Navi Mumbai International Airport & CIDCO

In a move to attract bidders for the development of the Navi Mumbai International Airport, the ministry of civil aviation (MoCA) has cleared the so-called ‘shared till’ model of development of the proposed greenfield airport, which will allow the airport’s operator to retain a percentage of non-aeronautical revenues.
A spokesperson for the City and Industrial Development Corporation (CIDCO), the nodal agency responsible for the Navi Mumbai International Airport project, said that the ministry had given its approval for the ‘shared till’ approach on Sunday.
The shared till approach allows the operator to retain a percentage of non-aeronautical revenues, which include turnover from retail shops, long-term concessions given to the entities like duty-free shop operators in the terminal building, and car parking charges.
CIDCO was in favour of the shared till model of development for the Navi Mumbai airport as it helps create a level playing field between other prospective bidders and the GVK Group, which currently operates the Mumbai international airport.
Since the proposed airport falls within 300km of the existing airport in the city, Mumbai International Airport Ltd (MIAL), which is a GVK-led consortium, had the first right of refusal vis-a-vis development of the Navi Mumbai airport.
It is expected that even after development of the Navi Mumbai airport, bulk of the air traffic would remain directed towards the Mumbai airport, which theoritically gives GVK a competitive edge if it were to bid for the new airport, as it enjoys high aeronautical revenues from the Mumbai airport.
Since the prospective developer of the Navi Mumbai airport will now be entitled to non-aeronautical revenues too, they can compete with GVK when bidding for the contract. However, GVK can pay 90% of the highest bid offered and bag the contract to develop the new airport from CIDCO.
“This (the shared till approach) will enhance long-term project viability for the operator of the airport and encourage participation from other private players,” the CIDCO spokesperson said.
Though major airports in India like those in Delhi and Mumbai operate on a shared till basis, most others follow a ‘single till’ or ‘dual till’ model. Under the single till model, aeronautical as well as all non –aeronautical revenues are used to cross-subsidize the expenditure incurred for the development of the airport. In the dual till approach, only aeronautical revenues are used to subsidise development expenses. At present, popular airports in the country like in Delhi and Mumbai were developed under the shared till approach.
A senior CIDCO executive had earlier told FE that as many as 20 bidders had shown interest in developing the project.
Some of the leading companies that are bidding for the new international airport coming up on the northeastern fringes of Mumbai include Zurich Airport, Spanish firm Ferrovial Aeropuertos, Tata Realty and Infrastructure, MIAL, SREI Infrastructure Finance Limited, Essel Infraprojects, Solux Corsan India Engineering & Construction, Gensler (USA), Samsung C&T, IL&FS, and the GMR Group.
FE couldn’t independently verify with these companies, except MIAL. A MIAL official had earlier told FE that the consortium will bid for the largest greenfield airport proposed in India.
The first phase of the Rs 14,574 crore-project, which was first coneptualised 27 years ago, is now expected to be completed by the end of 2017.

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