Bangalore International Airport Limited (BIAL) is a Build-Own-Operate-Transfer (BOOT) model. • The first phase of the airport consist of a 4000-metre long runway, taxiways and an apron area with aircraft stands and a terminal building. • The concession agreement between the Government of India and BIAL was signed in July 2004 and the airport became operational in May 2008. • Private promoters hold 74% stake in BIAL while the state holds the remaining 26%

1. BANGALORE AIRPORT
PUBLIC PRIVATE PARTNERSHIP - BOOT
SREETHU P R | RVCA | M ARCH | SEMESTER 1

2. SPV - Bangalore
International Airport
Limited (BIAL)
Public
authority
Equity
investors
Debt
Providers
State and Central
Government
Private Partners
Public Partners
Financial institutions
SBI and ICICI
GVK (43%) : Largest airport operators in the
country.
• Prepared plan : Consulting firm- Kaufmann and
Vander Meer Planer AG of Switzerland.
• Contractor: L&T
SIEMENS (26%) : A venture capital firm which
has equity investments in infrastructure projects
and air operates worldwide.
• Equipping the airport with technical system.
• Engineering and installation of airfield lighting,
IT and communication systems, baggage
handling system, power supply and building
services automation system.
FLUGHAFEN ZÜRICH AG (5 %) : Based
in Kloten, Switzerland is the mixed-economy stock
company.
• Handled airport operation
AAI (13 %) : Statutory body under the Ministry of
Civil Aviation, which is responsible for creating,
upgrading, maintaining and managing civil
aviation infrastructure in India.
• Overall project coordination of BIAL
KSIIDC (13 %) : Government Nodal agency
under Karnataka government.
• Handled acquisition of land.
Regulator :
AERA
Passengers
Airlines
BIAL BOOT Model
SBI, ICICI

3. • Bangalore International Airport Limited (BIAL) is a Build-Own-Operate-Transfer (BOOT) model.
• The first phase of the airport consist of a 4000-metre long runway, taxiways and an apron area with aircraft stands and a
terminal building.
• The concession agreement between the Government of India and BIAL was signed in July 2004 and the airport became
operational in May 2008.
• Private promoters hold 74% stake in BIAL while the state holds the remaining 26%
SOURCE : http://vslir.iima.ac.in:8080/jspui/bitstream/11718/11494/1/CMS-PP-217-Greenfield_Airport_Development_in_India-151-Gupta_b.pdf
https://www.icao.int/sustainability/PPP%20Case%20Studies/PPP_Airport_India.pdf

4. • Spread over a land area of 3900 Acre.
• The airport is having an annual passenger
capacity of 12.0 million and cargo handling
capacity of 35000 tonnes.
• The total project cost for phase-1 was $495.6
million.
• The airport offers non aeronautical services
like hotels, food court, tax free shops,
shopping mall etc.
• The 1st phase of airport became operational
in May 2008.
• The Phase-II of BIAL includes development of
one more terminal and another runway. The
estimated cost of Phase-II is about $500
million.
SOURCE : http://vslir.iima.ac.in:8080/jspui/bitstream/11718/11494/1/CMS-PP-217-Greenfield_Airport_Development_in_India-151-Gupta_b.pdf

5. Build-Own-Operate-Transfer (BOOT)
• Private organization conducts a large development project under contract to a public-sector partner,
such as a government agency.
• A BOOT project is often seen as a way to develop a large public infrastructure project with private
funding.
• After the negotiated period of time, the infrastructure asset is transferred to the government or to the
private operator. This approach has been used for the development of highways and ports.
• The private developer - typically a large corporation or consortium of businesses with specific expertise
- to design and implement a large project.
• The public-sector partner may provide limited funding or some other benefit (such as tax exempt
status)
• The private-sector partner assumes the risks associated with planning, constructing, operating and
maintaining the project for a specified time period. During that time, the developer charges customers
who use the infrastructure that's been built to realize a profit.
• At the end of the specified period, the private-sector partner transfers ownership to the funding
organization, either freely or for an amount stipulated in the original contract. Such contracts are
typically long-term and may extend to 40 or more years.
SOURCE : https://www.indianeconomy.net/splclassroom/what-are-the-different-models-for-public-private-partnership-ppp-in-infrastructure/

6. SOURCE : https://www.indianeconomy.net/splclassroom/what-are-the-different-models-for-public-private-partnership-ppp-in-infrastructure/
The partnership structure along with roles of the project
stakeholders
The concession period of Bangalore airport has been kept 30
years which is extendable up to 60 years.
The following are the private promotors:
• GVK Group India (43%)
• Siemens Project Ventures GmbH (26%)
• Flughafen Zurich AG Ltd. (5%)
• AAI (13%)
• Karnataka State Industrial Investment & Development
Corporation Limited (KSIIDC) (13%)

