Sunday, January 25, 2009

BIAL weighing growth options, says Brunner

BIAL weighing growth options, says Brunner

Mr Albert Brunner

Our Bureau

Bangalore, Jan. 23 Mr Albert Brunner, the outgoing CEO of Bangalore’s airport operator BIAL, says the company is sizing up the situation and weighing its options on the way forward now that the traffic slowdown has given it a breather.

“We have more or less a clear picture now of what we have to do. We have told our master planners to compare various options for going into the next expansion,” Mr Brunner who flies out of the company at the end of the month after a seven-year stint, told Business Line.

It plans to start with ‘airport city’ or the ‘aerotropolis’, the commercial real estate development of 215 acres on its site. This plan was hit by the real estate downturn. “We will take it up in the coming months,” Mr Brunner said.

“We started with it two years ago and even started the tender process. We probably have to redo it because the market condition has changed completely now. But it’s much more difficult now than two years ago.” This plan was halted to complete the airport in time.

The Swiss German civil engineer came to Bangalore in 2002 for what he described as a “once in a lifetime experience” after completing the fifth expansion at Zurich for operator Unique Zurich Airport.

The greenfield airport opened in May 2008 amidst high traffic growth expectations and questions on its capacity. Within a month, it had to brave the global chill in air traffic.

Now, “the pressure for a new immediate expansion has eased. But it is not true that we have put the future expansion plans on hold,” said the man from Unique Zurich Airport, who steered the Rs 2,500-crore project at Devanahalli.

“We only put it on hold temporarily in November due to the tight cash flow situation. We did not have the (domestic) UDF in place. Now we have that, hopefully on an ad hoc basis, we are doing our homework in terms of what we can afford to take up in the next few months” going by the market demand.

Bengaluru Airport expects to end the year with 8.2 million passengers compared with 11 million it hoped for last May.

Virtually every decision made by BIAL was challenged or changed – the design of the new airport, the passenger fee and the choice of its various concessionaires. The Karnataka High Court is hearing a PIL on the closure of the HAL airport and has ruled in favour of duty-free player Flamengo, which had lost its bid.

BIAL plans to defend its decision in the Supreme Court. Mr Brunner said, “We have a very good (legal) system in India. There are winners and there are losers. Some of those who lost have accepted while some others decided to fight it in court. We are not afraid of this at all.”

Mr Marcel Hungerbuehler, the incoming CEO and who led the operations as COO, said building the airport “was almost a miracle.” Getting the airport up and running, he said, was often underestimated. “Now we are very keen that we reach a very high service standard level for passengers as well as for airport efficiency. Thereafter, we have to do proper planning and be ready with infrastructure when it is needed,” whether as an interim terminal or a full-fledged second phase.

Mr Brunner agreed that BIAL’s first year revenue falls short of expectation, thanks to headwind in the aviation industry. “That’s exactly what we are working on now. BIAL had Rs 22-crore loss a month, unpaid dues of Rs 41 crore from airlines and the UDF did not come until January 16, almost a third of its request.

The domestic UDF (user development fee) or airport fee of Rs 260 a departing passenger is less than the Rs 675 that BIAL asked for. “The Ministry (of Civil Aviation) has made it very clear in writing that this is an ad hoc UDF and that it has to study BIAL’s (investment) in detail. I hope it will be revised as soon as possible.”

About Bangalore’s disappointment over the airport, its looks, the cost of food or commuting, he said, “We have every reason to be proud of the airport. Yes, there were negative remarks after the airport opened. We completed such a big project within the given time-frame under a lot of difficulties. A project of this magnitude has its ups and downs, it happens all over the world. Basically, people don’t like changes. Now criticism is falling silent and internally we hear overwhelmingly good feedback from the passengers.”


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