Bangalore airport gets a facelift, new identity

Capacity will be increased; passengers may have to shell out more

 

The Bangalore international airport, which has been refurbished and expanded substantially to handle up to 20 million passengers a year, compared with close 13 million earlier, has got a new identity. The airport will now be called the Kempegowda International Airport, Bengaluru, (KIAB) — to honour Kempegowda, a 16th century chieftain from the region, credited with planning the Bangalore city.

The Rs 1,500-crore investment committed by a GVK-led consortium for this expansion is likely to be shortly reflected in higher user development fee (UDF), to be reviewed over the next two-three months.

“A call on that will be taken in two-three months by the Airport Economic Regulatory Authority (Aera),” said G V Sanjay Reddy, managing director of Bangalore International Aiport Ltd (BIAL), which operates the airport. Reddy did not give a clear idea on the quantum of UDF hike, an issue that has been a bone of contention between Aera and the country’s private airport developers. But, according to a consultation paper filed by BIAL, available on the Aera website, for the period from FY13 to FY15, the UDF has been proposed to be raised to Rs 783 (from Rs 231) for domestic passengers and Rs 1,700 (from Rs 952.30) for international passengers.

BIAL, one of the few profitable Indian airport operators, had reported a profit of Rs 104 crore on a revenue of Rs 628 crore for the year ended March 2013. It had a debt of Rs 2,200 crore on its books.

Launching a new terminal at the airport, Aviation Minister Ajit Singh said India had grown to become the ninth-largest aviation market in the world and was poised to soon become the third — behind only US and China. He added the central government had been working to provide affordable air connectivity.

The Planning Commission had provided a blue print for expansion of the country’s airport network. “'We have identified 20 major airports to be upgraded under the PPP mode, and six of those, including Kolkata, Chennai, Jaipur and Guwahati, have been handed over to private players. Our aim is also to develop low-cost airports in the country,” Singh said.

The move by a GVK-led consortium to expand the international airport at Bangalore has come at a time when the company is under severe stress and is looking at various ways to raise resources, either at its airports holding company, or at the BIAL level. In addition to its Bangalore airport asset, the GVK group also handles the Mumbai international airport. It is learnt to have had various levels of discussions with Singapore-based Changi Airport for a strategic partnership at the holding company level.

Also, it is understood that GVK is planning to initiate steps to off-load part of its stake after it gets the approval to raise UDF, a move that will substantially boost its valuation.