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Case Title:

New Airports in India: For Public Benefit or Private Profit?

Publication Year : 2010

Authors: J Thadamalla, R Shah and K Suresh

Industry: Transportation

Region:India

Case Code: PPP0008IRC

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
In India, proliferation of airlines, both full-service and low cost carriers (LCCs), improved connectivity, increasing affordability of a growing middle class, and attractive pricing schemes by LCCs led to a rapid rise in air passenger traffic. But, the prevailing airports, however, could not cope with the growth in air traffic and had to be expanded or modernised. In 2006, the government opted for the PPP route to develop new airports and modernise existing airports. PPP ensures expertise of the private sector in airport infrastructure management, and decreases the government's role, as the government lacks huge funding in infrastructure projects. The new airports are able to provide a lot of amenities to the user public, but passengers have to travel longer distances to access them, and they are also made to pay user development charges for these airports. The case facilitates discussion on how a government with deficit budgets can achieve public benefits through private participation, and lessen its role to provide basic infrastructure. The success of this strategy depends on how government can structure the PPP model to balance private profit with public benefits.

Pedagogical Objectives:

  • To infrastructure ownership pattern in India.
  • To government policy on PPP in the development of new airports in India.
  • To how the PPP model can be structured to balance private profit with public benefits.

Keywords :  Public private partnership (PPP), Evolution of Indian aviation sector, Growth drivers of Indian aviation sector, New airports in India, Low cost carriers in India, Airport authority in India (AAI), Air traffic growth in India, Committee on infrastructure, Business environment in India, Investment pattern in new airports, Revenue sharing pattern in new airports, Aeronautical revenue in India, Non-aeronautical revenue in India, User development fee (UDF), Duty-free shopping at Indian airports

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