GMR wins bid to build Goa’s second airport

GMR beats Essel Infra Projects Ltd and state-run Airports Authority of India to the contract by offering the highest revenue share to the Goa government

GMR offered 36.99% of revenue generated by the airport to the government of Goa. Photo: Reuters
GMR offered 36.99% of revenue generated by the airport to the government of Goa. Photo: Reuters

New Delhi: GMR Infrastructure Ltd on Friday won the bid to build Goa’s second airport, expected to cost Rs.3,000 crore, gaining an opportunity to tap tourist traffic to the north of the state.

The company, which operates the Delhi and Hyderabad airports, beat Subhash Chandra’s Essel Infraprojects Ltd and state-run Airports Authority of India (AAI) to the contract by offering the highest revenue share to the state government.

GMR offered 36.99% of the revenue generated by the airport to the government of Goa, a former Portuguese colony known for its beaches and fishing villages. Essel Infraprojects and AAI offered 27% and 32.31%, respectively.

“We got a very high revenue share—way above what brand new airports get. It’s a fantastic revenue share. It shows the potential of the Goa airport,” Suresh Shanbhogue, director at the Directorate of Civil Aviation, government of Goa, said in a phone interview from Goa, where the bids were opened on Friday.

Airports built from scratch, like the one in Bengaluru, offer a revenue share as low as 4% to the state government. Old airports farmed out to private operators offer more. The operators of two of India’s biggest airports—in Mumbai and in Delhi—share 37% and 46%, respectively.

The Goa project will be the largest new airport planned after the Navi Mumbai airport, Mumbai’s second airport, where bidding is expected to start soon.

Prime Minister Narendra Modi is likely to be in the state soon to lay the cornerstone of the project in Mopa, north Goa.

“Prime Minister is expected to lay the foundation stone in September-end or October,” said Shanbhogue.

GMR will get about six months for tying up finances for the project, after which construction will begin.

“We are quite happy about it,” said Sidharath Kapur, president (airports) at GMR. “We will build a world-class Goa airport that will reflect and support Goa as the premier tourist destination in India.”

The airport, which will be developed in four phases, is expected to have a capacity to handle 13.1 million passengers a year by 2045. A total of 2,271 acres is required for the project. Flights are expected to start around 2020.

GMR Group has been struggling under the weight of heavy debt. With business interests in airports, energy and infrastructure, the group has a consolidated debt of Rs.39,154 crore.

“GMR is an experienced operator so hopefully they will increase tourism and local economy,” said Bengaluru-based Amrit Pandurangi, a senior director at consulting firm Deloitte Touche Tohmatsu India.

“But it’s a major investment and with a good revenue share given by GMR...,” Pandurangi said, adding that the project faces a long haul, given that the existing airport will not be closed down when the new one comes up.

The present airport at Dabolim in Goa has already exceeded its capacity of handling five million passengers a year. Fares to and from Goa tend to be high, especially during the peak season (December-January) and on weekends when tourists flock to its beaches.

The Dabolim airport cannot be expanded as it is a naval facility where AAI runs a civilian section that offers few flights. Airlines often complain of no landing slots being available at the airport.

India’s yearly air traffic is expected to touch 100 million passengers by 2017, up from 80 million in 2015. India recorded the fastest domestic air passenger growth of 18.8% in 2015, according to the International Air Transport Association.

India is set to build 50 new airports in the next three years as part of a plan to boost regional connectivity, and of these at least 10 will become operational over the next one year, according to civil aviation minister Ashok Gajapathi Raju.

India has more than 30 non-operational airports and more than 400 airstrips dating back to World War II.

Consulting firm Capa Centre for Aviation estimates that India needs $40 billion for airport development.

The existing airport at Goa will continue to operate, said Shanbhogue.

“The new airport is closest to Morjim beach. Both the old and the new airports are equidistant from Panaji,” he said, referring to the state capital.

Mayank Aggarwal contributed to this story.

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