The Civil Aviation ministry today has requested BIAL the promoters of the new Bengaluru International Airport (BIA) to delay the launch of the airport to end May.

Most likely it will be May 29, 2008.

I offer my sincerest sympathies to the entire team at BIAL and its concessionaires. They have put in hard work to bring the project to fruition, and their efforts are getting compromised by the politics of elections, and the need of the Government to have a public display of their "achievements".

I also understand that the meeting was very positive on another topic of great interest to me. The continuation of operations at the existing HAL airport in parallel with BIA.

The meeting explored many options, and I was told by sources that the BIAL representatives came to the meeting with a positive attitude.

I have explained in my previous article the merits of keeping HAL airport open, along with the benefits for BIAL as a company.

There is another meeting scheduled for May 12, and I hope BIAL continues this positive attitude and accepts a deal that will keep all sides happy.

This is the first story I have been able to publish on two major interests of mine, Aviation and Philanthropy.

Please read the full story on the Rotary International website.

If you would like to know more about Rotary in Bangalore, visit Rotary Club of Bangalore website.

This is an on-site assessment of the terminal and other passenger facilities at the new Bengaluru International Airport (BIA). It is quite well written, despite the title, which I do not fully agree with.

Sniperz Blog: Bangalore Airport - Daylight Dacoity

Some readers of my blog have commented that my stand for keeping HAL airport in addition to Bengaluru International Airport (BIA) is not clearly articulated. So here goes.

Thanks to the economic boom in India, the liberalisation of the aviation industry, and the efforts of the low cost carriers, who incidentally lead the global surge in aviation growth, Bangalore air traffic has exploded; to a growth level just not anticipated, let alone planned for.

In the 36 month period that BIA was being constructed, traffic has grown 255% from 4.1 million passengers per annum (MPPA) to almost 10.5 MPPA. With all due respect to the capabilities of the BIAL consortium, I dare say, there is no infrastructure project in the world, that can plan for, let alone handle this level of growth.


From terminal to airplane stands to runway to airspace, an airport is a finely tuned integration of capacity points, and the old adage of a chain being as strong as its weakest link holds true. As all airports in India have shown us, the flexibility of human beings allows terminal capacity to exceed 100%. Also, the terminal design at BIA is modular, and I believe BIAL management claims, that it can be easily expanded. However, I must temper my belief, with the fact, that BIAL management has chosen not to expand the present terminal in 2007, despite seeing the explosive growth trends.

What cannot be easily exceeded is apron, runway, and airspace capacity, for the cold hard rules of air safety dictate these operate at or below 100%, and the laws of physics determine long construction times. While BIA's terminal is a huge improvement over the AAI owned and operated terminal at HAL airport, BIA still has, only ONE runway, just like HAL airport.

Under the safety rules of the DGCA, the runway can only handle 30 flights an hour (take-off or landing). It does not matter that the plane is a mega people moving Jumbo jet or a small commuter turbo-prop like an ATR or a cargo aircraft. Unlike vehicles on a road at rush hour, you cannot stop a plane in mid-air due to a traffic jam. Each flight has to be given a pre-determined flight slot.

As per BIAL's own data, on its opening date, BIA's single runway, is already "fully booked" during the peak travel hours from 6AM - 10AM and from 6PM to 8PM. In fact the 6am-7am and 6pm-7pm hours are "over-booked", and we are still in the Summer schedule which is a lean time for air travel all over India. Where will the additional demand that will come in the peak Winter season be accomodated ?


Future growth can only come by domestic flights during non peak hours and international flights later in the night. We use air travel for convenience, and I do not know many people willing to take a flight at non peak hours.

BIAL has independently contracted Lufthansa Consulting (LHC) on two occasions to project air traffic in Bangalore before commencing construction. Thanks to their conservative projections, Bangalore has crossed, BIAL's "Optimistic" figures for the year 2010, 3 years ahead in 2007 and the gap is only widening with each passing day. Many seasoned industry watchers believe the BIAL projections continue to be excessively conservative, and their projection of 21.4 million passengers by 2013 is unrealistically low.

Using the real life example of India's best and largest airport, in terms of flight operations, Mumbai, the very best that BIA can achieve with its one runway is 15 million passengers. This figure of 15 million is discounting two fundamental assumptions :

1. Mumbai's high number of international flights which use large aircraft (more passengers per flight), when compared to Bangalore, and
2. The high efficiency of the highly experienced of the air traffic controllers at Mumbai, compared to the fresh recruits at BIA.

The association of air transporters (airlines), IATA, held meeting with the operators of BIA, the BIAL consortium. BIAL projected traffic of 15.6 million passengers by March 2010. The 15 million capacity of the single runway will be exceeded by calendar 2009 (18-21 months from opening). Constructing a new runway will take significantly longer.

