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Subsidy scheme for small airports

By Amrita Dhar in New Delhi
December 16, 2003 10:42 IST
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The ministry of civil aviation is considering a minimum subsidy mechanism for small airports to attract private investors.

The other option being weighed for such airports are joint ventures between the Airports Authority of India and state governments.

Through the minimum subsidy mechanism the government will provide a subsidy to a private player for taking over an airport. The bidder, asking for the lowest subsidy, will be given charge of the airport. The Lucknow, Amritsar, Agra and Gwalior airports are being considered for such a move.

The Naresh Chandra Committee on civil aviation has suggested a similar mechanism for the allocation of non-profitable domestic routes among domestic airlines.

The AAI maintains 115 loss-making operating and non-operating airports, most of which may find no buyers because of poor traffic figures. With the government planning to privatise most of the profit-making airports, cross-subsidising the majority of non-profitable airports may prove to be a problem.

Another avenue that the ministry is exploring for these airports is offering state governments a stake in them. These airports could be a joint venture between respective state governments and AAI. Of the 124 airports with the AAI, only nine make profits.

While 72 are loss-making operational airports, 43 are loss making non-operational airports. In 2001-02, besides the Mumbai and Delhi airports, only seven others -- Kolkata, Chennai, Hyderabad, Goa, Bangalore, Juhu and Pune -- made profits.
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Amrita Dhar in New Delhi
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