GMR says Delhi airport project hinges on passenger numbers

GMR group, which is modernising the Delhi airport, has said its business model for the airport is pegged on the growth in passenger traffic and any further deterioration in numbers would directly impact the execution of the project.

“We are hopeful that we will be able to raise Rs 609 crore per annum for the next three years through the airport development fee (ADF). We still don’t know what happens if the passenger number further dwindle,” a company source said.

GMR has been allowed to collect Rs 1,300 from international passengers and Rs 200 from domestic passengers flying out of Delhi towards ADF. DIAL is planning to raise Rs 1,827 crore by levying this fee for three years, which is the gap-fund required to complete the project.

However, with the passenger numbers likely to decline and the government not offering any visibility on extending the ADF duration beyond three years, the company is still in a fix as far as project schedules are concerned.
The passenger traffic at the Delhi airport declined 4% in 2008 over the previous year with much of the fall seen in domestic traffic.

 Of the total project outlay of Rs 9,000 crore, the equity component is about Rs 4,000 crore and the remaining is debt.

The partners in the DIAL consortium have so far contributed Rs 1,200 crore towards equity and the company has raised about Rs 3,000 crore in debt. As an alternate model, DIAL is also developing a hospitality district near the airport and would raise Rs 2,500 crore in the form of deposits from prospective tenants in the proposed 45-acre layout in the first phase. The hospitality district would have hotels in the first phase, ranging from three- to five-star categories.

However, the earlier efforts of DIAL to call for bids from the builders for the hospitality district failed due to a depressed real estate market. 

“After the hospitality district’s development hit a roadblock, we approached the government to allow us to raise further funds from other options and we were given ADF as an option,” a company source said.

The company has again called for bids from the developers, which are under technical evaluation. “We can’t escape the reality about the condition of the real estate market at this point. Still, we are making an attempt take the project forward,” the source said. DIAL’s spokesman said the project was progressing as per schedule.

“The upgradation of the existing terminals is almost complete. The new domestic terminal will be ready in the next two months and the new terminal — T3 — for domestic and international traffic will be complete by 2010. Our mandate is to complete all the works at the airport ahead of the Commonwealth Games,” he said.