The Public Private Partnership Appraisal Committee (PPPAC), chaired by Anuradha Thakur, Secretary of the Department of Economic Affairs (DEA), has given in-principle approval to the third round of airport privatisation covering 11 airports grouped into five bundles. Private concessionaires are expected to invest an estimated ₹8,622 crore in operating and developing these airports. Under the Public Private Partnership (PPP) model, the airports will be leased for a 50-year concession period, and operators must retain 60% of the Airports Authority of India (AAI) employees for up to three years.
What Is the PPPAC and How Does It Approve Projects?
The Public Private Partnership Appraisal Committee (PPPAC) is the apex body that appraises and approves central-sector PPP projects in India. It was set up in 2006, following a decision of the Cabinet Committee on Economic Affairs (CCEA) in October 2005, to speed up project appraisal, remove delays and bring uniformity to the approval process.
The committee is chaired by the Secretary of the Department of Economic Affairs under the Ministry of Finance. Its members include the Chief Executive Officer of NITI Aayog, the Secretary of the Department of Expenditure, the Secretary of the Department of Legal Affairs and the Secretary of the ministry sponsoring the project. In this case, the sponsoring ministry is the Ministry of Civil Aviation, whose proposal to privatise 11 airports was cleared by the committee at its 149th meeting held on August 4, 2026.
The approval granted is an in-principle clearance. After this, the sponsoring ministry conducts a market sounding exercise with private infrastructure players to gauge interest, incorporates their feedback, and brings the revised proposal back for the committee’s final recommendation. Once approved, the proposal is placed before the CCEA for the final Cabinet-level nod before bids are invited.
The 11 Airports and Five Bundles at a Glance
The 11 airports are being offered in five bundles. Each bundle combines a larger, commercially stronger airport with one or more smaller airports. This bundling model is being used for the first time in the Indian aviation sector, with the aim of improving the financial viability of smaller airports by leveraging the revenues and operational synergies of the bigger ones.
| Bundle | Airports in the Bundle |
|---|---|
| Bundle 1 | Amritsar and Kangra |
| Bundle 2 | Varanasi, Gaya and Kushinagar |
| Bundle 3 | Bhubaneswar and Hubballi |
| Bundle 4 | Raipur and Aurangabad |
| Bundle 5 | Tiruchirappalli and Tirupati |
The investment required varies across the bundles. The Bhubaneswar-Hubballi bundle needs the highest investment of about ₹2,725 crore, followed by Varanasi-Gaya-Kushinagar at ₹2,467 crore. The Raipur-Aurangabad bundle is estimated at ₹1,496 crore, while Tiruchirappalli-Tirupati and Amritsar-Kangra are pegged at ₹1,411 crore and ₹523 crore respectively.
The Ministry of Civil Aviation selected these airports after a detailed assessment. AAI initially examined 12 major airports and then evaluated about 136 smaller airports for possible pairing, before the AAI Board approved a structure of five major airports bundled with six smaller ones. The 11 airports were chosen from among AAI facilities handling roughly 0.1 million to 1 million passengers every year, based on projected traffic growth and future investment needs.
Understanding the PPP Model and Concession Terms
A Public Private Partnership (PPP) is a mode of financing public infrastructure in which the government and a private company share investment, risk and rewards. In the airport sector, the private operator is called a concessionaire, a company that gets the right to build, operate and earn revenue from an asset for a fixed period in exchange for a fee paid to the government.
The fixed period is known as the concession period. In this round, the concession period is 50 years, meaning the private operator will run the airports for five decades before handing them back to the government. Under this model, ownership stays with AAI, while the concessionaire manages and develops the assets. In simple terms, the government leases the airport to a private firm, rather than selling it outright.
Analogy · Renting, Not Selling Expand analogy
Think of it like renting out a house. The landlord remains the owner, but the tenant manages daily upkeep, renovates rooms and collects rent. After the lease expires, the house returns to the landlord. In the same way, the private concessionaire operates the airport for 50 years, invests in development, and eventually hands the asset back to the government.
