The Budget announcement amending the Airports Authority of India Act to allow monetisation of land could have a negative impact on the future development of airports, says a former AAI Chairman.

Peeyush Naidu, Partner, Deloitte Touche Tohmatsu India, however felt that it is a step in the right direction and will help boost the non-aeronautical revenues of the airports and improve viability of the airports.

Commenting on the proposal, Amber Dubey, partner and India Head, Aerospace and defence, KPMG, said many AAI airports, especially the ones in the State capitals have significant commercial value. “The revenue generated can be utilised for airport upgradation, development of new regional airports and for reducing aeronautical charges,” he said.

The state-owned AAI is the third largest land holder after the Armed Forces and the Indian Railways with an estimated 55,000 acres of land, including over 12,500 acres in South India and close to 15,000 acres in Western India, as on end of March 2015, according to an AAI document. AAI operates 125 operational and non-operational airports within the country. In his Budget speech, Finance Minister Arun Jaitley said that the Airport Authority of India Act will be amended to enable effective monetisation of land assets adding that the resources, so raised, will be utilised for airport upgradation.

“If all the land at an airport is converted into commercial land then future acquisition of land for airports could become a big financial issue,” said a former AAI Chairman. Terming the Budget as “not a big bang announcement,” the former Chairman felt that the move will allow for monetisation of 400-500 acres of land from airports across the country.

Pointing out that there was nothing new in the announcement, a former official of the Ministry of Civil Aviation said that monetisation of land is already happening and was something which allowed Centaur hotel to come up at Mumbai airport.

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