Why India’s Next Round of Airport Privatisation Is Both Ambitious and Contentious

India’s third round of airport privatisation has taken a concrete step forward, with the Ministry of Civil Aviation sending a proposal to the Public Private Partnership Appraisal Committee (PPPAC) for in-principle approval. Covering 11 airports to be offered in five bundled groups, this phase marks a significant evolution in how India plans to monetise and modernise its aviation infrastructure — even as concerns over costs, competition and monopolisation grow louder.

What is being privatised in the third round

The proposal groups 11 Airports Authority of India (AAI)-run airports into five bundles, each combining metro-adjacent and non-metro facilities. The bundles include:

• Amritsar and Kangra
• Varanasi, Kushinagar and Gaya
• Bhubaneswar and Hubli
• Raipur and Aurangabad
• Tiruchi and Tirupati

These airports were shortlisted from AAI facilities handling between 0.1 and 1 million passengers annually, based on traffic growth potential, investment needs and geographic proximity. Once the PPPAC completes its appraisal and the Union Cabinet gives its approval, bids are expected to be invited by March 2026.

How airport privatisation has evolved in India

India’s airport privatisation journey began in 2003, when the NDA government approved public-private partnerships for Delhi and Mumbai airports. These brownfield airports were awarded through competitive bidding to GMR-led and GVK-led consortia respectively, under a revenue-share model with AAI retaining a 26% stake.

This was followed by greenfield PPP airports at Bengaluru and Hyderabad. A major shift came in 2019, when six airports — Ahmedabad, Lucknow, Jaipur, Mangaluru, Guwahati and Thiruvananthapuram — were privatised under a per-passenger fee model, all of which were won by the “Adani Group”.

Why bundling airports is a first — and a risk

The third round is the first time India is attempting bundling, pairing profitable or high-traffic airports with smaller ones. The idea is to allow cross-subsidisation, ensuring investment flows into non-metro airports that may not be viable on a standalone basis.

The PPPAC will examine critical design choices, including whether revenue-share or per-passenger fee models work better, how user development fees (UDFs) should be structured, and whether caps are needed on the number of airports a single entity can win. These decisions will shape affordability for passengers in smaller cities.

Privatisation and the National Monetisation Pipeline

Airport privatisation is part of the broader “National Monetisation Pipeline” (NMP), launched in 2021 to unlock value from brownfield public assets. The NMP had set a target of ₹6 lakh crore over FY2022–25, with airports expected to contribute about ₹20,782 crore.

While nearly 88% of the overall NMP target has been achieved, aviation has lagged behind sectors such as roads and railways. The Union Budget 2025–26 has now announced a new Asset Monetisation Plan (2025–30) aiming to raise ₹10 lakh crore, giving fresh urgency to airport privatisation.

The monopoly concern: lessons from airlines and airports

Recent disruptions in the airline sector — including mass cancellations by IndiGo — have revived fears about duopolies. Similar anxieties now surround airports, where Adani controls eight major airports, including Mumbai and Navi Mumbai.

Disputes at Navi Mumbai Airport, involving telecom operators alleging excessive charges, and eviction orders affecting corporate jet operators at Mumbai airport, have sharpened concerns about market power and lack of competitive checks.

Why costs are rising for airlines and passengers

Privatisation has delivered modern terminals and improved facilities, but it has also driven up charges. At “Thiruvananthapuram Airport”, the first tariff revision after privatisation saw domestic passenger UDFs rise sharply, alongside increases in landing charges and the introduction of a disembarkation fee.

The “Airport Economic Regulatory Authority” (AERA) later flagged under-reporting of non-aeronautical revenue projections — revenue streams meant to offset passenger and airline charges. Such cases highlight the delicate balance regulators must strike between investment incentives and consumer protection.

Can service benchmarks rein in excesses?

AERA has begun shifting towards service-quality-linked regulation. Proposed benchmarks include security wait times, check-in duration, help desk availability and inter-terminal travel time. Failure to meet these could attract penalties, including up to a 5% reduction in airport tariffs, translating into lower UDFs for passengers.

This marks a move from purely cost-based regulation to outcome-based oversight — though its effectiveness will depend on independent monitoring and enforcement.

What lies ahead for Indian aviation

Only about 6% of Indians currently fly, despite India being the world’s third-largest aviation market. The government plans to build 50 new airports over the next five years and expand the existing network of 163 airports. By FY2026, total passenger-handling capacity is expected to reach around 550 million passengers per annum, but industry estimates suggest this must rise to 850 million within five years.

Meeting this demand will require not just new airports, but financially healthy airlines, competitive airport operators, and a regulatory framework that keeps flying affordable. The third round of privatisation will therefore be a test — not only of investor appetite, but of whether India can modernise its aviation infrastructure without pricing out the very passengers it seeks to serve.