Airport privatisation in India: Ready for the next take-off?

Lovejeet Singh
Chandhiok & Mahajan, New Delhi    

Vihaan Gupta
Chandhiok & Mahajan, New Delhi

India's aviation sector is entering a defining phase of growth. As the world’s third-largest domestic aviation market, India continues to record sustained post-pandemic growth in passenger traffic. Rising passenger numbers, expanding regional connectivity and increasing cargo activity have created an urgent need for airport infrastructure capable of supporting future demand. While airport development was historically driven by public investment, the sheer scale of capital now required has progressively pushed policymakers towards private participation.

Over the last two decades, India's airport privatisation programme has evolved considerably from an effort to modernise existing airports, attract private investment and create new aviation capacity. Today, with a proposed second phase of airport monetisation under the National Monetisation Pipeline (NMP)^[1] and with major greenfield projects – such as Navi Mumbai International Airport and Noida International Airport at Jewar – underway, airport privatisation has become a central pillar of India's aviation infrastructure strategy.

Yet, as the NMP programme enters its next phase, important elements such as concession structure and airport bundling remain under consideration. Clarity on these aspects may ultimately determine the long-term success of India's airport privatisation model.

The evolution of airport privatisation

Airport privatisation in India emerged from the recognition that public resources alone could not meet growing infrastructure requirements. The Airport Infrastructure Policy of 1997 formally encouraged private investment in an effort to improve the quality, efficiency and competitiveness of airport operations.

Private sector participation in airport development first gained visibility through Cochin International Airport, followed by Delhi and Mumbai airports, and the development of greenfield airports in Bengaluru and Hyderabad. Building on the success of these airports, the Airports Authority of India (AAI) awarded a contract to Adani Enterprises Limited for the management and development of six brownfield airports in 2019 – Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram and Mangalore – under public private partnership (PPP) framework. These projects demonstrated that private operators could mobilise capital, improve passenger experience and accelerate infrastructure development.

However, the objective of airport privatisation gradually expanded. Initially conceived as a mechanism to improve infrastructure and operational standards, it increasingly became a tool for unlocking value from existing assets and financing future development.

Structures of airport concession

India's airport PPP experience has been shaped by two distinct concession structures — each with its own strengths and limitations.

Revenue sharing model

The first generation of airport concessions adopted a revenue-sharing model. Under this framework, private operators agreed to share a specified percentage of their gross revenue with AAI. Delhi International Airport Limited and Mumbai International Airport Limited are the most prominent examples. Through these arrangements, AAI continues to benefit from the financial upside generated by airport growth.

The principal advantage of this model is that as passenger traffic and commercial revenues grow, public authorities directly benefit. However, high revenue-sharing commitments can also strain project economics and pressure operators to maximise both aeronautical and non-aeronautical revenue streams.

Per passenger fee model

Subsequent rounds of airport privatisation adopted a different bidding parameter. Instead of competing on revenue-sharing percentages, bidders were evaluated based on the per-passenger fee payable to AAI. The 2019 privatisation round for the six brownfield airports followed this approach, with concessions awarded to the bidder offering the highest per-passenger fee. This model simplifies bid evaluation and provides greater certainty on concession payments.

At the same time, this model relies heavily on traffic forecasts. Aggressive bidding assumptions may become difficult to sustain if passenger growth does not materialise as anticipated. While the model offers transparency and simplicity, its long-term effectiveness depends on the accuracy of demand projections and the commercial viability of individual airports.

Neither model is inherently superior. The revenue-sharing framework allows public authorities to participate directly in future growth, while the per-passenger fee model provides predictability and ease of administration. The challenge for policymakers is to select a structure that balances public value creation with sustainable returns for investors.

National Monetisation Pipeline

The introduction of the NMP marked an important shift in the government's approach to airport privatisation. Rather than viewing airports solely as infrastructure assets requiring investment, the NMP treats mature airports as revenue-generating assets capable of funding future infrastructure creation.

