GHIAL defers capex plans to combat slowdown

GMR Hyderabad International Airport Limited (GHIAL), the developer and operator of Rajiv Gandhi International Airport here, has deferred its Rs 150 crore capital expenditure plan on the greenfield facility and decided not to undertake expansion projects "which are not critical now" as a part of  its efforts to combat the current slowdown in the economy, which had a ripple effect on the airports sector.

According to  GHIAL chief executive officer P S Nair, the company is also introducing austerity measures to reduce cost of operations by 15-20 per cent besides exploring other avenues of revenue. The other avenues include increasing the spread on duty free, retail and food and beverage for passengers.

During the first six months of the current financial year, domestic traffic from the new airport has declined by 7.7 per cent to 2.49 million from 2.7 million in the corresponding period last year (from Begumpet airport). Though the international passenger traffic increased by 8.4 per cent to 779,995 in the same period, the overall decline in passenger traffic was 4.3 per cent  as domestic traffic accounts for 77 per cent of the total passenger traffic of the airport. 

Besides the decline in passenger traffic, Nair said, the fixation of lower user development fee (UDF) of Rs 375 by the civil aviation ministry for domestic passengers as against Rs 600 sought by the company had  impacted GHIAL revenues. "We are looking forward for the constitution of Airports Economic Regulatory Authority of India to take up the UDF issue", he said.

In spite of the slowdown,  GHIAL is expecting a 10 per cent growth in passenger traffic this year. However, this is far less than the over 40 per cent year-on-year growth rate registered by the Begumpet airport during the past three years.

Consequently, the company's break-even period, originally expected to be five-and-a-half years, is likely to be prolonged. "It might take an additional six months time to achieve break-even", GHIAL chief commercial officer, Viswanath Attaluri, said.

Attaluri said that in the first 10 days of this month there had been a rise in passenger traffic. This apart, the airport had registered a overall growth of 17.6 per cent in cargo freight despite a 10.9 per cent decline in the domestic cargo during the April-September period this year compared with the same period last year. It's international cargo freight increased by 47.8 per cent to 17,673 tonnes compared to 11,955 tonnes in the corresponding period last year.