7. • Indian conglomerate spanning diverse sectors including energy, resources, airports,
transportation, hospitality and life sciences.
• GVK's foray into the aviation sector began with the modernization of Chatrapati Shivaji
International Airport (CSIA) in Mumbai. Followed by the acquisition of Kempegowda
International Airport (KIA) in Bengaluru.
• Largest airport operators in the country.
• Siemens Project Ventures GmbH operates as a venture capital firm. The Company
develops equity investments in infrastructure projects and ir operates worldwide.
• Siemens Project Ventures GmbH ("Siemens") transferred its 14% stake in Bangalore
International Airport Limited (valued at USD 1 billion approximately) to one of the GVK
group entities namely Bangalore Airport and Infrastructure Developers Private Limited.
• Flughafen Zürich AG (FZAG), based in Kloten, Switzerland is the mixed-economy stock
company.
• Held 17 percent of the equity capital of Bangalore International Airport Ltd. (BIAL) during
the construction phase, and was the owner and operator of the newly opened Bangalore
airport in 2008.
• The share holdings were reduced to 5 per cent in 2009, and they are to be sold in 2017
• The Airports Authority of India is a statutory body (created through the Airports Authority
of India Act, 1994) working under the Ministry of Civil Aviation, Government of India is
responsible for creating, upgrading, maintaining and managing civil aviation
infrastructure in India.
• Established in the year 1964, as a owned undertaking of the Government of Karnataka.
• Nodal agency in dealing with all important matters concerning the Government.

8. SOURCE : http://vslir.iima.ac.in:8080/jspui/bitstream/11718/11494/1/CMS-PP-217-Greenfield_Airport_Development_in_India-151-Gupta_b.pdf
Project Partners Role
• The design of BIAL Airport was prepared by world renowned Kaufmann and Vander Meer Planer AG of Switzerland.
• Indian construction firm L&T (India) was responsible for civil construction work.
• Contract for equipping the airport with technical system was awarded to M/S Siemens Industrial Solutions and
Services Group (I&S) and Siemens India Ltd.
• The contract included supply, engineering and installation of airfield lighting, IT and communication systems,
baggage handling system as well as power supply and building services automation system.
• Zurich was to handle airport operation.
• To handles acquisition of land efficiently, KSIIDC (Public agency) was incorporated.
• The overall project coordination was handled with AAI
• Development of BIAL is a good example of Airport development under Public Private Partnership.
• It was the first airport project in India where private sector has shown its capacity to execute big projects in time
bound manner with its own financial sources.
• The Concession agreement and shareholders agreement were used to distribute the project risk among the
partners based on their ability.
• Many of the issues of the risk could be identified only during the execution and operation of this project as no history
is available for this kind of project model.

9. SOURCE : http://vslir.iima.ac.in:8080/jspui/bitstream/11718/11494/1/CMS-PP-217-Greenfield_Airport_Development_in_India-151-Gupta_b.pdf
• Special kind of PPP structure was adopted for BIAL. There was an expert agency for each project activity. These
expert agencies have an equity stake in BIAL. Their level of equity not only indicates the project risk profile but also
indicate the level of interest that the sponsor has to take in project implementation.
• This model was intended to bring about ownership sense among partners to achieve highest level of efficiency and
commitment.
• BIAL has provision for minimum shareholding of various investors upto predefined event with a view to ensure his
dedication for the success of the project.
• Investors have not been allowed to sale their equity during the phase of construction, the most risky phase in
infrastructure project.
• BIAL concession agreement has flexibility for investors to exit from the project at some predefined moments.
• The construction of the project was done efficiently by the private party in scheduled time period of 33 months.
• The government has agreed to grant non-compete status for BIAL airport to protect competitive position of BIAL,
due to any change in law.

10. SOURCE : http://vslir.iima.ac.in:8080/jspui/bitstream/11718/11494/1/CMS-PP-217-Greenfield_Airport_Development_in_India-151-Gupta_b.pdf
https://www.icao.int/sustainability/PPP%20Case%20Studies/PPP_Airport_India.pdf
Equity structure of BIAL
• Siemens Project Ventures shall hold at least forty percent (40%) of the paid up capital of BIAL for a period
of three (3) years after commercial operation date (COD) of airport and not less than twenty six percent
(26%) for a period of seven (7) years after COD .
• Flughafen Zurich AG can divest equity only after three years from COD. But its equity cannot go below 5%
during the concession period.
• Initially the Zurich had equity stake of 17% in BIAL. It had divested 12% stake to m/s GVK for $96 million on 7-
10-09(after completion of three years from COD).
• L&T had sold its full stake of 17% to GVK on 6-12-09.

11. SOURCE : http://vslir.iima.ac.in:8080/jspui/bitstream/11718/11494/1/CMS-PP-217-Greenfield_Airport_Development_in_India-151-Gupta_b.pdf
Issues in PPP model of BIAL
• It took 32 months (from the day of signing of MOU for development of Airport) for selection of concessionaire for BIAL.
It was almost equal to the time taken for the construction of the airport.
• KSIIDC took 73 months, for land acquisition, from the day of signing of Airport development MOU. Time taken for land
acquisition was too high.
• Few of the foreign partners in BIAL had sold their equity just on completion of their minimum lock-in period. Foreign
equity exits not only result in capital outflow but also results in loss of expertise, which can affect efficient operation of
Airports.
• BIAL concession agreement does not have provisions to deal with the issue of refinancing. It was one of the causes
of conflict among the partners. Debt refinancing is possible after end of construction phase of the infrastructure
project.
• Non clarity on tariff fixation methodology had resulted in conflict among public- private partners.
• The concession agreement of BIAL has no provision to mitigate the likely risk due to foreign exchange rate variation.
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