Airport Privatization: Bidding Process for Delhi and Mumbai (B)

Abstract

Modernization of the Delhi and Mumbai airports had been considered as early as 1996 by the Airports Authority of India (AAI). In June 2003, the AAI board approved a modernization proposal. The two airports accounted for 47 per cent of the passenger traffic, 58 per cent of cargo traffic and 38 per cent of aircraft movement in 2003-4. They generated one-third of all revenues earned by the AAI. Both Delhi and Mumbai airports handled twice as many aircraft movements as they were originally designed for, resulting in congestion for both aircraft and passengers. The set of Cases (A - E) focuses on the bidding process in their privatization. The process began in May 2004 with an original completion date of September 2004. However, for a variety of causes, the process got delayed and the bids were finally received by September 2005. The evaluation process of the bids was questioned at various levels. There were many reviews with inputs from experts. A decision was about to be made in January 2006 by the Empowered Group of Ministers (EGoM) on how to carry this bidding process forward. Case A focuses on EGoM’s decision. This case focuses on the choice made by the winning bidder. Cases C - E focus on the reaction of a losing bidder, the courts’ decision, and the actual judgment by the court.