Andhra Pradesh has revived the developer-selection process for the proposed Dagadarthi greenfield airport in Nellore district, with Andhra Pradesh Airports Development Corporation Limited seeking a private concessionaire to develop, finance, operate and maintain the facility under a Design, Build, Finance, Operate and Transfer model. The authority’s third-call Request for Proposal estimates Phase IA capital expenditure at ₹648.59 crore for FY27-FY29 and envisages a 45-year concession, potentially extendable under conditions set out in the concession framework.
The tender represents another attempt to turn a long-discussed Nellore airport into an executable project. An earlier concession agreement for Dagadarthi was signed in 2018 but subsequently terminated by the Andhra Pradesh government, returning responsibility for appointing a new developer, securing land, obtaining clearances and financing the airport to the state and its airport-development agency.
What does the ₹648.59 crore Dagadarthi Airport Phase IA include?
The official Request for Proposal places estimated Phase IA capex at ₹648.59 crore across FY27 to FY29. The airport is planned from its initial phase to support medium-size narrow-body aircraft including Airbus A320/A321-class operations, rather than being designed solely around smaller turboprop regional aircraft.
Phase IA components include land development, fencing, the airport boundary wall, internal and peripheral roads, runway, apron, parking, terminal building, fire station, substation and air-traffic-control infrastructure. This scope means the ₹648.59 crore phase is intended to establish an operational airport rather than merely complete enabling works before a later aviation phase.
The project should nevertheless still be described as being in the bidding and developer-selection stage. The RFP itself makes clear that Andhra Pradesh Airports Development Corporation is conducting a competitive process and retains the right to reject bids, so the issue of a tender does not establish that construction has started or that a concessionaire has already been appointed.
How much traffic does Andhra Pradesh expect Dagadarthi Airport to handle?
The project documents forecast annual passenger traffic of about 410,000 in FY27, increasing to 560,000 in FY30, 910,000 in FY35 and 1.4 million in FY40. Longer-term modelling reaches 3.2 million passengers in FY50, 5.8 million in FY60 and 9.5 million by FY70, although forecasts over such long periods should be treated as planning assumptions rather than guaranteed demand.
Cargo is also built into the business case. The RFP forecasts about 2,090 tonnes annually initially, rising to 5,978 tonnes by FY40 and 32,914 tonnes by FY70, while the project influence zone is expected to include Nellore, Kadapa, Prakasam, Chittoor, Annamayya and Tirupati districts.
The catchment reflects the state’s intention to position Dagadarthi as more than a city airport for Nellore residents. Nellore district has significant agriculture, aquaculture, industry and export activity, while neighbouring districts could create additional passenger and logistics demand if road access and airline connectivity make the new airport commercially competitive.
Why is the 45-year concession important for project economics?
The proposed concession runs for 45 years, giving the private operator a long period over which to recover upfront investment and earn returns from aeronautical and non-aeronautical revenue. The draft framework also provides for extensions under specified conditions, including an additional 15-year provision, while a separate traffic-linked mechanism can extend the remaining concession if passenger throughput in the fifteenth year falls below one million passengers, subject to limits in the agreement.
Long concessions are common in greenfield airport PPPs because terminals, runways and airside infrastructure require heavy upfront capital while traffic can take years to mature. The structure gives a developer time to build commercial revenues from retail, parking, property development and other services alongside passenger and airline charges.
The commercial challenge at Dagadarthi is that traffic growth is not guaranteed simply because an airport is built. Airlines need profitable routes, passengers must find the location convenient and the airport must compete with road and rail connectivity as well as established airports accessible from the broader region.
Why has Dagadarthi Airport taken so long to reach construction?
The project has a long history of proposals and changes in implementation structure. The previous concession arrangement was terminated, and the central government subsequently noted that responsibility for appointing a replacement developer, completing land acquisition, securing mandatory clearances and arranging project finance rested with the Andhra Pradesh government and Andhra Pradesh Airports Development Corporation.
The latest procurement is explicitly described as a third call, showing that developer selection itself has required repeated attempts. Greenfield airport PPPs can be difficult to close when projected traffic is initially modest because developers must commit significant capital before the airport has demonstrated actual passenger volumes.
The revised ₹648.59 crore Phase IA also reflects a phased strategy intended to avoid overbuilding ahead of demand. Project documents say the development sequence is designed to optimise initial capex while allowing later expansion as passenger and cargo traffic matures, which is a more conservative approach than building ultimate capacity at the outset.
What could Dagadarthi Airport mean for Nellore’s industrial economy?
Nellore is one of Andhra Pradesh’s important agricultural, commercial and industrial districts, while the broader catchment includes manufacturing, tourism and export-oriented activity across southern Andhra Pradesh. Faster air access could improve business connectivity and support higher-value cargo if airlines and logistics operators ultimately establish appropriate services.
The state has previously positioned Dagadarthi as a potential airport serving both passenger demand and aqua-export logistics, an attractive proposition given Nellore’s aquaculture sector. Cargo potential would still depend on cold-chain infrastructure, airline capacity, freight rates and exporter economics, so the airport should not be assumed to become a large cargo hub immediately after opening.
For now, the most important development is that Andhra Pradesh has put an executable PPP structure back before potential investors with a defined Phase IA cost, aircraft capability and long concession period. The next genuine project milestone will be selection of a concessionaire and signing of the resulting agreement; only after that would land handover, financing and construction provide evidence that the long-running Dagadarthi Airport proposal is finally moving from procurement into physical execution.
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