Unprecedented aviation growth in India has brought into focus the need to create infrastructure ahead of demand. The Airports Authority of India (AAI) operates 129 airports across the country and to deal with traffic explosion, it has lined up a large capex plan that includes new terminal buildings and second airports for many state Capitals and strengthening of airside capacity. Airlines may need to pay a premium for peak hour flights even as more AAI airports begin functioning round the clock to cut congestion at peak hours. AAI chairman Guruprasad Mohapatra spoke to Sindhu Bhattacharya of CNBCTV18.COM on a range of issues such as congestion at airports, privatisation and capacity, among others and clarifies that control of air traffic controllers will remain with his organisation and not with. Edited excerpts: What are AAI’s plans to tackle the increasing congestion at airports?
Mohapatra: India has seen unprecedented aviation growth. We are responding to this by increasing the pitch for greenfield airports and proposing second airports for state capitals, definitely for Kolkata and Chennai. Discussion are on with state governments for land for second airports. For Pune the state government just indicated a place called Purandhare. Looking for second airports in Bhubaneshwar, Ahmedabad, Rajkot and many other places too. For Delhi and Mumbai, second airports are already in the offing. Bangalore and Hyderabad will hold good for some years.
Has capacity at AAI airports already been breached?
A: No, the capacity hasn’t been breached. (Figures his office provided show this fiscal, capacity at all AAI airports together will be 165.25 million passengers versus projected demand of 158.12 million. But it will begin falling short from 2019-20. Capacity will increase to 167.35 million but demand will outstrip it at 181.83 million passengers). Apart from second airports in state capitals, we are also augmenting capacity at existing airports. We have been increasing slots from winter schedule to summer each year. AAI has earmarked Rs 25,000 crore capex for next 5 years, of which Rs 8000-10,000 crore has already been spent. We have identified which airport terminal building will be expanded, which runways will be strengthened. Wherever land is available we will do a parallel taxi track, more aprons and parking bays will be built. A new airport has come up at Pakyong and flights should start after monsoons. Second airport is being developed for Rajkot at Hirsar. We are also expanding terminal building and runway capacity at Jabalpur and Kolhapur besides building new terminal buildings at Guwahati, Leh, Patna and Imphal.
How is the capex being funded?
A: Luckily, we are financially a healthy company. But now we realize that the kind of capacity expansion plans we have, we will require to borrow.
Will that be the first time in AAI’s history?
A: No, we have done some borrowings before. Our board has now approved a borrowing plan for next 4-5 years. Out of Rs 25,000 crore capex, 60% will be funded through borrowings. We have raised Rs 1500 crore loan for this fiscal, from a bank consortium lead by SBI. We are studying whether to go for long term borrowings from banks, or look at bonds, for the remaining amount.
Do PPP airports of Mumbai and Delhi still contribute a significant share to AAI’s earnings?
A: Our dependence has come down as our non-aero revenues have increased significantly. Besides, the tariff order by AERA has reduced tariff incomes of these two airports from aeronautical activities. This has reduced their contribution to our earnings. Plus, our non-aeronautical revenue has increased from activities like shopping facilities inside terminal buildings. We are also trying to monetize land and are firming up a policy on how to do tendering for hotels. Identified land at 8-9 airports which can be thus monetized.
How much revenue would you raise from these activities?
A: Ideally, the non-aeronautical revenue should be 30-35%. Another couple of years we should reach this target, we are already fairly close to this at just about 30% now.
Why is AAI keen on bidding for the world’s emptiest airport in Sri Lanka?
A: No comments.
What is the status of privatisation plans for Jaipur and Ahmedabad airports?
A: In the first round there was a single bidder so process was scrapped. Now, we are adding significantly to the scope of work in the bid to make the proposition more attractive. The Delhi, Mumbai airport concession model is not the only model. A consultant is examining what kind of greenfield agreements can be signed, removing some past irritants. Delhi, Mumbai airport concession agreements are all based on percentage of gross revenue. We are looking for another model.
Why is AAI mulling a hike in charges for peak hour slots?
A: Most airport capacity constraints today happen during peak hours. Airports are designed for a 24-hour flow…we find off-peak hours are utilized very less. We are increasing AAI airports that operate round the clock. Patna, Indore, Guwahati and Ranchi were added last winter, three more by October. Then, we will levy premium charges on new flights during peak hours.
So these premium charges will be only on new flights?
A: That is a discussion going on, but it is still not a decision. It could be existing or new flights, I cannot rule out anything. There is a limit to how much an airport can accommodate during peak hours. Even at Heathrow and many other busy airports, peak hour charges exist.
Is there a proposal to increase PSF? Why?
A: Footfalls are increasing across airports but then PSF charges were fixed years back. Expenditure we incur on paying salaries to the security forces is much more than the income through PSF. Private airport operators and AAI have provided details to the government about income and expenditure incurred on security activities. Airport operators are incurring a loss of Rs 100 crore each year due to PSF shortfall.
The government has said the control of air traffic control officers (ATCOs) will pass on from AAI to (aviation regulator) DGCA to comply with ICAO norms. What are your thoughts?
A: ATCOs are recruited and trained as per international and DGCA norms but are not licensed currently. They are only rated by a system devised by AAI, their employer. Should DGCA take over the role of licensing the ATCOs is the question. That will require rule changes and DGCA is working on it … Control of ATCOs will remain with AAI.
UDAN flights and slot constraints. What’s the situation?A: Slot constraints for these flights exist only in Delhi, Mumbai airports. So we are building Hindon airport as an alternative to Delhi. Flights should start from Hindon in 6-9 months. In Mumbai, round one of UDAN flights have been accommodated. but Navi Mumbai is required for remaining flights.