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AAI working on plan to allow housing projects on airport land

LiveMint logoLiveMint 20-04-2017 Tarun Shukla

New Delhi: Legal changes to enable housing development in airport land are in the works, the chairman of India’s state-run airport development authority said. Currently, airport housing in India is permitted only for airport employees.

The Airports Authority of India (AAI), which operates 125 airports, has a land bank of 55,800 acres, which has so far been used only for aviation and passenger-related activities.

That will change soon.

“We want to make it market-driven,” AAI chairman Guruprasad Mohapatra said in an interview.

The Union aviation ministry will soon move a cabinet note to amend the law governing AAI to permit use of airport land for housing and other areas which are currently not allowed, Mohapatra added.  

“Housing is an attractive thing to develop in and around airports. Currently, you can’t develop housing as part of the land restriction,” he said.

As cities have grown, Mohapatra said, they have reached the fringes of airports, which were once far from the city centres. “Urban housing is now a requirement. Housing close to the airport receives the most premium—you see advertisements saying 20km from the airport and so on.”

Mohapatra said prime housing may not be required in very small towns, but in places where land is very expensive, there could be very strong demand.

Once the legal changes are through, airports could also use the available land to build malls and convention centres, among others.

Like mass housing, airports are currently not allowed to build convention halls, Mohaptra said. "That probably is a requirement in many cities now. India is hosting many conventions now,” he said, adding AAI would survey each city and based on the demand, decide what would fetch the best price for its land, which will be leased out accordingly.

The change will also benefit airports that have been leased out to private operators like the ones in Mumbai, Delhi and Hyderabad.

AAI has identified city-side development of airports at Lucknow, Raipur, Tirupati, Jaipur, Bhubaneswar, Varanasi, Kolkata and Amritsar in a phased manner, junior aviation minister Jayant Sinha told Parliament on 16 March.

Finance minister Arun Jaitley announced in the Union budget earlier this year that rules would be amended to “enable effective monetization of land assets” for AAI and the resources raised from the land would be used for upgrading airports.

Airports typically earn revenue from aeronautical activities such as navigation charges from airlines and non-aeronautical charges like car parking and hotels. Globally, non-aeronautical revenue makes up 40-45% of the total mix while in India this figure is only 25%.

To be sure, living near an airport will come with its own set of challenges. To start with, housing will have to be made sound-proof, said a former AAI board member, asking not to be named.

Airport housing will also have height restrictions to avoid interference with flight paths. They will also have to be far from the runway and 45m above a defined level of the airport, which will allow 4-5 floors to be built, former AAI board member said.

AAI will also have to consider other questions.

“Will it be for the rich or middle classes or the poor? Will AAI provide for all the services and utilities and do maintenance or some other party? Will AAI sell the land also or only the houses? Can they (houses) be freely traded by their owners?,” the former AAI board member asked, adding, “Importantly, AAI must make sure that they have excellent planning inputs so that all the land required for serving future growth of aviation demands is protected, and then and only then, the ‘excess land’ put to non-aviation use.”

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