Ministry to propose scrapping of 150-km clause for airports; Greater Noida plan may get go-ahead

Written by Rishi Raj | Santosh Tiwari | New Delhi | Updated: May 23 2014, 06:15am hrs
The civil aviation ministry is set to propose to the new government led by Narendra Modi to do away with the policy of not having an airport within 150 km of an existing airport as part of its plan to set right the wrongs of the UPA regime.

The process is part of an exercise wherein all the ministries have been asked by the cabinet secretariat to make presentations listing out their priorities, as also the policies they think have gone wrong in the past.

Not allowing airports to run within 150 km of an existing airport is certainly an erroneous policy which needs to be reviewed, said a senior civil aviation ministry official in the know of the developments. This will be part of the civil aviation ministry's presentation that it will be making before Modi.

The scrapping of this restraining clause in the airport policy, which says that if the government were to allow construction of a greenfield airport within the radius of 150 km then either the consent of the existing airport operator be taken, or it be given the right of first refusal to be its builder, will majorly impact GMR's Delhi International Airport. There has been an old proposal by the UP government to build an international airport in Greater Noida, a suburb near Delhi, which could not take off because of this restraining clause. If it is removed, the government would be free to go ahead and build the airport without either seeking the consent of GMR or giving it the right to build the airport.

The Mumbai International airport, which has been built and operated by GVK, would not be impacted by the change in policy because a second airport is already being built in the city at Navi Mumbai the existing one has limitations in terms of expansion. In fact, GVK would have the RoFR for it, which means that if its bid for constructing the airport is 10% lower than the highest bidder, it would be given the right to match the highest bid and be awarded the contract for constructing it. The company has said in recent times that it will bid aggressively for the Navi Mumbai airport.

The current airport in Mumbai handles around 33 million passengers annually, which can go up to around 50 million. However, in Delhi, where DIAL's current handling is around 36 million, traffic can go up to 100 million because there's enough space for expansion.

The change in the policy will not have any immediate, major impact in cities like Hyderabad and Bangalore. According to the civil aviation ministry, Hyderabad's Begumpet airport infrastructure is lying unused since the coming up of the new airport because of this restraining clause.

The same thing has happened in case of the Bangalore airport the old airport was closed after the opening of the new airport.

People are traveling long distances to reach the new airports as you can't run the Begumpet airport because there is an agreement not to do so under the existing policy. In effect, a wonderful infrastructure is getting wasted, said the official.

However, industry sources said reviving older airports would not make sense as there isn't much traffic in these cities. For instance, the new airport in Bangalore has a capacity to handle 20 million passengers in a year, but it gets only 12.5 million. Similarly, in Hyderabad, against a capacity of around 12 million, actual movement is only 7.5 million.

"It would take around 5-8 years for these two airports to reach their full capacity. It is only after that there could be some sense in reviving the older ones, but their capacity is very low," said industry people in the know of things.

They said the government will have to cautiously handle the issue of allowing new airports to come up after scrapping the 150-km radius bit from the policy. It needs to assess that overcreation of capacities does not take place. For instance, if an airport is created in Greater Noida and DIAL also goes for expansion, there needs to be enough traffic to justify the existence of both the airports.