Pvt airports set to send SOS to govt

HYDERABAD: After airlines, it’s the turn of airports to send an SOS to the government for help to counter falling traffic and therefore, revenues.

The Hyderabad-based GMR group, which operates the Hyderabad and Delhi airports, is planning to approach the government for “help”.

“We are yet to make up our mind on the kind of help we should be seeking from the government. We will decide on it shortly. But, we think we have a legitimate right and case for doing so,” GMR Hyderabad International Airport (GHIAL) CEO P S Nair said.

The GVK group, which operates the Mumbai airport, is also keen that the government expedite the process of taking certain decisions, which it is supposed take as per the concession agreement, with the passenger traffic dropping in the airports.

Though GHIAL, which operates the Hyderabad airport, is yet to decide on the nature and quantity of the support it needs, it feels seeking the government’s support would be inevitable.

“Passenger traffic has come down. Airlines have the option to stop flying and ground aircraft. An airport does not have a choice. We can’t switch off even a light despite the downturn,” Nair said. 

The Hyderabad airport has seen a 9.8% fall in domestic passenger traffic in the 8 months since it was inaugurated on March 14, though international passenger numbers increased by 10% over last year.

Though this is the first operational year for the new airport, the figures are being compared with data from the Begumpet airport of the Airport Authorities of India that was operational last year.

Domestic passengers for the volume at airports and bring in the revenue in the form of higher user development fees or UDF.

While domestic passengers pay Rs 375 as UDF in Hyderabad when flying out, international passengers pay Rs 1,000.

According to Nair, Hyderabad airport is set to fall short of estimated passenger traffic of 8 million (6.4 million domestic and 1.6 million international) passengers for the year.
The airport has a capacity to handle 12 million passengers annually.

The Mumbai airport has witnessed a 17% drop in passenger traffic flow in the second quarter.

“We know that there is nothing the government can do. But we are entitled to levy certain as per the concession agreement. For instance, we are entitled to increase the landing and parking charges by 10% for which we need to seek the ministry of civil aviation’s approval. We have submitted an application for this already. All we are asking them is to speed up the process of approving the proposal,” Isaac George, GVK group’s CFO, told DNA Money.

Delhi International Airport Ltd (DIAL), which is also a GMR group company, too, is in the process of knocking the ministry’s door for putting in place a support mechanism.

“No airport is an exception in this market. The airlines can get support in the form of reduction in duties on aviation turbine fuel etc. We can only ask the government to allow us to increase the charges we collect from the airlines. That’s the only major revenue source for us,” another senior official of the GMR group, who did not wish to be identified, said, referring to the Delhi airport.

GHIAL, meanwhile, has gone on an austerity drive.

It plans to put on hold all expansions that are not critical to the airport’s core operations, it is working on a proposal to make use of the real estate it has in the 5,500-acre airport campus for generating additional revenue.

A budget hotel that was to come up near the hotel has now been put on hold for at least another six months.

The originally planned Rs 150 crore capex plan has also been deferred.
“There is no way we can incur any capex now,” GHIAL’s chief commercial officer A Vishwanath said.

The measures also include cost cutting in various operational areas like power and water consumption and revising the rentals of the retail outlets that have set up their shops at the airport.

But, both GMR and GVK see a silver lining in the cargo business.
For GHIAL, though the domestic cargo declined by 10.7%, a major gain was in the form 45.8% increase in international cargo.

“We hope to see a net increase by about 10-15% in the cargo itself by the year end,” Nair said.