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Rediff.com  » Business » Hyderabad airport defers capex plan to combat slowdown

Hyderabad airport defers capex plan to combat slowdown

Last updated on: November 17, 2008 11:18 IST
GMR Hyderabad International Airport, the developer and operator of Rajiv Gandhi International Airport in Hyderabad, has deferred its Rs 150-crore (Rs 1.5-billion) capital expenditure plan for  the greenfield facility and decided not to undertake expansion projects 'which are not critical now'.

This is on account of its efforts to combat the current slowdown in the economy, which has had a cascading effect on the airport sector.

According to GHIAL chief executive officer P S Nair, the company is also introducing austerity measures to reduce cost of operations by 15-20 per cent besides exploring other sources of revenue.

During the first six months of the current financial year, domestic traffic from the new airport has declined by 7.7 per cent to 2.49 million from 2.7 million in the corresponding period last year (from Begumpet airport).

Though the international passenger traffic increased by 8.4 per cent to 779,995 in the same period, the overall decline in passenger traffic was 4.3 per cent  as domestic traffic accounts for 77 per cent of the total passenger traffic of the
airport. 

Besides the decline in passenger traffic, Nair said, the fixation of lower user development fee of Rs 375 by the civil aviation ministry for domestic passengers as against Rs 600 sought by the company had  impacted
GHIAL revenues.

"We are looking forward to the constitution of Airports' Economic Regulatory Authority of India to take up the UDF issue", he said.

Earlier, the parliament had adopted a bill providing for the constitution of the authority that would regulate tariff charges at airports besides monitoring their performance standards.

In spite of the slowdown, GHIAL is expecting a 10 per cent growth in passenger traffic this year.

However, this is far less than the over 40 per cent year-on-year growth rate registered by the Begumpet airport during the past three years.

Consequently, the company's break-even period, originally expected to be five-and-a-half years, is likely to be prolonged further.

"It might take an additional six months time to break-even", GHIAL chief commercial officer, Viswanath Attaluri, said.

Attaluri said that in the first 10 days of this month, there had been a rise in passenger traffic. This apart, the airport had registered an overall growth of 17.6 per cent in cargo freight despite a 10.9 per cent decline in the domestic cargo
during the April-September period this year compared with the same period last year.

It's international cargo freight increased by 47.8 per cent to 17,673 tonnes compared to 11,955 tonnes in the corresponding period last year. 
BS Reporter in Hyderabad
Source: