Developers thinking of low-cost airports

New Delhi: Faced with the airline business going haywire right before their eyes, mainly on account of the spiralling prices of oil, airport developers are now looking at low cost options for developing airports.

Low cost airports would translate into lower charges for airlines, and no extra costs for passengers, both factors being important to driving demand.

The GMR Group has started to evaluate this model in terms of efficient greenfield airports that could come up in smaller cities, costing between half or a fifth of the Rs2,500-crore that the Hyderabad airport cost. Sources in airport infrastructure say that cities with operational runways could get a new low-cost terminal for as low as Rs150 crore.

This change in thinking has been spurred by the recent spiralling oil prices, which have sapped all cash from the airline business, and made delays in payment of airport charges a common feature. Moreover, recovery of costs incurred in constructing fancy airports via the levy of a user development fee becomes difficult when airlines are already levying surcharges and taxes to stay in the air.

Industry sources peg the cost of developing a cost effective, or low cost, airport in a city like Pune around Rs1,000 crore. Smaller cities such as Amritsar, Udaipur, or Coimbatore can see a similar facility come up at less than half of that cost.

Reports say that the GMR group is looking to add a low-cost terminal to its Hyderabad airport, though that would happen only after traffic reaches the 12 million by around 2011-12. Word on the street indicates that Delhi may get a similar low-cost terminal.

Indian low cost carriers (LCCs) have been demanding low-cost airports for their economical charges, as they are more affordable on a smaller ticket size. Presently, low cost carriers pay the same airport charge that full service carriers pay, though they charge lesser for their services.