Author: Mia Bhatia

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Beyond

Centre plans private operation of 11 AAI airports

The Centre has taken another step towards expanding private participation in India’s airport sector, giving in-principle approval to lease out 11 Airports Authority of India (AAI) airports to private operators under the public-private partnership (PPP) model.

The airports will be offered in five bundles, with each bundle going to a single private concessionaire for a proposed 50-year concession. The Public Private Partnership Appraisal Committee (PPPAC) approved the proposal in principle at its meeting on August 4, according to official documents.

The proposed airport bundles are designed to combine larger, established airports with smaller facilities. The five groups are Amritsar-Kangra-Gaggal, Varanasi-Gaya-Kushinagar, Bhubaneswar-Hubballi, Raipur-Aurangabad and Tiruchirappalli-Tirupati.

The government’s decision comes as India’s aviation sector continues to expand and airports across the country face growing demand for better infrastructure and passenger facilities. By bringing private companies into the operation and development of these airports, the Centre hopes to attract fresh investment while improving efficiency and service quality.

The bundling strategy is particularly aimed at making smaller airports more financially attractive to private operators. Instead of bidding for an individual airport, companies will compete for a group that combines a stronger airport with one or more smaller facilities. The idea is that revenues and passenger traffic from the larger airport can support investment and development at the smaller one.

Five airports have been identified as the larger or anchor facilities in the proposed groups — Amritsar, Varanasi, Bhubaneswar, Raipur and Tiruchirappalli. They will be paired with Kangra-Gaggal, Gaya, Kushinagar, Hubballi, Aurangabad and Tirupati.

Under the proposed PPP concession, private operators will take responsibility for the operation, management and development of the airports. This will include passenger terminals and city-side infrastructure, along with the investment required to expand facilities as traffic increases. The estimated investment by the private concessionaires across the 11 airports is around ₹8,622 crore.

The proposed concession period of 50 years gives operators a long-term horizon to recover their investments and develop airport infrastructure. The bidding mechanism is expected to use the per-passenger fee for domestic traffic as the key parameter, allowing companies to compete for the right to operate the bundled airports.

However, the government is also trying to ensure that the next round of airport privatisation does not result in excessive concentration of assets among a few large operators.

The Finance Ministry has raised concerns about the increasingly concentrated nature of India’s aviation industry. Officials have specifically flagged the possibility that excessive market concentration or over-leveraging by private airport operators could create risks across multiple projects.

To address this, the Civil Aviation Ministry has proposed capping the number of airport bundles that a single bidder can win. The exact limit has not yet been decided. The ministry is working on the details and is expected to place the final proposal before the PPPAC.

The proposed cap could become an important part of the bidding process because India’s airport market is already dominated by a handful of major private operators. The government wants to encourage private investment without allowing one company to accumulate too many airport concessions.

The proposed arrangement also includes measures concerning existing AAI employees. The government has suggested a one-year joint management period involving AAI staff after the private concessionaire takes over. The private operator would also be required to retain 60% of AAI employees for up to three years under the proposed structure.

At the same time, private operators will not control every airport-related function. AAI will continue to handle air traffic control and Communication, Navigation and Surveillance services. Cargo-related operations will also continue to involve AAI Cargo Logistics and Allied Services Company, or AAICLAS.

The latest proposal is part of the Centre’s broader airport privatisation programme. India has increasingly relied on PPPs to bring private capital and management expertise into airport infrastructure. The government has argued that the model can help modernise airports while allowing AAI to generate revenue and focus resources on other parts of the country’s aviation network.

For passengers, the impact of the proposed airport privatisation will ultimately depend on how the new concessionaires invest in the facilities. Improvements could include expanded terminals, better passenger amenities, upgraded technology and smoother airport operations. Smaller airports could also benefit from greater connectivity and infrastructure investment if the bundled model works as intended.

The government now needs to complete the remaining steps before the airports can formally be put out for bids. The in-principle approval from the PPPAC moves the proposal forward, but the final concession structure and bidding conditions will need to be settled before private companies can take part in the process.

The move also signals the Centre’s willingness to deepen private participation in aviation infrastructure while attempting to maintain competition. With 11 AAI airports being prepared for 50-year PPP concessions, the next phase of airport privatisation could bring significant changes to how some of India’s important regional aviation hubs are operated and developed.

The challenge for the Centre will be to strike the right balance: attract enough private capital to modernise airports, make smaller facilities commercially viable, protect employees and passengers, and prevent excessive concentration in an already competitive but increasingly consolidated aviation market.

