate an agency preferably a PSU to coordinate the activities
and assumes responsibilities and authority for moving ahead in areas
related to the above.
10. Setting up a Special Purpose Vehicle (SPV)
The State Govt./ promoter shall set up a SPV wholly owned buy it to
begin with. Later, on the selection of successful bidders, the private
investor will be inducted in the SPV with 74% equity shares
11.Public Private Partnership (PPP) Model
The State Government as a primary promoter may consider joint
venture (JV) with private investors through Public Private Partnership
Model (PPP). In case it proposes to have a joint venture with private
promoters, it shall be the primary responsibility of the State
Government to choose private sector partners through a transparent
competitive bidding process subject to the guidelines on foreign
equity participation.
12.State Govt./ AAI may also participate in the JV with equity which will
be limited to 13% each (Rs. 50 crores cap or 13%, whichever is lower
in case of AAI)
13. Bidding Process
The Joint Venture Partner / Greenfield Operator shall be selected by the
State Govt. through a transparent competitive bidding process based on
technical and financial criteria. While inviting bids from prospective
bidders by the State Govt./ promoters, the draft Concession Agreement
(CA), Shareholder Agreement (SHA), State Support Agreement (SSA),
Land Lease Agreement (LLA), (CNS/ATM) Agreement, principles of
Finance Agreement, principles of Airport Operator Agreement along with
format of commitment from lenders regarding debt/ equity will be
furnished to the pre-qualified bidders. Before inviting technical and
financial bids, these documents will be frozen in consultation with Pre-
Qualified Bidders (PQBs).
14. Selection Criteria
It may be divided into technical and financial criteria. The technical criteria
may include financial, development and management abilities. A broad list
of these will be made part of the bid documents. The financial criteria
could be the minimum bid for State Support and viability gap funding or
maximum concession fee.
15. The successful bidder inducted into SPV through SHA shall use the
Detailed Project Report (DPR) for realizing and operationalizing the
project implementation.
16. Viability Enhancement :- The greenfield airport project can be made
viable by following means:-
(i) Land and external infrastructure provided by the State
Government for the airport on lease through Land Lease
Agreement with variety of combinations such as token lease,
moratorium on lease, deferred payment of lease etc.
(ii) The State Government may enter into a State Support
Agreement in addition to Land Lease Agreement with the
greenfield airport operator providing for State Support such
as grant, infrastructure loan, interest free loan etc.
(iii) Central Government may levy an Advance Development Fee
(ADF) from embarking passengers at the existing airport or
for the development of new airport on terms and conditions
as per ADF rules framed by the Ministry.
(iv) The Greenfield airport operator may be allowed to levy a
User Development Fee (UDF) at the new airport, subject to
the Regulatory regime in force.
(v) Aeronautical Charges may be leviable at the airport shall be
as approved by the Govt./ Regulator.
(vi) The Passenger Service Fees (PSF) levied at all airports
would be applicable to the Greenfield airports also. ADF /
UDF would be charged in addition to the PSF. PSF being
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