Monday, July 12, 2004

BIAL set to take off

On the Runway

With the signing of the concession agreement on July 5, the last hurdle in the way of India's first private sector-led international airport project at Devanahalli in Karnataka has been cleared

By Stephen David in Devanahalli, INDIA TODAY

For frequent flyers in Bangalore, like software hot shop Manthan Systems' Managing Director Atul Jalan, 34, business trips are a pain. Just back from a week-long visit to Spain and the UK, Jalan, who logs about 25,000 miles every month, says, "It is a shame that India's infotech capital does not have direct connectivity to cities around the world." He ruefully adds, "We waste a lot of time and pay nearly 30 per cent extra on connecting flights out of Mumbai or Delhi for our foreign travels."

The plaints of Jalan and the 12,50,000 software professionals in Bangalore might just come to an end. A 4,300 acre brown patch of land at Devanahalli, 35 km north of Bangalore, once marked for one of India's largest golf courses, will now be home to the first international airport in Karnataka. On July 5, a concession agreement was signed by K. Krishna Kumar, additional chief secretary, Karnataka, Ajay Prasad, secretary, Civil Aviation, and W. Bischoff of the Bangalore International Airport Ltd (BIAL) for the runways to come up at Devanahalli in around 33 months. The airport will be constructed through private-public partnership, with BIAL being the joint-venture of the Karnataka State Industrial Investment and Development Corporation Ltd (KSIIDS), the Airports Authority of India (AAI) and a consortium of Siemens (Germany), Unique Zurich (Switzerland) and Larsen & Toubro (India).

While KSIIDC and AAI will hold 26 per cent equity in BIAL, the private consortium will hold the remaining 74 per cent. The total cost of building the plush airport is estimated at Rs 1,300 crore. The Karnataka Government has provided a Rs 350 crore soft loan to BIAL and has pledged a budgetary support of Rs 400 crore.

The old Bangalore airport, operated by the Indian Air Force and the Hindustan Aeronautics Ltd, will be closed to civilian traffic after the completion of the new airport. The international airport will accommodate a minimum of 20 aircraft of different types and have an ultimate capacity of catering to 40 million passengers in a year, with the initial phase planned for a capacity to handle five million passengers and 1.4 lakh tonnes of cargo. Bangalore's current airport can handle only two million passengers and 30,000 tonnes of cargo a year.

Rs 1,300 CRORE: The total estimated cost of building the airport.
Rs 350 CRORE: Soft loan provided by the Karnataka Government.
Rs 400 CRORE: Budgetary support to be pledged by the state Government.
Rs 460 CRORE: The Karnataka Government and the AAI have signed a memorandum of understanding with ICICI Bank for a $100 million debt.

One of the priorities of the Congress-JD(S) Karnataka Government after Dharam Singh took over as the chief minister in May 2004 was to push for the Devanahalli project. Singh, seen as a rural-centric politician, wants to dilute that image a bit and project himself as an industry-friendly, progressive politician with this project. "With the signing of the agreement, more than 10 years of efforts by the state government have fructified," says Singh.

Infosys Chairman N.R. Narayana Murthy, who served as non-executive chairman of the Bangalore International Airport project, used his clout to push the plan with the Centre and even spent his company's money to tone up the immigration counter at the existing airport.

Al Brunner, chief executive officer of BIAL, says the Devanahalli airport will be built to world-class standards and will sport among other impressive features, a 4 km runway to accommodate big planes like the Boeing 747 and an apron wide enough for 20 different types of aircraft. The airport, to be ready by mid-2007, will be connected by a six-lane national highway. Ashok Soota, chairman of the CII and managing director of MindTree Consulting, says it will spur the development of the area around the airport.

However, hamstrung by red tape, Brunner now wants the Centre to give him a "comfort letter" assuring that there will be no delays in obtaining operational clearances in the future, especially those relating to aerodrome licence and its subsequent renewals. BIAL has sought the licence for two years as against the current validity for a year. The Centre is likely to accept this request. The private airport project company also wants the height of the air traffic control tower at Devanahalli to be 60 m as against the existing stipulation that it be 45 m. A team of the International Civil Aviation Organisation (ICAO) has agreed to the request.

An airport for Bangalore, which was first conceived in 1994, ran into rough weather when the Tata Group and Singapore Airlines walked out of the project citing governmental delays. The Tatas had spent around Rs 5 crore on initial surveys. After the state government revived the plan in 1995, the AAI brought it to a halt saying that a private company could not be allowed to build an airport. The decision was later reversed. Problems then cropped up over financing until last year ICICI Bank agreed to underwrite the airport.

Union Civil Aviation Minister Praful Patel says the clearance for the airport took longer than it should have because it was a new concept. "We have now paved the way for similar projects in other cities," he says. The last word is, however, reserved for Captain Gorur Gopinath, managing director of Air Deccan, India's first low-cost, no-frills airline: "This will definitely not only boost air traffic but also help in the growth of the helicopter and air charter services in the country." Better late than never.


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