An airport in bad weather

By: | Published: September 2, 2015 12:09 AM

Durgapur airport of Bengal Aerotropolis Projects awaits passenger arrivals

Barely three months after Kazi Nazrul Islam Airport near Durgapur in West Bengal took off to a glittering start, India’s first private greenfield airport is in jeopardy. Now, the airport wears a deserted look. A few CISF staff are guarding the airport, a lone Air India ticket counter is open, an ATM that’s shut, and there’s not a single car that’s parked at the parking lot.

The lack of passengers has led to carriers shutting down services, bringing down the overall operations at the airport, and now, the promoters are banking on real estate to return on track.

“Our realty business will cross-subsidise our airport business,” a spokesman for Bengal Aerotropolis Projects said.

Bengal Aerotropolis Projects is a special purpose vehicle formed to build the airport and other infrastructure at Andal near Durgapur. It is being developed by Singapore’s Changi Airports International, which also owns a stake in the venture.

The aerotropolis project was conceived in 2006. A new airport was to be developed on an old airfield used by the US Armed Air Forces during the second World War.

In 2007, the Centre and the West Bengal state government announced plans to redevelop the airport on a 650-acre land. The plan also included building an industrial park, a logistics hub, an infotech park and a supporting township—all just 15 kilometers from the industrial town of Durgapur—spread over another 1650 acres, with a total investment of Rs 12, 000 core.

The airport, with a 5,750 sq metre terminal, has the facility to handle narrow-body aircraft such as Airbus A-320 and Boeing 737. It has the capacity to handle about one million passengers per year.

On May 11 this year, Prime Minister Narendra Modi became the first passenger to fly out of the new private airport and a week later the airport launched its commercial operations with three  carriers – Air India, Pinnacle Air and Spirit Airways.

While Air India started a Kolkata-Andal (Durgapur) daily flight for Rs 2,500 with a 42-seater ATR, Pinnacle started a non-schedule operations between Kolkata and Coochbehar, touching Andal and Bagdogra. Spirit Airways started unscheduled operations between Kolkata and Patna, touching Andal.

Within two months of operations, Spirit and Pinnacle pulled out their flights.

Partha Ghosh, managing director of Bengal Aerotropolis Projects, said he has been negotiating with GoAir and Indigo to operate flights between Andal-Kolkata and Delhi. But the negotiations haven’t gone through as yet.

GoAir and Indigo have no immediate plans to connect Durgapur, according to people with knowledge of the development.

Air India, the only operator now, has cut its number of days it flies to this airport by half. It now flies three-days a week to Durgapur compared to six days a week when it began flying to this small airport.

Average occupancy was below 15 seats a flight and so the interest of touching Andal dried up despite the West Bengal government’s offer of a sales tax waiver on aviation turbine fuel and the airport operator handing out discounts on landing and parking charges to the airlines. Ghosh said the occupancy rate was around 30-35% but a sustained operation could have increased it. Air India is continuing its operations since Bengal Aerotropolis is providing it viability gap funding to make up for the losses, a spokesman for Air India said.

“Small non-metro airport projects in India are generally non-viable if there is no non-aeronautical revenue. Small airports need to have at least 15-20 flights a day to make operations viable,” another official at Bengal Aerotropolis said.

A quick turnaround of operations at the Durgapur airport is crucial for Bengal Aerotropolis, and more importantly for India, to attract investments in such large infrastructure projects. The Union ministry of civil aviation has identified about 50 locations for such smaller airports to be given to private firms for development.

Now, Bengal Aerotropolis is banking on the vast land bank it got as part of the project to ensure that the airport project succeeds. It has started leasing out land-parcels for private real estate development.

“The airport building has exponentially increased land price at the project site,” said Lakshmi Ghoshal, one of the developers who had leased land from Bengal Aerotropolis.

Still, Ghosh is hopeful on reviving the airport operations and run it as a standalone operations without any cross-subsidy from its aerocity projects. He is betting on attracting people from nearby industrial towns such as Durgapur, Asansol, Dhanbad and Bokaro— known for their steel industry, coal mining and power production—to use the airport. “There are initial hiccups in a business.

A business will have to be given its due time for commercial success,” says Ghosh.

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