Mangalore Airport Concession Agreement: What You Need to Know

Mangalore International Airport, located in the southern state of Karnataka in India, has been in the news for its concession agreement. The airport’s concession agreement has been in effect since 2010, and recently, there have been talks of revising it. So what is the Mangalore Airport concession agreement and why is it important?

A concession agreement is a contract between a government and a private company that allows the company to operate a public asset, such as an airport, for a specific period of time. The company, in turn, pays the government a fee for the right to operate the asset. In the case of Mangalore Airport, the concession agreement was signed in 2010 between the Airports Authority of India (AAI) and private consortium, comprising of the GVK Group and the Airports Company South Africa (ACSA).

Under the terms of the agreement, the GVK Group-ACSA consortium would operate, manage and develop the airport for 30 years. In exchange, they would pay the AAI a fee of approximately INR 115 crores (about USD 15 million) per annum. The consortium would also invest INR 2,000 crores (about USD 270 million) in the airport’s development.

The consortium was also tasked with increasing the airport’s passenger capacity, improving infrastructure, and enhancing the airport’s revenue streams. They were also responsible for maintaining the airport’s safety and security standards, and complying with all applicable laws and regulations.

Since the concession agreement was signed, the airport has undergone significant development. The runway has been extended, the terminal building has been modernized, and the airport has seen an increase in passenger traffic.

However, there have been some concerns about the agreement. In 2019, the Kerala High Court ordered the AAI to conduct an audit of the airport’s accounts, after it was alleged that the GVK Group-ACSA consortium had siphoned off money from the airport’s revenue. The audit report, which was submitted in May 2020, confirmed the allegations, stating that the consortium had siphoned off INR 705 crores (about USD 95 million) from the airport’s revenue.

Following the report, the AAI issued a notice to the consortium, asking them to pay the amount within 45 days. The notice was challenged by the consortium in the Karnataka High Court, which granted a stay on the notice while it hears the case.

The controversy surrounding the Mangalore Airport concession agreement highlights the importance of transparency and accountability in such agreements. It also underscores the need for regular audits and monitoring of the operations of airports that are operated by private companies.

In conclusion, the Mangalore Airport concession agreement is an important agreement that has significant implications for the airport, the government, and the private consortium. While the agreement has led to the development of the airport, there have been concerns about its implementation. The controversy surrounding the agreement serves as a reminder of the need for transparency, accountability, and regular audits of such agreements.