Categories
Leaders

Volkswagen Chief warns crisis is more than critical

Volkswagen is facing a major turning point, with Chief Executive Officer Oliver Blume warning that the German automaker’s situation is “more than critical” as it struggles with rising costs, weak profitability, excess production capacity and intensifying competition from Chinese carmakers.

Blume’s warning comes as Volkswagen prepares for a fresh round of discussions with employees over cost-cutting measures, possible job reductions and the future of several German factories. The company is already undergoing one of the biggest restructuring programmes in its history, but management believes the measures taken so far are not enough to restore the group’s competitiveness.

The Volkswagen Group is under pressure from several directions at once. Its business in China, one of its most important markets, has weakened sharply, while Chinese manufacturers are increasingly entering European markets with competitively priced electric and hybrid vehicles. At the same time, US tariffs have made it more expensive for Volkswagen to sell vehicles in America.

Blume said Volkswagen’s operating return of around 3.8 per cent was respectable given the difficult market environment, but still too low to generate the money needed for new technologies, products and production facilities.

China has become one of Volkswagen’s biggest challenges. The Chinese auto market has contracted by more than 20 per cent since the beginning of the year, according to Blume, while hundreds of new models have entered the market.

Chinese automakers are also expanding rapidly outside their home market. Volkswagen says Chinese manufacturers are gaining market share in Europe, where they can compete aggressively on price, particularly in electric vehicles and plug-in hybrids. The pressure is forcing European manufacturers to rethink their costs, production strategies and product portfolios.

For Volkswagen, the problem is not simply falling sales. The company has a large manufacturing network and significant fixed costs, making it difficult to adjust quickly when demand changes. Blume has warned that Volkswagen is producing around 500,000 vehicles more than the European market can absorb, highlighting the scale of its excess capacity.

The company’s German factories are at the centre of the restructuring debate. Blume is scheduled to meet employees at several locations, including the Volkswagen headquarters in Wolfsburg and plants in Zwickau and Emden, to explain the company’s plans.

Volkswagen has not announced that any specific plant will be closed. However, Blume has said the company currently cannot see how facilities in Emden, Hannover, Zwickau and Neckarsulm could remain profitable into the 2030s under present conditions.

Factory closures would be a major step for Volkswagen and its workforce. Blume has described closures as the “last and most expensive solution”, with the company also considering alternative industrial uses for some sites.

The issue has already created tension with powerful German labour representatives. Unions have criticised management’s savings plans and are expected to resist measures that could result in further job losses or changes to production locations.

Volkswagen has already agreed to significant employment reductions in Germany. The group has ordered cuts involving around 50,000 jobs, with agreements already reached with approximately 37,000 employees, according to Blume.

However, recent reports indicate that the company is considering further measures as part of its broader restructuring. Reuters reported that the potential scale of additional action could involve up to another 50,000 positions, although this figure should not be treated as a confirmed final job-cut target.
Volkswagen is also looking at reducing its model range and production capacity to better match demand. The aim is to lower overheads and free up funds for electric vehicles, software and other technologies that will shape the next phase of the automotive industry.

Volkswagen is also facing a tougher business environment in the United States. The company says US tariffs alone are costing the group approximately €5 billion a year. Vehicle tariffs have risen sharply compared with two years ago, increasing the cost of European-built vehicles entering the US market.

That adds another layer of pressure at a time when Volkswagen is already trying to improve margins. The company has been forced to balance investment in electric vehicles and new technology with the need to reduce costs across its traditional manufacturing operations.

Despite the challenges, Volkswagen says its transformation is beginning to produce results in some areas. The company reported strong demand for its newer electric models in Europe, with its European order bank for fully electric vehicles increasing by more than 50 per cent in the first half of 2026. Its new electric urban car family also received more than 70,000 orders in its first few weeks.

Volkswagen expects a difficult period ahead, but management maintains that the company has the financial strength and products needed to recover if it can improve its cost structure.

For employees, investors and the wider German auto industry, however, the next few weeks could be crucial. Volkswagen is expected to use upcoming staff meetings to explain the scale of the restructuring and seek support for further savings.

Volkswagen cannot rely on its traditional strengths alone. Rising Chinese competition, changing consumer demand, US tariffs and high European production costs are forcing one of the world’s biggest automakers to make difficult decisions.