Key Terms of the Concession
| Aspect | Detail |
|---|---|
| Bidding parameter | Per-passenger fee charged on domestic passengers |
| Concession period | 50 years |
| Total investment | ₹8,622 crore across the five bundles |
| AAI staff retention | 60% of employees for up to 3 years |
| Employee transition | One-year joint management period after handover |
| Government oversight | Airports Economic Regulatory Authority (AERA) |
The per-passenger fee model means bidders compete by offering the highest fee they will pay to the government for every domestic passenger handled. This replaced the older revenue-share model, in which operators shared a fixed percentage of their gross earnings. Bidding on a per-passenger fee gives the government predictable income but relies heavily on accurate traffic forecasts.
During the concession, the private operator will manage passenger terminals and city-side infrastructure. Air Traffic Control (ATC) and Communication, Navigation and Surveillance (CNS) services will remain with AAI, and cargo operations will continue through AAI’s wholly owned subsidiary, AAI Cargo Logistics and Allied Services Company Limited (AAICLAS). The concessionaire must complete the sanctioned capital expenditure identified by AAI within three years of the start of commercial operations.
How Airport Privatisation Evolved in India
Airport privatisation means bringing private companies into the operation, management and development of airports. In India, this journey began in 2003, when the government approved the privatisation of the brownfield airports of Delhi and Mumbai. Under this arrangement, private consortia held 74% stakes and AAI retained 26%. Delhi went to a GMR-led consortium and Mumbai to a GVK-led consortium in 2006, selected through competitive bidding on a revenue-share basis.
Greenfield PPP airports followed, with Bengaluru and Hyderabad developing new airport facilities in 2004 and starting operations in 2008. Then, in 2019, the government privatised six more AAI airports at Ahmedabad, Lucknow, Jaipur, Mangaluru, Guwahati and Thiruvananthapuram, all of which were won by the Adani Group. This round moved to the per-passenger fee model.
The state-owned Airports Authority of India (AAI) itself was constituted under an Act of Parliament and came into being on April 1, 1995, by merging the International Airports Authority of India and the National Airports Authority. AAI, headquartered in New Delhi, is responsible for creating, upgrading, maintaining and managing civil aviation infrastructure across the country, and it continues to own all the airports in this third round.
How Much of AAI’s Network Has Been Privatised?
| Round | Year | Airports | Model |
|---|---|---|---|
| First round | 2006 | Delhi, Mumbai | Revenue-share concession |
| Greenfield PPP | 2004-2008 | Bengaluru, Hyderabad | Greenfield development |
| Second round | 2019 | Ahmedabad, Lucknow, Jaipur, Mangaluru, Guwahati, Thiruvananthapuram | Per-passenger fee (won by Adani) |
| Third round | 2026 | 11 airports in five bundles | Per-passenger fee, bundling model |
This third round is part of a larger plan to privatise 25 AAI airports, which was first outlined by AAI after the 2019 round concluded. The programme is linked to the National Monetisation Pipeline (NMP), launched in August 2021, which aims to raise ₹6 lakh crore over FY 2022-2025 by leasing brownfield public infrastructure assets. The airport sector was assigned a target of about ₹20,782 crore, roughly 4% of the total NMP value.
Privatisation vs Disinvestment: Key Differences
The terms privatisation and disinvestment are often used interchangeably, but they mean different things in economic policy.
Privatisation means the transfer of ownership and control of a public sector enterprise to private hands. When a majority stake (more than 50%) is sold, management control passes to the private buyer. Disinvestment, on the other hand, means the government selling a part of its equity in a public undertaking, which may be a small portion. If the government sells less than 50%, it continues to control the company.
| Point of Comparison | Privatisation | Disinvestment |
|---|---|---|
| Meaning | Transfer of ownership and management to private sector | Sale of a portion of government equity |
| Stake involved | Usually more than 50%, transferring control | Can be partial, often less than 50% |
| Management control | Passes to private owners | Remains with the government |
| Objective | Improve efficiency through private ownership | Raise revenue, broaden ownership |
The current airport round is a form of privatisation through lease, not disinvestment, because AAI retains ownership of the airports. The government also uses Airport Operations Management Contract (AOMC)-type arrangements, where operations are handed to private operators through management contracts, which differ from full ownership transfer.
