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  • Group:4: AAI Building For Bhogapuram Airport: From Authority To Bidder

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    shahin selkar
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    The document discusses AAI's consideration of bidding for the Bhogapuram airport project in Andhra Pradesh. Key points include: 1) AAI chairman is strategizing on participating in the bidding process for the Bhogapuram airport, which would serve Visakhapatnam. 2) Lessons from AAI's previous bid for the Mopa airport in Goa indicate that aggressive projections for non-aeronautical revenues and city-side development revenues are important. 3) Factors like land acquisition support, tax exemptions, and viability gap funding will influence AAI's decision on whether to bid for Bhogapuram airport.

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    The document discusses AAI's consideration of bidding for the Bhogapuram airport project in Andhra Pradesh. Key points include: 1) AAI chairman is strategizing on participating in the bidding process for the Bhogapuram airport, which would serve Visakhapatnam. 2) Lessons from AAI's previous bid for the Mopa airport in Goa indicate that aggressive projections for non-aeronautical revenues and city-side development revenues are important. 3) Factors like land acquisition support, tax exemptions, and viability gap funding will influence AAI's decision on whether to bid for Bhogapuram airport.

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    137 views10 pages

    Group:4: AAI Building For Bhogapuram Airport: From Authority To Bidder

    Uploaded by

    shahin selkar
    The document discusses AAI's consideration of bidding for the Bhogapuram airport project in Andhra Pradesh. Key points include: 1) AAI chairman is strategizing on participating in the bidding process for the Bhogapuram airport, which would serve Visakhapatnam. 2) Lessons from AAI's previous bid for the Mopa airport in Goa indicate that aggressive projections for non-aeronautical revenues and city-side development revenues are important. 3) Factors like land acquisition support, tax exemptions, and viability gap funding will influence AAI's decision on whether to bid for Bhogapuram airport.

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    of 10

    Group:4

    AAI Building for Bhogapuram Airport:


    From Authority to Bidder
    Anand Kumar (2)
    Chirag Thakkar (11)
    Devansh Saxena (13)
    Raj Shah (32)
    Rohan Nandi (36)
    Shahin Selkar (40)
    Souvik Biswas (43)
    Vedant Dhakate (49)
    Introduction

    • Mohapatra, Chairman, AAI – strategy for participating in


    bidding for Bhogapuram airport
    • Airport would be serving Visakhapatnam (largest city of AP)
    • AAI’s second bid attempt for the airport (first being at Mopa, Goa)

    Group 4 | PGDM (IM) | 2019-21 2


    Airports Authority of India

    • AAI, Mini-ratna Category-I PSU under MoCA


    • Main functions of AAI:
    ► Control & management of Indian air space
    ► Provision of communication, navigational and surveillance aids
    ► Expansion and strengthening of operational areas viz. Runways, Aprons,
    Taxiways, etc. and provision of ground based landing and movement
    control aids for aircraft and vehicular traffic in operational area.
    ► Design, development, operation and maintenance of passenger
    terminals.
    ► Development and management of cargo terminals at international and
    domestic airports.
    ► Provision of passenger facilities and information systems in the
    passenger terminals.

    Group 4 | PGDM (IM) | 2019-21 3


    Lessons from Mopa Bidding (1/2)

    • Two criteria for inviting bids


    ►Upfront fixed amount to be paid upon execution of concession
    agreement towards the cost of land to be granted for the project.
    ►Percentage of revenue share payable to the Directorate of Civil
    Aviation, GOG each year
    • GAL took an aggressive position as compared to AAI based
    on two parameters
    1) Revenues from city side development.
    » Aggressive call on the city side revenues
    » Cash shortfall high for revenue share quoted by GAL
    2) Non aeronautical revenue generation per passenger per annum.
    » Non aeronautical revenue was highly dependent on international as well as
    leisure traffic
    pax – Passengers
    p.a. – per annum
    Group 4 | PGDM (IM) | 2019-21 4
    Lessons from Mopa Bidding (2/2)

    • AAI was not able to take call on higher non aeronautical


    revenues due to lack of precedence of the same in any of
    the AAI airports.
    • Non aeronautical revenues will lead not only to competitive
    bidding but also enhancement of its revenue generation
    from airport assets and higher value creation.
    • AAI’s presence brought GAL bid to better level.

    Group 4 | PGDM (IM) | 2019-21 5


    Criteria determining AAI’s decision to bid for
    Bhogapuram Airport (1/2)
    • Acquisition and handling over of land to AAI/private entities
    for development and operation of airports as per agreed
    terms and conditions
    • Exemption of lease charges on land used for airport
    operations for adequate time duration, as per the project
    profile and viability
    • Reimbursement of electricity changes for a predetermined
    period
    • Reimbursement of property and other taxes as levied by
    the local body

    Group 4 | PGDM (IM) | 2019-21 6


    Criteria determining AAI’s decision to bid for
    Bhogapuram Airport (2/2)
    • Viability gap funding from state and central governments
    • Incentives/reimbursements (underwriting seats, exemption
    from aeronautical tariffs) to encourage airlines to connect
    the cities of Andhra Pradesh
    • Access to potential locations of civil aviation infrastructure
    through multi-modal linkages (rail, road, etc.)

    Group 4 | PGDM (IM) | 2019-21 7


    Should AAI bid for Bhogapuram airport? (1/2)

    Pros Cons

    Group 4 | PGDM (IM) | 2019-21 8


    Should AAI bid for Bhogapuram airport? (2/2)

    • Yes, it should bid for Bhogapuram airport

    Provided
    ►It should either have or should have plans to involve private
    parties in the Operations & Maintenance of the airport (preferably PPP
    route)
    » Improving Managerial Efficiency
    » Increasing ability to generate Non-aero revenue

    Group 4 | PGDM (IM) | 2019-21 9


    Group 4 | PGDM (IM) | 2019-21 10

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