Bengaluru airport readies new terminal as Indian air travel explodes

By Uday Sampath Kumar

BENGALURU (Reuters) - Bengaluru's international airport is expecting passenger traffic to surge nearly 70 percent in an expansion over the next two years as multinational companies pour money into the city known as the Silicon Valley of India.

Airport authorities laid out plans on Thursday for a nearly $2 billion investment that will add a new terminal and a second runway, boosting the airport's capacity to 45 million passengers per year.

The population of south India's biggest city has more than doubled since the turn of the century as banks, IT consultancies and startups set up bases, concreting over a city of trees, bungalows and lakes once favoured by the country's retirees.

The Kempegowda International Airport, already the third busiest in India with 27 million passengers in 2017-18, is expecting traffic to triple in the next 10 years, said Hari Marar, the chief executive officer of the airport.

"We will be as big as Heathrow is today," Marar told a news conference on the expansion.

London's Heathrow Airport had about 78 million passengers walk through its terminals in 2017.

Along with a new terminal, Bangalore International Airport Ltd is also nearing completion of a second runway, capable of handling Airbus's A380s and operating in near zero visibility.

India's total passenger traffic rose about 16.5 percent in 2017-2018 to nearly 309 million, according to the Airports Authority of India, making it one of the world's fastest-growing aviation markets. Boeing Co expects the country to become the third-largest commercial aviation market by the early 2020s.

While demand for air travel has never been higher, domestic airlines are struggling to turn a profit in the face of intense competition and fluctuating oil prices.

The country's oldest private airline - Jet Airways - is cash strapped and is falling behind on debt repayment and wages owed to staff.

Other carriers IndiGo and SpiceJet also reported losses in their latest reported quarters.

To escape the tough domestic market, airlines are adding international routes in search of better returns. Marar, however, said Indian cities would find it difficult to become hubs for international air traffic in South Asia as Indian airlines do not operate through hubs as many global carriers do.

"India has missed out a huge opportunity to have Indian airports as hubs ... It is the biggest loss India has had from an aviation perspective," Marar said.

(Reporting by Uday Sampath in Bengaluru; Editing by Saumyadeb Chakrabarty)