Sunday, May 18, 2008

Blatant International Airport Loot Ltd.

For nearly three months now, lunch discussions in my organization have revolved around the new airport. Last week, I got a chance to preview it first hand - BIAL has a "scheme" to allow MNCs to take teams of employees for a visit, and I signed on. So, what is my conclusion?

As passengers take the first flight out of BIAL, the taxpayer will be taken for a ride.
(Disclaimer: I don't know anything about running an airport, so things may be radically different once the airport actually opens.)

The reason is simple: the airport, particularly the terminal, is not designed to handle anything more than the traffic that HAL airport used to get in the early 2000s. It is tiny, particularly in comparison to what was expected of it. Terminal size of 71,000 square metres is dwarfed even by the Hyderabad airport at 105,300 square metres. And the PR folks at BIAL have the nerve to claim that they can handle 11 million passengers every year, while HIAL with nearly 50% more area claims a modest 12 million. HIAL beats BIAL in aerobridges: 12 to 8, and even in terms of runway width, which our host at BIAL acknowledged is insufficient to handle A380s. The person in question even claimed that no airline was ordering A380s in the near future, saying "why dedicate capacity to something that won't happen in the near future" (paraphrased). Apparently, he hadn't seen this:, or a million other news items easily accessible from your favourite search engine.

We continued discussions about the airport, and he said that in Phase 2, an identical terminal would be built, taking the total capacity to 50million passengers. Now pray, according to BIAL numbers (which I completely reject), their terminal can handle 11million passengers. If you double of the area, what pot must you be smoking to let you quintuple the capacity!? When we entered the departure area, we were told that the seating could accommodate 1200 passengers, which was definitely a stretch of the imagination. Still, assuming that it can, let's examine the reality. A quick look at the departures from Bangalore between 8:00 and 9:00 PM reveals that there are around 20 flights taking off between those times. Taking a simple number of 70 passengers per flight, we have 1400 passengers. Similarly, peak hour international traffic happens between 00:30 and 2:30 hrs. Anyone who's taken an international flight during those times will testify that the cramped HAL airport had over 1000 passengers during those hours. So, we've already exceeded capacity! How will the airport handle traffic growth, which currently is at 20% per annum?

Now, this is not an accident. Ever since its inception, BIAL has refused to acknowledge the need for higher capacity in the airport, quoting dubious studies, while ignoring the ground reality - 10 million passengers took off last year - and the new airport is claiming to accommodate only 11 million (which, I'll bet is a total lie).

Let's now take a look at its finances. Are the user charges of BIAL, currently at Rs.675/- for a domestic passenger and Rs.975/- for an international passenger are too steep?

Here's a back-of-the envelope calculation. Taking an average charge of Rs. 700 per passenger, and with today's passenger numbers of 10 million per year - we get a figure of 7 billion rupees, or 700 crores as revenue from the measure. The total investment made by the partners is:
  • Rs 375 crore from Karnataka Govt (32.6%)
  • Rs 379.5 crore from Indian financial institutions as debt (33%), and
  • Rs 51.42 crore from the three member international consortium of Siemens Project Ventures, Larsen & Turbo and Unique Zurich Airport
Which means at nearly 900 crores expenditure, the airport venture will break even in the first two years of operating! And without _any_ increase in passenger traffic! OK, they have to pay salaries, there are running costs and utilities, but I haven't considered the revenue they will make out of the airport city, the planned "five-star" hotel, and from all the retail outlets that will be setup in the airport.

In addition, the airport will not allow KSTDC taxies to operate in the airport - what'll become of the livelihoods of those drivers?

These are the issues that Kiran Mazumdar Shaw, Mohandas Pai, and the rest of the rabble rousers must raise. Not travel time to the new airport.
On a final note: we went when there was less than two weeks for the airport to open, and finishing work was still on at the airport. Think about it, this is an airport that the company claimed was ready to open on March 31st! Looks like Mr. Brunner has learnt some Indian habits during his long stay here!

Postscript: It is a shame that none of the channels or the newspapers that covered the airport controversy bothered to present a statistical analysis of the airport, instead relying on sound-bites and "feelings". This points to a drastic reduction in the quality of journalism caused by the increasing numbers of those who come in for the "cool"ness of the job, not its rigor. Few journalists today are trained, or are willing to train, to achieve the analytical rigor that a Sainath, a Shourie or a Gurumurthy have achieved.


kattricker said...

Gops, I know for sure HIAL doesnt have 12 aerobridges even in a dream. It has 2!!! and they are usually reserved for international aircrafts or IC. But 8 is grossly inadequate in BIAL. This is yet another example of an effort too little too late...

Gops said...
This comment has been removed by the author.
Gops said...


I got my information from here:

HIAL has 12 aerobridges - I'm talking about the new airport, not the old one. Of these, 2 can accommodate wide-bodied aircraft.

Yep, 8 is too low for BIAL.

kattricker said...

Oh, you were referring to hyderabad airport. I thought you were referring to Hindustan airport (HAL) which was the old blr airport. Sorry...