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CIVIL AVIATION

Private Participation

i. Development and modernization of Metro airports

Keeping in the line with its policy of liberalisation, the Government has decided to modernise the
major international airports and attract private participation in order to induct the much needed
capital for expansion and modernisation of metro airports to world class standards.

Four metro airports at Delhi, Mumbai, Bangalore and Hyderabad are being developed and
operated by private entities through PPP concessions.

Kolkata and Chennai are being developed by the Airports Authority of India (AAI).





ii) Development and Modernisation of Non-metro airports

The Government has decided to modernise 35 non-metro airports to world class standards.

The runways, terminal buildings and equipment are being upgraded by AAI as part of this
initiative.

The city- side development of these airports would be undertaken through various forms of Public
Private Partnerships.

iii) Greenfield Airports

The policy of Greenfield Airports was approved by the Government in April 2008 to enable
greenfield airports to be set up on PPP basis. Foreign Direct Investment up to 100 per ent is
permitted through automatic approvals.

Planning Commission has developed a Model Concession Agreement for greenfield airports to
enable the State Governments to take up the development of such airports through PPP.



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AVIATION SECTOR
Risks Risk Factors
PROJECT
COMPLETION
RISK
Project Completion Risk: Completion within Schedule &
Budgeted Cost
Assured Supply of Construction Inputs
Land Acquisition
Required Regulatory Clearances
Quality of Workmanship
Environmental Compliance
TECHNOLOGY
RISKS
Cost & Time Comparison with other similar projects
Risks with New/Unproven Technology
Infrastructure Support for Construction
Availability of Raw Materials @assured cost
Availability of Utilities Power, Water etc.
AVIATION SECTOR
Risks Risk Factors
MARKET RISKS
Market Capacity & Potential
Cyclicality / Recessionary Trends in Demand
Competition from New Entrants
Price Risk: volatility, Product Price Depreciation
Break through technologies causing Technological
Obsolescence
Change in user preferences; Product Quality
LEGAL RISKS
Collateral & Security strongly enforceable
Structure of Arbitration Mechanism
AVIATION SECTOR
Risks Risk Factors
FINANCIAL
STRNGTH
Project Debt: Equity (Norm Maximum of 3.275)
Project DSCR (Norm Minimum of 1)
Project LLCR (Norm- Minimum of 1.1)
TOL / TNW #
Contingent Liabilities
Foreign Exchange Risk
CORPORATE
GOVERNANCE,
MANAGEMENT
QUALITY
Transparency in Related Party Transactions
Management: Track Record & Competence, Succession Issues
Financial Discipline: Strict Control on Cash Flows
Strict Control on more borrowings
Accounting Quality: Revenue Recognition, Depreciation
policies, etc.
AVIATION SECTOR
Risks Risk Factors
PROJECT
EXTERNAL
RISKS
Risks due to acts/policies of the Government
Risks arising due to change in Taxation policies / custom duty
changes
Risks arising due to external factors like WTO, Global Economic
Changes, etc.
Claims arising due to Operating Accidents
Risks of Disruption due to Labour Trouble, Force Majeure
Events, etc.