Case Study

AAI BIDDING FOR BHOGAPURAM AIRPORT: FROM AUTHORITY TO BIDDER

Raghuram Ganesan, Gopikuttan Gopi S
Public Systems, Airports (5030) , Airports Authority of India (AAI),. Bidding ,Conflict of Interest (30369), Public-Private Partnerships , Aeronautical Revenue , Non-Aeronautical Revenue

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Abstract 

Airports Authority of India (AAI) was constituted as a Statutory Authority under the Airports Authority of India Act 1994, with main functions of control and management of Indian air space. As of March 2017, AAI managed a total of 125 airports, which included 11 international airports, 08 customs airports, 81 domestic airports and 25 civil enclaves at defense airfields. Until 2005-06, AAI airports handled 100% of the passenger traffic in the country. The share dropped to slightly less than 60% in 2006-07 and further to 40%  in 2008-09 due to handing over of a few airports to private players. Over the years, AAI had been concerned about its reduced market share and the possibility that more and more airports would be developed outside their control. Ministry of Civil Aviation (MoCA) was increasingly encouraging state governments to develop airports, and where possible in the public private partnership (PPP) mode. AAI participated as a bidder in the bidding for Mopa airport, Goa. It lost the bid to GMR Airport Limited (GAL), which is part of GMR Group. A bid for another airport at Bhogapuram, which would serve Visakhapatnam, in Andhra Pradesh was on the cards. This airport was to replace the existing civil enclave in the Visakhapatnam naval airport. This case focuses on whether AAI should bid for Bhogapuram or not. Lessons can be drawn from the experience of bidding process for Mopa.

Learning Objective (Maximum of 500 Characters):  Briefly describes teaching goals of case.

The key objectives of the case are to familiarize participants with the larger discourse on Public Policy and Public Systems and Management. The case intends to introduce the idea of ‘Conflict of Interest’ in Public Systems and a few concepts in Public Private Partnerships. The key questions are:

  1. Would AAI’s participation in bidding as well as operation of airports lead to ‘conflict of interest’, apart from not bringing in private funds and management?
  2. As a Public Sector Enterprise, how would AAI remain significant in the aviation sector?

 

  • Pub Date:
    28 Dec 2018
  • Source:
    IIM-B
  • Discipline:
    Strategic Management
  • Product#:
    1301
  • Keywords:
    Public Systems, Airports (5030) , Airports Authority of India (AAI),. Bidding ,Conflict of Interest (30369), Public-Private Partnerships , Aeronautical Revenue , Non-Aeronautical Revenue
  • Length:
    Pdf : 29 page(s) ,

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