We started our planning process around nine months ago. We know, we need the second runway by 2012-13, if we continue to grow as we grow now. We need a second terminal at the same time, four years from now. Next week we’ll go to the board and give the preliminary information and three months from now, we’ll give a concrete proposal.
Is the additional investment linked to valuation and divestment of stake as there has been talk of Bial being valued at $2.5 billion (Rs10,775 crore) or more?
Fact is that we do not have revenues from domestic passengers. User development fee (UDF) is the backbone of our revenue and 80% of traffic is domestic and we don’t have revenue (from domestic traffic) for the first three months. Therefore, there is a certain reluctance (on the part of our investors for additional investment).
None of them have, however, said I am not interested in infusing additional money. None of them have ever said we (have to) go public for funding. I give you my word it has never been discussed. It could be a solution because it is cheaper than borrowing from banks but (it is only one of the solutions being considered).
What is the investment for an intermediate terminal?
We are thinking whether we need to build a functional terminal or a slightly bigger shell that can accommodate more people. It is being considered. Building should be below Rs100 crore and the apron expansion should be more... that would mean an investment of another Rs200-300 crore at least.
There is apprehension that the project is goldplated and you have not opened the books completely.
We are completely transparent. There are two representatives of Karnataka and government of India and the books are open to them.
Feeling among investors?
Initially we projected break-even in seven-and-a-half years. However, since then we had to make more investment but we also have more passengers. If we could charge the UDF, we will break even in five years. As I told you before, we need to invest further. Really, it is the (capital) appreciation of the airport, not the revenue, that makes (this project) more interesting for the investor.
Airlines are bleeding. Your outlook? Seen any cancellation of short-haul flights ?
Airlines are our customers. They are in a tight position, GoAir and Paramount have suspended one flight each. We have no indication of a slowdown for the winter schedule. In September, we will get a clear indication.
Arguments in favour of keeping the short-haul flights from the old airport and indemnifying Bial for those losses. Comments.
I feel sorry that they still come up with those arguments. You can indemnify our loss but in the long run, it is the loss of the city. The city will lose out having a strong airport and an opportunity to attract lot of international airlines and make it stronger. Airlines are already losing money. They will also lose money by (spending on) additional resources in two airports.
K. Raghu contributed to this interview.