Business Standard

On second thoughts, no touchdown

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After being shortlisted, GMR decides it actually doesn’t want to manage California airport.

After Delhi, Istanbul and Male, the GMR Group has got a call from the US west coast. is among the 10 shortlisted for selecting which is to manage and operate in California.

Only, GMR said it was withdrawing, not proceeding with what may otherwise have been its high-profile US debut. Instead, sources said, GMR prefers to scout for opportunities in Asia, especially in India.

The is coming up and the tender process is expected to begin by June. After Delhi, said industry analysts, GMR would love to enter Mumbai.

Ontario Airport, 61 km from downtown Los Angeles, was also made famous by Tom Hanks and Leonardo DiCaprio while shooting their cat and mouse chase flick, Catch Me If You Can.

“GMR does not plan to bid for the Ontario Airport opportunity,” the company spokesperson told Business Standard. Adding: “At this point, we will not like to comment on our growth strategy. However, we will continue to evaluate opportunities from growth markets.”

Was 30-year term
The GMR move has raised eyebrows, since it came after it participated in the initial documentation. Earlier in the year, the Los Angeles International and Ontario Airports (LAWA), which owns and manages the two airfields, had asked for expressions of interest from airport developers and managers for a 20-30 year agreement.

It had even sought suggestions on “hypothetical” business terms they’d like to incorporate in their contract, if selected. The chosen airport concessionaire — to be selected from the shortlist and a subsequent financial bid — is to be responsible for paying the LAWA annual rent and a fee.

GMR is the second airport operator from Asia in the shortlist. It included seasoned companies such as Fraport AG, a German airport investor, owner and operator; Munich Airport Consulting, an airport operator from Germany; Airport Property Ventures, a Los Angeles airport operator; financial investors and private equity funds such as AMP Capital Investors; an Australian infrastructure investor, Carlyle; and Goldman Sachs Infrastructure Partners.

Incidentally, Fraport is part of the GMR-led consortium that manages (DIAL). It has a 10 per cent stake in DIAL.

“This is an indication that Ontario airport is a key asset for the City of Los Angeles,” said executive director Gina Marie Lindsey. Los Angeles has managed the airport since 1967 through a joint powers agreement with the city of Ontario, becoming the airport’s owner in 1985.

The airport covers 1,700 acres, with two runways, and was selected as one of the five best alternate airports in America. But it has suffered a sharp drop in passenger traffic since 2007, with some airlines even opting out.

The ones that remained cut flights and between 2007 and 2010, the airport lost 33 per cent of its arriving and departing passengers. In fiscal year 2010, the airport served 4.8 million customers, 18 scheduled and 53 unscheduled airlines.

For cargo and freight traffic, however, it is still strategic, being the west coast air and truck hub for UPS, and is also a major distribution point for FedEx Express. In 2009, the airport had a $79-million revenue but a $13-million loss. In comparison, nearby Los Angeles airport, one of the busiest in the world, handled 4.66 million passengers in just January of 2011.

GMR-managed Hyderabad International Airport will handle close to eight million passengers in 2010-11, while Delhi will be handling close to 28 million passengers in the same period. Detailed financial numbers for GMR Airports were not immediately available, since the company is unlisted.

Other than Delhi and Hyderabad, GMR is involved in two international airport projects — Istanbul, Turkey and Male, Maldives.

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