Friday, February 22, 2008

REVISED ESTIMATES - Bial to invest Rs2,500 crore in expansion

REVISED ESTIMATES - Bial to invest Rs2,500 crore in expansion

B angalore International Airport Ltd (Bial), the company building a new international airport in India's technology hub, will invest more than Rs2,500 crore in its second phase of expansion, including an additional runway to accommodate passenger traffic expected to grow by a third to 13 million in the first year of operation.

The new Bengaluru International Airport will open on 30 March for passengers; the firm plans to simultaneously begin work on expansion to keep up with one of the world's fastest growing civil aviation markets.

"It will be higher than what we have invested will happen over the next threefour years," said Albert Brunner, chief executive of Bial, the holding company for the private-public project. "The final investment details would be known in four months."

Bial is a consortium of German infrastructure company Siemens Projects Ventures; Larsen and Toubro, India's largest engineering company; and Unique Zurich Airport, which operates the international airport in Zurich, Switzerland. The Airports Authority of India and the Karnataka government hold 13% equity in the project, built at a cost of Rs2,530 crore.

The consortium had earlier estimated the project to cost Rs1,420 crore, when it began work in 2005. Passenger traffic estimates have been revised three times, more than doubling from five million to 13 million over the same period.

"International airlines have projected an increase of 26% in their operations from Ban galore, while the new schedules of domestic airlines say growth of 30%," said Marcel Hungerbuehler, chief operating officer of Bial.

The existing airport of stateowned aircraft maker Hindustan Aeronautics Ltd, which handled around 10 million passengers in 2007-three times its capacity-would cease to operate once the new airport at Devanahalli, 35km outside the state capital, opens.

The software industry, which contributes to nearly 50% of Bangalore's net domestic product, has demanded that the existing airport be retained due to growing passenger traffic and the longer time it takes to reach the new airport from the city.

A national highway connects the city to the airport, but projects such as a six-lane highway and a transit rail sys tem are yet to take off.

"It can't be in the interest of the city to retain the old airport," said Brunner, adding that the firm wants the airport to be a hub for south India.

He added that the firm would take 10% equity in a proposed rail link costing Rs3,500 crore to the airport, to be constructed by the Delhi Metro Rail Corp. Ltd.

The airport operator has proposed a user development fee of Rs675 for each domestic passenger and Rs955 for an international passenger who flies through the airport. The firm would reduce the fee by half for the first three months, said Brunner, adding it would file the proposed levy with the airport regulator, which comes into effect from April.

Bial will take about six years to profit, despite charging the user development fee from passengers, he


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