Home' Asian Aviation : AAV April 2010 Contents 34 AsianAviation | APRIL 2010
while all other airports -- numbering 124 in total
-- remain under the control of the state-owned
Airports Authority of India (AAI).
Up to the late 1990s, the AAI had controlled all
of the country's airports, but with the transfer of ve
of the nation's biggest airports -- Delhi, Mumbai,
Bangalore, Hyderabad and Cochin -- to public-
private partnership models led by private consortia,
the authority saw its revenues shrink substantially.
ose ve airports together handle more than 60
percent of India's air tra c.
The AAI was left with 89 airports under its
control, just seven of which are pro table. Given
that the government has now committed itself to
upgrading non-metro airports across the country,
committing 124 billion rupees (US$2.8 billion) to
that programme in its 11th Five-Year Plan, this opens
a substantial shortfall between the AAI's revenue
Turning to debt
With the Ministry of Finance turning down an AAI
proposal to raise capital through the issue of tax-free
bonds, the authority is expected to turn to take out
bank loans of about 6 billion rupees over the next
"As the AAI is a AAA-rated entity with cash
reser ves of around 50 billion rupees, this should be
achievable," CAPA says.
However, the Sydney-based consultancy says, the
AAI still "needs to look more closely at developing a
strateg y to re-invent itself " in the light of the changes
in the industry. e authority needs to restructure
at a corporate level to develop a more commercial
approach to its work, helping it compete for tra c
with private airports.
is, CAPA points out, would be consistent with
the national strateg y of distributing tra c to smaller
cities, reducing the concentration on major hubs.
"The AAI should also focus on developing
other commercial opportunities," CAPA says. "For
example, there is huge upside in the potential for
growing non-aeronautical revenue, such as duty free,
domestic retail and food and beverage."
Each individual airport also needs to prepare and
follow its own business plan, the consultancy adds.
Corporatisation of the AAI has been discussed,
but progress has been slow to date. In the short-
term, it is more likely to spin off its air traffic
management (ATM) responsibilities into a separate,
corporatized unit. As a rst step, the airport operator
has appointed a new Board Member for Air Tra c
In its five-year airport plan, the Indian
Government identi ed 35 secondary airports for
upgrade and modernisation, initially setting the
goal that all work should be completed by 2009.
However, fundraising problems and the slump in
demand over the past year have delayed the plan.
Upgrades to the rst eight to nine airports were
nished by the rst quarter of this year, with four to
ve more facilities set to be upgraded by the end of
2010. All 35 are to be nished by 2012.
According to AAI Chairman V P Agrawal,
the upgrade projects completed to date cover the
airports at Amritsar, Aurangabad, Dehradun,
Jaipur, Lucknow, Nagpur, Trichy, Udaipur and
Visakhapatnam. at leaves 26 still in progress.
Previously, it had been intended that private
partners would be brought in to help manage airport
terminals and landside commercial development.
However, it has now been decided that terminal
and cargo operations will be retained by the AAI and
only landside development will be open to external
parties. Tenders for 10 of the non-metro airports are
expected to be issued soon.
Among green-field development plans, those
most likely to progress to the tender stage in the
immediate future are Navi Mumbai and Mopa in
Goa. Requests for Proposals were expected to be
issued for these projects early this year.
Navi Mumbai would become Mumbai's second
airport after Chhatrapati Shivaji International
Airport, which is expected to reach its capacity limits
within the next ve to seven years, with no scope
for further expansion because of physical restraints.
Mumbai is India's commercial and nancial capital,
so the new airport is essential to the city.
e new facility is scheduled to open by 2014-
2015, although the City and Industrial Corporation
responsible for the airport's development is pushing
for operations a year earlier. With an initial annual
capacity of 10 million passengers, the airport is
expected to be able to handle as many as 65 million
As of now, about 57 percent of the required land
has been acquired, with the rest in the process of
being transferred -- involving the resettlement of
3,000 families. Environmental factors have proved
to be an obstacle to the new airport's development,
since the proposed site is in a coastal protection zone.
e Indian Institute of Technolog y Bombay is now
preparing an Environmental Impact Assessment on
Upgrades to Kolkata and Chennai airports are
on-going , although both projects have run over their
initial budgets. According to CAPA, a green- eld
project may be announced for Chennai in the next
nancial year, raising doubts about the investment
now being pumped into the existing facility.
"Chennai and Kolkata airport modernization
projects are underway and we envisage no serious
impediments to their completion," says AAI chief
On top of the 35 airports already marked for
upgrade, the AAI has identi ed 13 more that it
wants to modernize and 32 unused airports that it
wants to bring into operation.
e private operators of Delhi and Mumbai airports
are now focusing on achieving their goals for the rst
phase of their upgrade projects. However, they are
being hurt by the high proportions of their revenue
that they agreed to hand over to the government --
46 percent for Delhi and 37 percent for Mumbai.
is has been exacerbated by the slump in travel
demand at a time of high capital expenditure.
" e structural shi in the industry towards low-
cost airlines will also have signi cant implications for
the business models and infrastructure requirements
for the airport operators," CAPA says.
Delhi's Indira Ghandi International Airport
(IGIA) -- South Asia's busiest airport by tra c
movements, was handed over to the management
of the Delhi International Airport Ltd (DIAL)
joint venture in May 2006. The venture is led
by Bangalore-based GMR Group, which is also
responsible for the airport's ongoing expansion and
Before the economic crisis hurt tra c growth,
the airport in 2007 handled 23 million passengers.
Expansion is expected to increase the hub's capacity
Mumbai is India's busiest
airport by passenger traffic.
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