Developers eye bids to upgrade Udaipur, Amritsar airports

Developers eye bids to upgrade Udaipur, Amritsar airports

New Delhi/Mumbai: Leading airport developers are readying to participate in bids to win the right to construct and operate commercial property at two small Indian airports—Amritsar in Punjab and Rajasthan’s Udaipur—that are the first among 35 non-metropolitan aerodromes that the Union government is trying to modernize through private companies.

A day after the civil aviation ministry called for ‘requests for quotations’ for so-called cityside development at the two airports, according to government and company sources, the Tata-Changi Airport consortium, Reliance Anil Dhirubhai Ambani Group or R-Adag, GMR Infrastructure Ltd, GVK Power & Infrastructure Ltd, and Larsen & Toubro Ltd are likely to participate in the bidding for the mandate to modernize the airports.

The government estimates that India needs $400 million (some Rs1,600 crore) in private investment in the 35 non-metro airports with the state-run Airports Authority of India, or AAI, spending an equal amount. The authority plans to attract private partners at 24 airports first.

The Amritsar and Udaipur aerodromes are among Indian airports benefiting from a surge in passenger traffic, and are expected to expand at 25% annually in the country in the coming years.

The Amritsar International Airport, one among 13 international airports in India, was also one of the fastest growing—40.4% jump over last year—among such airports in the country this year. It has also reported a 44.5% jump in freight traffic in July year-on-year, the highest among all Indian airports, according to the latest data from AAI.

Udaipur’s Maharana Pratap Airport, on the other hand, receives thousands of foreign tourists every year and could see a further rush as modern facilities become available, said Vivek Nair, managing director of Leela Group of hotels that has a resort coming up in the city.

The interest in non-metro airports was not surprising, said Dinesh Chandiok, CEO, Tata Realty and Infrastructure Ltd, which in the absence of any large airport projects recently bid for Karnataka’s smaller airports at Shimoga, Gulbarga and Bijapur. “Certainly the economic growth is pan-national today," said Chandiok. “As the economy grows, we think they (non-metro airports) are a good investment. We will be bidding for all the 24 airports with Changi." Tata Realty and Singapore’s Changi Airports International joined hands earlier this year to bid for India airport projects.

The GMR group that is leading the modernization of airport at Delhi and building a new one at Hyderabad said it was in the process of evaluating the scope of work in Amritsar and Udaipur. “As a general rule," said Madhu Terdal, chief financial officer, corporate strategic finance, GMR group, “we will be bidding for any major airports including non-metro projects in the country. But we would like to be a major player and not develop smaller airports that require Rs100-150 crore investment."

GVK, L&T and R-Adag are evaluating the Amritsar and Udaipur projects ahead of partnering international developers, according to officials at the business groups.

AAI, which has spent more than Rs100 on upgrading each of the ‘airside’ (terminal buildings and runway) projects at the Amritsar and Udaipur airports, will give part operational control and most of the maintenance work on a 30-year contract on the lines of the lease contracts at the Mumbai and Delhi airports, retaining, however, the overall management.

The selected bidder, likely to start the project by March next year, will be responsible for commercial operation, maintenance of the airport’s terminal building, cargo operations as also developing the cityside land (land outside the airport’s terminal building). This land can be used for construction of hotels, restaurants and car parking that form what is called non-aeronautical revenues for the airport.

Instead of sharing a percentage of the revenues generated out of the cityside development and related activities, as in Mumbai and Delhi, the selected private consortium will be selected based on the annual premium it is willing to pay AAI.

The government plans to seek developers for the remaining airports in a phased manner within the next few months.

Airports, said a senior civil aviation official familiar with the process but who did not wish to be quoted, that are nearing completion of airside development by AAI, will be announced first followed by the others.