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Old airports not viable: Experts

March 17, 2008 10:00 IST
Civil Aviation Minister Praful Patel has been appeasing the airport unions by conceding that the old Hyderabad and Bangalore airports will remain open for general aviation (business and corporate jets and charters) once the new ones begin commercial operations.

But aviation experts say the existing airports cannot be viable. Just two days ago, Patel told the Lok Sabha that the old airports would not be completely closed down but would be used for general aviation like private charters, defence and emergency operations.

Charter operations would mean that only smaller aircraft are used, which means that they will have to pay no landing and parking fees since the government has exempted aircraft with less than 80 seats from such charges

Also, there will be no earnings from space rentals (like check-in counters and so on). Overall, given that general aviation can never match those of scheduled airlines, "the Hyderabad airport is as good as shut down," said Robey Lal, former country head, International Air Transport Association (IATA). "Also, most of the private charter operators would want to operate out of the new airport rather than the old one," he added.

For instance, Bjets, a Tata joint venture for business jets that is slated to start operations soon, will operate out of the new Hyderabad airport at Shamsabad.

Just six to seven business jets operate at the Hyderabad airport every day at the moment, which is not enough for business viability. General aviation, say executives, does not constitute for more than 1 to 2 per cent of the total revenue. The two airports had clocked revenues of over Rs 304 crore (Rs 3.04 billion) in 2006-07. They also generated a profit after tax of Rs 324 crore (Rs 3.24 billion).

"It is very difficult for an airport operator to survive only on the revenues earned from general aviation business," said a private charter service operator. Besides, the new airport being constructed under a public-private partnership consortium will also have a general aviation facility in the later phase of the project as part of the contractual agreement with the government.

Some experts, however, feel that commercial operations in the old airport do not necessarily impact the new airport at all. "When the concession agreements for both the airports were signed, the traffic that was expected then has already been exceeded by twice that number. To handle the excess traffic that will be generated in the coming years, it was extremely important that both the airports be kept open," said Amrit Pandurangi of PricewaterhouseCoopers.

However, some airlines executives are more optimistic that there could be economic viability of these airports in the long run.

"The authorities at the old airport might think of levying some additional charges for the general aviation players which might help revenues a bit," said a Simplifly Deccan executive.

Deccan's executive vice-chairman G R Gopinath has been pitching for not closing old airports and allowing competition between airports in the same city as is the practice across the globe. Airports Authority of India (AAI) officials insist that the old airports can be viable. "We have a good number of general aviation aircraft movements at the airport. Later facilities can be developed for the same and this airport is close to the city unlike the greenfield projects which are in the outskirts of the city. That is a big selling point," says an AAI official at Bangalore airport.

Anirban Chowdhury & Manisha Singhal in New Delhi/Mumbai
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