India Considers Bid Cap in Airport Privatisation to Avoid Market Concentration

India is evaluating changes to its airport privatisation framework as it prepares to offer 11 airports, with discussions centred on limiting how many assets a single bidder can secure, as per news reports. 

Proposed Cap and Policy Debate 

Officials are examining a structure that would restrict one entity to a maximum of 2 airport blocks, equivalent to 4 airports. If the same bidder emerges as the top contender for a third block, the next-highest bidder may be given the opportunity to match the winning bid. 

The move is being considered to prevent concentration of critical infrastructure in the hands of a single operator. However, there is an opposing view within policymaking circles that such limits could lead to more cautious bidding behaviour, potentially lowering overall proceeds from the auction. 

Background and Trigger for Review 

The discussion follows the 2018 airport privatisation round, where Adani Enterprises secured all 6 airports on offer, in some cases quoting nearly double the bids of competitors. With indications that the group may pursue all 11 assets in the upcoming round, policymakers are reassessing the structure. 

Concerns have also been shaped by recent disruptions in the aviation sector linked to IndiGo, where operational issues highlighted the risks associated with reliance on a dominant player in a critical sector. Officials noted that airports function as natural monopolies, making concentration a systemic concern. 

New Bundling Model and Global Reference 

A revised approach is also being introduced in the form of bundling smaller airports with larger ones to improve viability. For instance, Varanasi will be paired with Kushinagar and Gaya, while Amritsar, Bhubaneswar, Raipur and Trichy will be grouped with Kangra, Tirupati, Aurangabad and Hubli respectively. 

Internationally, countries such as Brazil have adopted safeguards by limiting the number of airports a single entity can control or restricting participation of existing operators in additional assets. 

Financial Context and Outlook 

The previous round delivered significant returns, with the Airports Authority of India generating over ₹700 crore annually from the six privatised airports.  

The government is now targeting ₹27,500 crore from the civil aviation sector under the next phase of asset monetisation through FY30. 

With ministries including civil aviation, finance and NITI Aayog involved in structuring the framework, the final decision will be taken by the Public Private Partnership Appraisal Committee. 

Read More: Adani Airports Partners with MakeMyTrip to Offer Online Duty Free Pre Booking Services! 

Conclusion 

India’s evolving airport privatisation strategy reflects a balance between maximising revenue and ensuring competitive participation, as policymakers refine the framework for one of the country’s largest infrastructure monetisation exercises. 

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