AAI to approach govt to raise 5,000 cr through bonds

AAI to approach govt to raise 5,000 cr through bonds

New Delhi: The Airports Authority of India (AAI), which runs 125 airports across the country, would approach the government to allow it to raise 5,000 crore through infrastructure bonds, its top official said on Monday.

“We will again approach the government to allow us to issue infrastructure bonds for the next phase of development of 15 airports during the 12th plan period," AAI chairman V P Agrawal told reporters here.

AAI’s plea to raise a similar amount through tax-free infrastructure bonds in 2009 to develop 35 non-metro airports was rejected by the government then. The modernisation and upgradation work on many of these airports has already been completed.

Replying to questions on the sidelines of a seminar on the Indian aviation sector organised by Indo-American Chamber of Commerce, he said these bonds could be tax-free but the government would have to take a decision on the entire issue.

Finance minister Pranab Mukherjee had announced in the 2011-12 general budget that government would allow issuance of tax-free infrastructure bonds worth 30,000 crore by various bodies in the current financial year.

The 15 airports which are to be developed in the next phase would be those non-metro airports “which can be revived and where there is a big traffic potential" that can be developed by the airlines over a few years, he had said.

Agrawal said the AAI would also unlock about 1,100 crore of its “locked money" to finance the upcoming airport development projects.

While the modernisation of Chennai airport would be completed by this year-end, that of Kolkata airport would end by March next year, he said.

While AAI is a ‘AAA´ rated organisation, these tax-free bonds to be offered by it are likely to be low-risk in nature and unlike other investments, the interest earned would most probably be exempted from taxes.

Maintaining that the term of these bonds would be worked out soon in consultation with the government, the AAI chief said temporary borrowings and short-term loans at lowest rates would also be taken to fund the airport development programme.

Referring to ‘GAGAN´, the satellite-based air navigation system (SBAS) being developed by AAI and ISRO, he said all necessary equipment was already in place and the process of its certification was currently on.

“Certified signals from this system will be available for use from June 2013," he said, adding that aircraft and even helicopters were now equipped with SBAS and ground-based navigation systems to which these signals would be available.

The signals would be available over the entire Indian airspace as well as the Indian Ocean region from Australia to some African countries, subject to these countries installing receiver equipment, Agrawal said.

About $1 billion would be required to be spent over the next few years on air traffic flow management systems in the country, he said.

Observing that the Indian aviation sector would require a total investment of about $110 billion till 2020, he said $30 billion would be required for airport development and the remaining for aircraft and other equipment.

Bob Smith, vice president of US aviation technology firm Honeywell Aerospace, estimated that till 2030, India’s aircraft fleet would grow from 430 to almost 1,450 and the passengers from 54 million to 250 million.