Union Cabinet approves extension of AAI land lease for Nagpur Airport Development

The Union Cabinet on Wednesday, May 13, approved the extension of the lease period of the Airports Authority of India (AAI)’s land leased to MIHAN India Limited (MIL) beyond August 6, 2039, paving the way for the transfer of Nagpur Airport operations to GMR Nagpur International Airport Limited (GNIAL).

"With extension of Lease Period of the AAI land leased to MIL beyond 06.08.2039, it would now become co-terminus with the 30 years Concession Period of GNIAL, paving the way for handing over of airport to 2nd JVC-GNIAL," said the PIB release.

The decision was taken by the Union Cabinet chaired by Prime Minister Narendra Modi. According to the government, the extension will enable MIL to license the airport to GNIAL for a period of 30 years from the Commercial Operation Date (COD).

MIHAN Project Gets Major Push

The move is being seen as a significant step in the development of Nagpur Airport under the Multi-modal International Cargo Hub and Airport at Nagpur (MIHAN) project.

"This marks a major milestone in Nagpur airport’s journey to becoming a regional aviation hub under the Multi-modal International Cargo Hub and Airport at Nagpur (MIHAN) project," said the release.

MIL was formed in 2009 as a joint venture company between AAI and Maharashtra Airport Development Company Ltd. (MADC), with an equity structure of 49:51. While airport assets were transferred to MIL the same year for operational purposes, execution of the lease deed was delayed due to land demarcation issues. The AAI land was subsequently leased to MIL up to August 6, 2039.

PPP Bid Process and Court Battle

In 2016, MIL initiated a global tender process to identify a private partner for operating the airport under the Public-Private Partnership (PPP) model. GMR Airports Ltd. (GAL) emerged as the highest bidder with a quoted revenue share of 5.76 per cent, which was later revised to 14.49 per cent of gross revenue.

However, MIL annulled the bidding process in March 2020. The decision was challenged by GAL before the Bombay High Court, which ruled in its favour. The Supreme Court also upheld the decision in favour of GAL. Following the Supreme Court’s judgment dated September 27, 2024, MIL signed the concession agreement with GNIAL on October 8, 2024.

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Airport Handover and Expansion Plans

With the latest Cabinet approval, the lease period of AAI land leased to MIL will now align with the 30-year concession period granted to GNIAL. This will allow the formal handover of the airport to GNIAL for development and operations.

According to the government, GNIAL plans to transform Dr Babasaheb Ambedkar International Airport into a world-class aviation facility through phased development. The airport is expected to eventually handle up to 30 million passengers annually, strengthening its position as a major aviation hub in Central India.

The proposed expansion is also expected to improve connectivity in the Vidarbha region and significantly enhance cargo handling infrastructure at the airport.