AAI to slash borrowing for upgrade of airports

The countrys largest airport operator,state-owned Airports Authority of India,is considering ways to slash its borrowing requirement...

The countrys largest airport operator,state-owned Airports Authority of India (AAI),is considering ways to slash its borrowing requirement for modernising 24 non-metro airports over the next two years by about 44 per cent to Rs 2,800 crore from the originally envisaged Rs 5,000 crore. It has worked out a two-pronged strategy of cutting costs and boosting revenues towards this end.

According to an AAI executive,the operator is exploring ways to trim the modernisation plan of some airports and also considering levying development fees in about nine airports over and above the 10 already identified. AAI is undertaking an internal assessment to identify non-metro airports where Development Fee (DF) can be levied,apart from the ten airports for which proposals are ready and are under the active consideration of the civil aviation ministry and the Airports Economic Regulatory Authority (AERA). These ten airports are Trivandrum,Ahmedabad,Chennai,Kolkata,Tiruchirapalli,Vishakhapatnam,Vizag,Varanasi,Amritsar and Udaipur. AAI hopes to fetch Rs 120 crore through levying of DF.

In another revenue boosting measure,AAI is evaluating the prospect of turning the old Hyderabad airport into a hospitality district,developing 10-15 acres of the land for the purpose. At the same time,Bangalore Airport,which is mired in court cases,may also be re-opened as a low-cost airport,for low-cost flying. We are evaluating both these options,and are also looking at starting academies at these airports, said the official.

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On the cost cutting front,the ministry has asked the AAI to prepare the cost breakdown for each of the 24 non-metro airports. We are re-looking at the ongoing projects where savings can be achieved. For instance,at the Kolkata Airport the cost variation is quite high on account of declining traffic,and the authority has decided to delay the construction of a control tower by eighteen months, said the official.

To meet the capex requirements,the authority plans to raise Rs 1,200 crore during fiscal 2009-10. Recently,the AAI received the approval to levy DF,beginning January1,2010,at the Jaipur Airport where departing passengers will have to shell out Rs 150 on domestic routes and Rs 1000 on international routes. Previously,Delhi and Mumbai were also allowed to charge DF to meet the capital expenditure gap.

AAIs profits fell by around 36 per cent to Rs 687 crore in 2008-09 as compared to 2007-08 on account of a dip in passenger traffic and the economic slowdown.