The company now faces the challenge of cutting costs without weakening its ability to invest in the electric and digital technologies needed to compete in the future.

Categories
Beyond

Onion prices at ₹42/kg, Kanda Express rolls

Onion prices have risen sharply across several parts of India, putting fresh pressure on household budgets and prompting the Centre to step in with emergency measures. From Monday, August 24, the government has started operating special trains, called Kanda Express, to move onions from Nashik in Maharashtra to major consumption centres where prices have climbed well above the national average.

The move comes after the average retail price of onions rose to around ₹42 per kg, according to official data. This is nearly 45% higher than the price a year ago and about 19% above the level recorded a month earlier. The sharp increase has become a concern for consumers as onion is a daily kitchen staple and a sustained rise can add to overall food inflation.

The government has identified Delhi, Chennai, Kochi and Guwahati as key destinations for the Kanda Express because onion prices in these markets are significantly higher than the national average. The idea is straightforward: move stocks from regions where supplies are relatively comfortable to markets where consumers are paying more.

Delhi has seen one of the steepest increases. Retail onion prices have reached around ₹65 per kg, compared with about ₹35 per kg a year earlier. In Chennai, prices have climbed to nearly ₹58 per kg, against ₹33 per kg last year. Onion prices have also remained elevated in parts of Kerala and Assam.

For households, the increase is particularly noticeable because onions are used regularly in Indian cooking. A rise of even ₹10-20 per kg can add to monthly grocery bills, especially for families that buy onions in larger quantities. Restaurants, hotels and food businesses are also likely to feel the impact because onions are a basic ingredient in a wide range of dishes.

The current price rise has been linked mainly to lower onion output and tighter supplies. When arrivals fall while demand remains steady, wholesale prices tend to rise, eventually pushing up retail rates. The government is therefore trying to address the immediate supply imbalance rather than allowing prices to rise further.

The Kanda Express is one part of that response. The Centre is also preparing to release onions from its buffer stock into the market. The aim is to increase availability in areas where prices have risen sharply and provide some relief to consumers.

The government’s buffer-stock strategy is not new. Onions are among the essential commodities for which the Centre maintains stocks that can be released when prices rise sharply. By bringing additional supplies into the market, authorities hope to reduce the gap between demand and availability and prevent a further escalation in prices.

The latest intervention also highlights the importance of India’s onion supply chain. Maharashtra is one of the country’s major onion-producing states, with Nashik serving as an important production and trading hub. Moving onions directly from the region to major consuming centres by rail can help transport larger quantities more efficiently and quickly than relying entirely on road movement.

The key question for consumers is how quickly the additional supply will translate into lower onion prices in local markets. The government intervention may take some time to work through the supply chain, particularly if wholesale and retail traders are holding stocks purchased at higher prices.

The Centre is also monitoring the production outlook to assess whether the current shortage is temporary or likely to continue. If arrivals improve in the coming weeks, prices could ease naturally. But if supplies remain tight, further intervention may be required.

The timing is important because rising prices of other food items could add to household expenses. Sugar prices, for instance, have also moved higher in recent weeks. Official data cited in reports showed retail sugar prices at around ₹62.50 per kg on August 22, compared with ₹46 per kg a month earlier. In Delhi and Mumbai, prices were around ₹65 and ₹69 per kg respectively.

The combination of higher onion and sugar prices could add to concerns over food inflation, particularly if the increases persist. Onion prices are closely watched by policymakers because of their importance in household consumption and their potential impact on food-price expectations.

The government will therefore be hoping that the Kanda Express and the release of buffer stocks can improve availability quickly. The special trains are expected to transport onions from Nashik to markets where prices have risen significantly, helping bridge the supply gap.

The initiative also provides a reminder of how quickly agricultural prices can change. Even when overall production appears adequate, differences in regional supply, transportation costs, storage and market arrivals can create sharp price variations between cities.

For consumers in Delhi, Chennai, Kochi, Guwahati and other affected markets, the immediate concern is simple: when will onion prices come down? The answer will depend on how much additional stock reaches the markets and whether fresh arrivals improve.

The Centre’s strategy is focused on increasing supplies and preventing further price escalation. The Kanda Express, alongside the release of buffer-stock onions, is expected to play a key role in that effort.

If the additional supplies reach deficit markets quickly, consumers could see some relief in the coming days. But with production and arrivals still being closely monitored, the government will need to keep a close watch on the market to ensure that the latest onion price surge does not turn into a prolonged food inflation problem.