In March 2007, the State government Cabinet approved construction of greenfield airports in Bijapur, Gulbarga and Shimoga to give a boost to the tourism industry. Nineteen companies had responded when the Government called for an Expression of Interest (EoI) in 2007 to develop the airports. In January 2010, the Karnataka government signed a Memorandum of Understanding (MoU) with infrastructure development company MARG Limited for developing a green field airport at Bijapur under a public-private partnership agreement. The airport was to initially cater to smaller aircraft like ATR-72. The airside development was to include a 2,500 square metre terminal building, a 1,700 m long runway, aprons, taxiways, hangars, isolated parking bay, a 15 m air traffic control tower, ground support equipment, fuel storage facilities and a fire station.
The project came to a halt in 2012, when MARG demanded an additional 1,000 acres of land to build commercial complexes near the airport to make the project economically viable. According to the government, this amounted to a breach of contract signed through the MoU. In 2013, the Government decided to abandon the PPP model and instead sought to partner with AAI to complete the project. AAI agreed to build Bijapur airport but sought Rs. 50 crore from the State government to start site levelling work.