We can achieve 20-25% growth; govt needs to remove policy uncertainty, says CEO of GMR Hyderabad International Airport

By: | Published: April 4, 2018 4:23 AM

GMR-operated Hyderabad International Airport (GHIAL) is all set to touch the 18-million passenger mark this year after having grown at almost 21% y-o-y for the last three years.

SGK Kishore, GMR Hyderabad International Airport, GMRSGK Kishore

GMR-operated Hyderabad International Airport (GHIAL) is all set to touch the 18-million passenger mark this year after having grown at almost 21% y-o-y for the last three years. The airport, initially designed for 12 million passengers, has sought regulatory permission to expand capacity to 30 million. The first airport in the country to go the PPP way has also announced a mega airport city — the first multi-themed airport city in India. Manisha Singhal spoke to GHIAL CEO SGK Kishore. Excerpts:

Hyderabad was the first airport to go under the PPP model. What has been the learning for you under this model?

It has been a good experience for all stakeholders. The government got speedy implementation of infrastructure projects, users got a global experience, and for private partners like us, it’s basically learning the nuances of large infrastructure projects, especially regulatory, along with the complexities of traffic growth. After this model, Indian airports started getting ranked globally. This never happened before 2008.

Give us details of your expansion plan.

We have planned to double the current capacity over 2.5 years. We are getting regulatory clearance for the next phase, that is for 30-million capacity. The yardsticks and benchmarks and the type of improvements that have come in the air navigation services have all added to increased efficiencies and we have revised capacity to 75 million from 40 million passengers now.

What are the parameters that you have kept in mind while making these traffic projections?

Mainly fuel cost. We are assuming that the crude oil cost will remain below $100 for the next 4-5 years, and with that assumption we are eyeing at least 15% growth.

Developers have a major concern with regard to uncertainty over revenue sharing. What are you advocating?

We have told the government that there’s huge opportunity. We can grow by 20-25% and we need to convert that into a reality. If we have to sustain this growth, apart from fuel price, airport infrastructure will be a big challenge or the bottleneck if you don’t take proactive steps to improve it. For this there are a few things the government needs to do, the most important being removing the policy uncertainty and ensuring policy consistency. The tariff-based bidding, which the government is trying, should bring in a lot of clarity and reduce bureaucratic work.

You haven’t floated an IPO but raised money via bonds. What’s your capex plan?

For fundraise the appetite was much more but we thought we will go initially for $350 million. Based on our requirement, we will go to the market again. For IPO we missed the bus, but for the bond we went at the right time. We will assess the external markets and our internal requirements and then go for fresh capital raise again. For the current phase this is adequate. In these sort of capital-intensive projects we realised it is always good to go for the bond sort of instrument… So, there’s one more thing the government will have to do and that is to develop a strong and good domestic bond market.

What are your plans for regional airports?

We evaluate every opportunity and if it makes commercial sense, and there is competitive bidding, we can go for it. But smaller airports may not be amenable for a PPP sort of structure.

Mumbai and Delhi airports aren’t keen on having smaller aircraft. What about you?

At Hyderabad airport, we are at a stage where we encourage regional connectivity… As airports start becoming bigger, the slots become more precious, so it is in the interest of the passengers that the slots are used for maximum throughput… As of now, we are fine with it.

Will Hyderabad get direct flights to the US and Europe?

With the US direct flights, the issue is one of the range. Given the range of the current long-haul aircraft, I think Delhi/Mumbai are best suited for direct connections. But from a pure traffic point of view, Hyderabad deserves more connections because a lot of Telugu-speaking passengers fly to the US and Europe. Our next focus will be how to get long-haul connections first to Europe and then to the US. Once the engine efficiencies improve, new technology comes and the range improves, you may see direct flights from Hyderabad to New York and Chicago a few years down the line.

By Manisha Singhal

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