New Delhi: State-run Airports Authority of India (AAI), which owns and runs most of the country’s commercial airports, plans to shelve the modernization of at least seven of the 35 non-metro airports it had planned to upgrade. The move follows a reduction in revenue caused by airlines slashing the number of flights to stem mounting losses.
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The shortfall in spending planned for the airport upgrade, together with expenditure earmarked for the modernization work underway at Chennai and Kolkata airports, is estimated at around Rs5,000 crore.
At the peak of the air traffic boom in the country in 2006, AAI had planned to spend at least Rs6,440 crore by 2011-12 for modernization of the 35 airports.
Over the last fiscal, passenger traffic dwindled as the pace of economic growth slowed in the face of a global recession. It dropped 4.8% in 2008 alone from the previous year.
“We have reviewed the curtailment of some ongoing airports projects and also (plan to) introduce several cost-cutting measures,” said an AAI board member, who didn’t want to be named.
The steps it proposes to take to tackle the shortfall in modernization costs include seeking government approval to raise Rs5,000 crore from a sale of tax-free bonds, increasing commercial development of airport properties, recovering dues from airlines and oil companies, besides in-house steps such as economy air travel for employees.
Non-metro airports that were being modernized included Ahmedabad, Amritsar, Guwahati, Jaipur, Udaipur, Thiruvananthapuram, Lucknow, Goa, Madurai, Mangalore, Agatti, Aurangabad, Khajuraho, Rajkot, Vadodara, Bhopal, Indore, Nagpur, Visakhapatnam, Tiruchirappalli, Bhubaneswar, Coimbatore, Patna, Port Blair, Varanasi, Agartala, Dehradun, Imphal, Ranchi, Raipur, Agra, Chandigarh, Dimapur, Jammu and Pune.
A second AAI official, who also didn’t want to be named, said work on at least 30% of these airports has been commissioned. “We plan to commission 25% (of the remaining) before December and 25% by March and the rest will be delayed for a later date.”
The airport operator is still to decide which projects will be left for a later stage.
Given that traffic has fallen, passenger saturation at airports such as the one in Jaipur, whose modernization was completed recently, that had been expected in fiscal 2017 will now likely be pushed forward by three years to 2019-20, the second AAI official said.
Of the 125 airports AAI manages, 86 are operational but just 15 made profits during fiscal 2008; data for the fiscal year gone by is not yet available.
In the last three years, four of the top six airports managed by AAI have been privatized. While the AAI-run airports at Bangalore and Hyderabad have been shut down as private-run airports became operational in the cities,New Delhi and Mumbai airports are now run under private management with 26% held by AAI.
The authority had sought permission from the government to raise tax-free bonds to the tune of Rs5,000 crore, but this has not been acceded to in the Union Budget presented on Monday.
Budgetary allocation to AAI has been limited to Rs99.15 crore, of which Rs79.15 crore has been allocated for development of airports at Jammu, Srinagar and Puducherry (formerly Pondicherry), besides a few others, and Rs20 crore for airports in north-eastern states.
AAI officials said they are “still hopeful” of getting permission for the tax-free bonds from the government; else, they plan to borrow the money from the market at a higher interest rate.
The airport operator also plans to recover dues from oil companies and airlines to strengthen its cash flows. The amount due from domestic airlines to AAI as of April stood at Rs911.39 crore, including Rs691.15 crore from National Aviation Co. of India Ltd-run Air India, Rs113 crore from Kingfisher Airlines Ltd, and Rs55.09 crore from Jet Airways (India) Ltd and its low-fare subsidiary JetLite.
“We have to tighten up. We are (also) going to write to oil companies seeking Rs150 crore due on them for throughput charges,” the second AAI official quoted earlier said.
The civil aviation ministry expects domestic passenger traffic to recover this fiscal together with estimated international passenger traffic growth of 10% during the period.