There are three broad models of airport privatisation used worldwide: selling the airport outright, leasing it through a long-term concession (as in this case), and a management contract where the government retains ownership and control while a private firm runs day-to-day operations. India has relied mainly on the concession model.
Why the Government Wants a Cap on Airport Bundles
The approval of this round comes with a notable safeguard: the Ministry of Civil Aviation has proposed capping the number of airport bundles that can be awarded to a single bidder. The exact modalities of this cap are still being finalised and will be incorporated when the proposal returns for the committee’s final recommendation.
The concern stems from the growing market concentration in India’s privately operated airport sector. In the previous round of 2019, the Adani Group won all six airports on offer. The group has since expanded further, acquiring a majority stake in Mumbai International Airport from GVK in 2021 and holding a stake in the upcoming Navi Mumbai International Airport. With this, the Adani Group operates or controls eight airports, making it the country’s largest private airport operator.
The Finance Ministry has flagged the oligopolistic nature of India’s aviation sector. An oligopoly is a market dominated by a few large players. Private airport operators such as Adani and GMR together account for a substantial share of India’s air passenger traffic through their airports. Along with market concentration, the government has also raised concerns over over-leveraging, where operators take on excessive debt to win and run airports.
Benefits and Concerns of the Bundling Model
| Benefits | Concerns |
|---|---|
| Smaller airports become viable by pairing with larger ones | Fewer bidders may have the capital to handle large bundles |
| Private investment flows into non-metro airports | Operators may focus only on the stronger airport in a bundle |
| Prevents cherry-picking of profitable airports only | Risks further concentration among large players |
| Supports balanced regional infrastructure growth | Bundles demand heavier capital commitment |
To widen competition, the government also plans to allow bidders with cross-sectoral infrastructure experience, rather than restricting eligibility to companies with prior airport operations and management experience.
The Way Forward
After the in-principle clearance, the Ministry of Civil Aviation will carry out a market sounding exercise with infrastructure players to test the response to the bundling model. Feedback from the private sector will be reviewed by AAI, and necessary changes will be made before the proposal is brought back to the PPPAC for its final recommendation. The plan will then go to the CCEA for approval, after which formal bids can be invited.
The stakes are high because India is the world’s third-largest domestic aviation market, yet only about 6% of Indians travel by air, leaving huge room for growth. The government has set a goal of building 50 new airports over the next five years and expanding the existing network of over 160 airports. New facilities such as the Navi Mumbai International Airport and the upcoming Noida International Airport at Jewar are already being developed under the PPP framework.
For the remaining airports in the planned privatisation list, the government is expected to take up further rounds after this one. The success of the bundling experiment will largely determine how quickly the remaining airports are offered to private operators and whether the model is extended to other sectors. In addition, a healthy mix of competition, reasonable financial leverage and timely investment in smaller regional airports will decide whether this round genuinely improves passenger experience and airport infrastructure across the country.
Key Takeaways
- The PPPAC gave in-principle approval to the third round of airport privatisation covering 11 airports in five bundles at its 149th meeting on August 4, 2026.
- The committee is chaired by the Secretary of the Department of Economic Affairs (DEA), currently Anuradha Thakur, and was set up in 2006 under the Ministry of Finance.
- Private concessionaires are expected to invest ₹8,622 crore, with the Bhubaneswar-Hubballi bundle requiring the largest outlay of about ₹2,725 crore.
- The airports will be leased for a 50-year concession period under the PPP model, with ownership retained by AAI and bids decided on a per-passenger fee.
- Concessionaires must retain 60% of AAI employees for up to three years, following a one-year joint management period.
- Airport privatisation in India began in 2003 with Delhi and Mumbai, while the 2019 round awarded six airports to the Adani Group, prompting the proposed cap on bundles per bidder.
