Major airports will ride high

Given India's noisy and often cantankerous politics it wasn't an easy decision to take. Yet, on 1 February 2006, despite political opposition, the Indian government finalised plans for the restructuring and modernisation of the country's biggest international airports at Delhi and Mumbai. For the first time, the private sector was involved through a public-private partnership.

On 3 May 2006, the Delhi airport was handed over to Delhi International Airport Private Ltd (DIAPL) and the Mumbai airport to Mumbai International Airport Private Ltd (MIAPL). These companies took over complete operational control on 3 November 2006.

The public sector Airports Authority of India holds a 26 per cent equity stake in each of the two companies, ceding 74 per cent to what the government likes to call "strategic partners" – the GMR-Fraport consortium in Delhi and the GVK-ACSA consortium in Mumbai (ACSA is the acronym for Airports Company South Africa). Directly held foreign equity has been capped at 49 per cent. The two Hyderabad-based groups, GMR and GVK, were selected through a bidding process.

The capital investment in Delhi's airport modernisation is estimated at Rs.7,961 crore (about $1.77 billion) and in Mumbai at Rs.6,131 crore over a period of 20 years, in four phases of five years each. Delhi will get a new runway that will be able to service giant A-380 type of aircraft. New international terminal buildings will be constructed, and Delhi will be able to handle 37 million passengers annually by 2010.

Modernisation of Chennai and Kolkata airports
Now the government is considering the modernisation of Chennai and Kolkata airports. Chennai is also likely to go the private-public way.

At Kolkata, the Airports Authority of India has planned the following:

Kolkata airport modernisation component	Estimated cost (Rs. crore)
Phase 1 international terminal building (departure)	225
Additional parking bays & GSE area	40
Integrated cargo complex	62
Extension of secondary runway on both sides	30
Domestic terminal module 2	360
International terminal building phase 2	250
Domestic cargo building, including apron	100
Extension of domestic security hold area including 3 aerobridges	30
Note: 1 crore = 10 million

New airport at Bangalore
Bangalore needed a new, or expanded, airport a decade ago. Indian politics wouldn't allow it. Now the sheer pressure of numbers (the rapidly growing traffic) has made it possible.

So a new airport will be built at Devanhalli, just outside Bangalore, on a 'build own, operate and transfer' basis (with a tenure of 30 years) and on a public-private partnership basis. The latest (December 2006) estimated cost: Rs.1,930 crore (about $428 million).

The government of Karnataka state and the Airports Authority of India will together hold 26 per cent of the contracted company's equity and the "strategic joint venture partners", as the civil aviation ministry describes it, will hold the balance 74 per cent. AAI's investment in the equity has been capped at Rs.50 crore.

The winner is a consortium led by Siemens of Germany, with Unique of Zurich, Switzerland and India's top engineering firm, L&T, as other members. A shareholders' agreement, a concession agreement, the state support agreement and a land lease agreement have been already executed. The government of Karnataka has extended Rs.350 crore as state support and is providing around 4,000 acres of land at a discounted rent of Rs.1.

The communication navigation surveillance and air traffic management agreements have been signed. So too with the operations & maintenance services agreement, financing agreements and other agreements. The target opening date for the airport is 33 months from financial closure, which was achieved on 23 June 2005. Formal implementation of the project commenced on 2 July 2005.

The Devanhalli project will become operational in April 2008.

The trouble is, Bangalore is running on a treadmill. The latest traffic growth estimates indicate that the airport will be saturated much earlier than formerly anticipated. So a revised proposal for the extension of the initially designed terminal building, apron and other facilities was approved by Bangalore International Airport Ltd BIAL's board of directors on 7 April 2006.

New airport at Hyderabad
A new airport site is being developed at Shamshabad, near Hyderabad, for an airport which will be created on a 'build own, operate and transfer' basis with a public-private partnership, with participation by the government of the state of Andhra Pradesh.

A 'special purpose vehicle' called Hyderabad International Airport Limited (HIAL) has been set up, in which AAI and the Andhra Pradesh state government together hold 26 per cent equity. The balance 74 per cent will be owned by the strategic partner (a consortium led by GMR Enterprises and including Malaysian Airports Holdings Berhard (MAHB).

The target opening date of the airport is 36 months from the date of financial closure, which was 22 August 2005. Work has begun, and the airport is expected to be completed by the middle of 2008, as scheduled.