New Delhi: India’s airports regulator, which also runs the largest network of airports in the country, finds itself locking horns with GMR Infrastructure Ltd, which operates Hyderabad’s new international airport, by planning to convert a portion of the older airport into a workshop for commercial aircraft, which GMR says is a breach of contract.
The Airports Authority of India (AAI)-run airport at Begumpet in Hyderabad was closed nearly three months ago when the new international airport at Shamshabad on the city’s outshirts began operation, as part of a 2004 agreement that stipulated such a closure.
To cushion the financial loss from shutting down the Begumpet airport, which was among the top five in the country by passenger traffic, AAI recently floated tenders seeking to convert a portion of the nearly 790-acre airport site into a maintenance, repair and overhaul or MRO centre for various types of commercial aircraft.
The GMR Hyderabd International Airport Ltd, or Ghial, the GMR Group-run company that operates the new airport, has opposed the AAI’s MRO project.
Viswanath Attaluri, chief commercial officer, Ghial, said the MRO venture would be commercial in nature and therefore not permitted under the terms of the 2004 agreement. “It has been taken up formally with them. I hope they will not go forward with it,” he said.
AAI will take up the matter with the civil aviation ministry soon, said a senior official who asked not to be named.
Currently, most of the nearly 400 planes in the fleets of scheduled domestic airlines in India have to be flown to West Asia or South-East Asia for maintenance checks that are beyond routine.
There have been proposals made in the past few years to start MRO centres in India including Boeing Co.’s 2006 announcement of a $100 million (Rs432 crore) facility at Nagpur, and Airbus SAS’s maintenance centre in collaboration with National Aviation Co. of India Ltd, likely in New Delhi, but none has materialized so far. The official said AAI has been thinking of utilizing the Begumpet facility as a training centre for air traffic controllers and making use of aircraft hangars and portions of the building for an MRO facility.
While commercial flights have moved to the new airport at Shamshabad, the old airport has to be maintained in an operating condition for non-commercial flights and this MRO, the bids for which have been extended till July-end, could allow some back-up revenue, the official said.
AAI in its calls for expression of interest said that it will provide “built up space, hangar and or bare land etc.” to experienced firms to start such a centre “for a period of ten years which is extendable by mutual consent, on revised financial conditions.”
This is the second time a GMR company has run into regulatory troubles with its airports. A proposal last year by the Delhi International Airport Ltd, a GMR-run firm that is modernizing and operatingthe airport in the Capital, to lease out some 45 acres of airport land to hotel and realty companies in return for upfront deposits had to be withdrawn after it was opposed by various quarters of the government.
At Hyderabad, GMR had announced last year that it will set up its own MRO in partnership with Germany’s Lufthansa Technik AG though that deal is being seen as near-dead. Under the deal, Lufthansa Technik was expected to hold more than 75% in an MRO company with GMR holding the rest, to build a $20 million facility servicing Airbus’ A320 planes and Boeing's 737 jets initially.
“Even though the deal has been completed there has been delay in execution,” Attaluri said, adding he was still hopeful about last year’s announcement. “(But) if (Lufthansa) moves at the speed at which they are moving, we may look at other options,” he said. The MRO was to commence operations by the end of 2008.
The old Hyderabad airport, which will host a biennial air show this October for the first time on the lines of the Dubai Air Show, hopes to settle the issues soon.