GMR says Hyderabad airport breakeven delayed 6 years

GMR Hyderabad International Airport Ltd (Ghial), a GMR group company operating the Rajiv Gandhi International Airport at Hyderabad, is likely to achieve breakeven only by 2020, or six years later than estimated.

“The breakeven should happen some time in 2020. But it is still too early to talk about revenues. Things are looking up a bit and we are hoping for the best,” said P Sripathy, CEO of Ghial.

The airport, built on 5,500 acres at Shamshabad in the outskirts of the city, cost about Rs2,500 crore.

Ghial is a joint venture between GMR Infrastructure, Malaysia Airports Holdings Berhad, Airports Authority of India and Andhra Pradesh. Though traffic is looking better, Sripathy said revenues are falling significantly short of estimates. Overall traffic was up 17% year-on-year in October, and 11% sequentially over September. “These numbers do not really indicate much. Even otherwise, we (the Hyderabad airport) lag other airports like Delhi, Mumbai, Chennai and Bangalore in terms of traffic. We are just average or below-average compared with them,” he said.

About 6.2 million passengers used the airport last year, while it has a capacity for 12 million. But despite perceptible growth this year, passenger traffic is unlikely to top the last year’s number. “Going by the first half, traffic numbers are likely to be flattish. Let’s see how the second half pans out,” Sripathy said.

Sensing the difficulties in meeting the deadlines for achieving certain revenue milestones, Ghial has already approached the Airport Economic Regulatory Authority (AERA) for revising airport charges upwards.

It now collects Rs1,000 from outbound international passengers and Rs 375 from the domestic passengers as ‘user development fee’.

Ghial may be wanting to double the fee, sources said, to achieve revenue milestones.
“Our application is pending before AERA. I can’t give any indication about the increase in UDF. We have made a proposal and the regulator will finally decide on the tariff,” Sripathy said.

Non-aero revenues seem to be improving compared with last year, but Sripathy said the numbers don’t portray the real picture because of low base effect since operations were very turbulent last year.

“Our non-aero revenues are likely to be around 40% this year,” he said.