The NMP 2.0 for financial years 2026-2030 considers the monetisation of 26 AAI airports, namely: Agartala, Amritsar, Aurangabad, Bhopal, Bhubaneswar, Calicut, Coimbatore, Dehradun, Gaya, Hubli, Imphal, Indore, Kangra, Kushinagar, Madurai, Patna, Raipur, Rajahmundry, Ranchi, Surat, Tirupati, Trichy, Udaipur, Vadodara, Varanasi and Vijayawada.^[2]

This phase of airport monetisation is expected to involve the ‘bundling’ of airports. According to news reports, eleven airports so far have been grouped into five bundles as set out below and the remaining will be bundled soon.

Why bundle airports?

The rationale behind bundling is to:

1. make the overall package commercially viable, especially where smaller or regional airports may not attract strong bids on a standalone basis;
2. improve investment attractiveness by pairing commercially strong airports with less profitable ones, encouraging development across a wider range of locations;
3. prevent cherry-picking of only profitable airports, ensuring that private investment also flows into non-metro airports; and
4. support balanced infrastructure development across the country.

Challenges of bundling

While bundling offers certain advantages, it also raises important challenges:

1. It may limit the pool of eligible bidders, since larger bundled packages require substantially greater capital commitments. Investors seeking exposure to a specific high-traffic airport may be deterred by the obligation to manage smaller, lower-yield assets within the same bundle.
2. It creates a risk of uneven asset management within the bundle. A concessionaire may direct disproportionate attention and capital towards the commercially stronger airport, while performing only the minimum required obligations at smaller airports in the portfolio.
3. It intensifies concerns about concentration of airport ownership. Larger operators with greater financial capacity are structurally better positioned to win bundled concessions, potentially consolidating control over a significant share of India’s privatised airport network among a limited number of players.

What does this mean for investors and operators?

Beyond its policy objectives, the proposed monetisation programme carries important implications for investors, lenders and airport operators. The adoption of bundled concession packages is likely to increase transaction size and capital requirements, potentially favouring large infrastructure funds, institutional investors and established airport operators with the financial capacity to manage diversified portfolios. At the same time, bundling may encourage consortium-based bidding, enabling investors to combine operational expertise with long-term capital. For lenders, greater emphasis is likely to fall on passenger traffic assumptions and revenue diversification strategies.

Building new airports from the ground up

While brownfield monetisation focuses on extracting value from existing infrastructure, greenfield airport development aims to create entirely new capacity.

This distinction matters because India's future aviation needs cannot be met through expansion of existing airports alone. Several major metropolitan regions already face capacity constraints that demand entirely new infrastructure solutions.

Navi Mumbai International Airport and Noida International Airport represent one of the most significant examples of this approach. Developed through a PPP framework, these airports were conceived to complement Mumbai and Delhi’s existing airports and address long-term capacity limitations.

These projects illustrate the emergence of a new phase in India's airport privatisation journey. The focus is no longer limited to upgrading existing infrastructure or monetising mature assets. It now includes creating entirely new aviation ecosystems capable of supporting future economic growth.

The road ahead

India’s airport privatisation programme has moved well beyond its origins as a modernisation exercise. What began as an effort to upgrade ageing terminal infrastructure has matured through successive rounds of PPP-led brownfield development and structured asset monetisation into a programme of genuine scale and commercial sophistication. As future privatisation rounds grow larger and more complex, transaction design will play an increasingly important role in determining both investor participation and long-term project sustainability.

The shift towards bundled concession packages and large-scale greenfield development marks a qualitative step-change in the programme’s ambition.

However, one of the important questions which is still under consideration is regarding concession structures. The most recent greenfield airports – Navi Mumbai and Noida follow different concession structures. While Navi Mumbai adopts the conventional revenue sharing model, Noida has adopted per passenger fee model. There is still a lack of certainty in the revenue model to be adopted for the upcoming bundled airports.

With 26 airports proposed for monetisation and greenfield projects of unprecedented scale in the pipeline, the stakes of the next round are higher than any before it. As India seeks to attract long-term infrastructure capital while ensuring equitable and efficient development of its airport network, policymakers will need to strike a balance between commercial attractiveness and public interest objectives.

Disclaimer: The content of this article is intended to provide a general guidance to the subject matter and should not be construed as advice. The views of the authors are personal. Specialist advice should be sought in case of specific circumstances.

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