The Union civil aviation ministry is reviewing the in-principle approval given to private firms to develop airports in states like Kerala, Madhya Pradesh and Rajasthan since developers have not been able to achieve financial closure in time. The ministry had granted in-principle approval to these developers in 2008.
Last month, a steering committee on greenfield airports had asked the promoter of Kannur International Airport (KIAL) which is building the Rs 2,500-crore airport infrastructure in Kerala to work out a modified financial model following delay in financial closure. The developer has completed a feasibility study for the project. The Kannur airport in north Kerala is expected to come up in over 1,000 acres.
Similarly, the greenfield airport project near Jaipur in Rajasthan has been stuck since the developer has not been able to achieve financial closure. ?We have given them six months to be on track, failing which the approval given to them could be withdrawn,? an aviation ministry official said. The airport site is located about 60 km from Jaipur.
In yet another instance, the civil aviation ministry has slapped a show-cause notice on Gwalior Agriculture, the company planning to build a cargo airport at Gwalior, and asked it to resolve land-related issues with the state government.
The central government panel has also suggested to these developers to explore the possibility of adopting the private public partnership (PPP) model of Delhi and Mumbai airports.
?Investor interest will be for larger airports which are making profits. Smaller airports have long-drawn break-even period due to inadequate traffic. Besides, several risks such as land acquisition are associated with new projects,? said Amber Dubey, director (aerospace and defence) at KPMG.
?With economy growing at 8-9%, the banks and financial institutions have a lot of other avenues where they can invest and make profit in the short and medium terms,? Dubey added.
Nearly 65% of the country’s domestic air traffic is on metro routes comprising city pairs of Delhi-Mumbai, Delhi-Hyderabad and Mumbai-Chennai among others. While the air traffic on non-metro routes have also shown potential, the centre of growth is still the trunk routes.
Most of the non-metro airports in the country which are operated and managed by state-owned Airports Authority of India (AAI) are in losses with the airport operator cross-subsidising the revenue shortfall at these airports with those of profit-making bigger airports.
Recently, airport operators, including the state-run AAI which have invested thousands of crores to upgrade infrastructure, started lobbying with the government to allow more foreign carriers to operate from their facilities. The move is expected to help the airport firms improve their revenue and recover investment. International traffic to and from India has nearly doubled to 29.6 million in the last five years on the back of strong economy.