This too is uncertain, as the IAF's Yelahanka base is very close to BIA, and the IAF authorities have voiced their concern, despite "instructions" from New Delhi.

Even if the second runway is constructed the capacity of BIA will increase to 30 million passengers. Given Bangalore's meteoric growth, this number will be reached by March 2015, less than 8 years after opening. Even using BIAL's ultra-conservative projections, this will be crossed by end 2016, 9.5 years after opening.


Airspace at BIA is constrained to 40% of what HAL used to enjoy. I am not going to touch upon the restricted airspace of BIA. It is a technical subject, but if you are inclined please read my article on the REAL capacity of BIA.


In addition to congestion in the air, an exclusive BIAL also forces congestion on the ground. The Government of Karnataka is on a fire-fighting mission, spending more than Rs. 1,500 Cr., to develop peripheral roads to BIAL. Despite this development, the BBMP, is spending vast sums of money, to increase the road from High Grounds in central Bangalore till Hebbal flyover, in a clear indication that this is where most of the traffic will flow. The Operations Research Society of India, is projecting a 200% increase in traffic in central Bangalore. Keeping HAL open, will split the traffic and prevent congestion.

Airlines have indicated their willingness to operate from both airports, as along as there is adequate traffic permitted at HAL airport i.e. 2.5 million passengers and higher.

By keeping HAL open in parallel, will allow BIA and Bangaloreans multiple benefits :

1. Extend the saturation date of BIA by another 4 years, possibly more
2. Shift smaller turbo-prop aircraft to HAL, thus opening the slots to more valuable larger jets
3. Improve productivity by cutting down commute times
4. Product differentiation by using HAL as a low cost low amenities airport.
5. Still gives BIA over 210% of its original traffic projections.
   

There are precedents all over the world that justifies Bangalore as a multi-airport city. Cities like Atlanta who have a very high percentage of transit traffic, need a large single airport, to justify the transit connectivity. However cities like Bangalore which have large originating / terminating traffic, have multiple smaller size airports.

The world's busiest airspace, New York City, has 3 major airports, which started when there were only 4 million passengers, and have grown TOGETHER to serve 100 million.

Brazil is clubbed along with India in the BRIC economic group. Its major cities like Sao Paulo and Rio have a situation very similar to Bangalore. An in-city, small, domestic only, airport operating in parallel to a large, out-city, domestic and international, airport. In all the Brazilian cities, both the airports are operating as commercial successes.


A commercial venture has to operate in harmony with the community it serves. The past episode of Enron, taught us, that a commercial agreement which impedes rather than promotes its original purpose of serving the public interest, will cause the opposition and resentment from the very public it was meant to serve.

Given the fact, that even with HAL airport open, air traffic will saturate within the next 15 years, we have to start thinking of a third airport, instead of debating about the first two.

Due to the contrarian views I put forth, readers of my blog may get the impression that I am Anti-BIAL.

Nothing can be further from the truth. I am NOT against Bengaluru International Airport (BIA) at all. BIA is a required addition to Bangalore, and I have always admired the efforts put in by the whole team at the BIAL consortium, and their contractors, and have always congratulated BIAL CEO Mr. Brunner, on a job well done.

My main point of contention is only around the airport capacity in Bangalore, and the high fee structure.

Thanks to years of neglect by the Government Aviation fraternity, Bangalore's air traffic and economy has been suppressed. No one, me included, have anticipated the rate of growth, let alone plan for it. Since 2004, I have prepared regular reports for the some of the Industry Chambers on the air traffic scenario, and I am happy to say, each one of my projections has been surpassed by actual performance.

I have given praise to BIAL and I am critical of BIAL, when required. There are many realities that are not exposed in the everyday media.

Less than 20% of an airport is the passenger terminal(s). 80% is in other facilities, services, and an airport's role in the local economy. I think most people are getting enamoured by the terminal and forgetting the rest.

Thanks to my passion for aviation, and having travelled the better part of my life, across global airports, the great to the ugly, and I have studied airports.

I welcome BIAL, but not exclusively.

For too long Bangalore and its residents have endured infrastructure playing catch-up with demand. To ensure, that Bangalore, at least in this one instance, is ahead of the demand curve, I feel HAL is required to operate in additional to BIAL. My optimism for Bangalore is so strong, that I strongly recommend to Government that we need to be planning our third airport, instead of debating about the first and second.

The management of AAI Bangalore, and HAL, know how relentless I have been in pushing them to provide better services and achieve more results for Bangalore. I have sat up for nights on end observing the processes, and along with highly qualified colleagues from industry, proposed processes to ensure good service. Its a pity that the apathy of headquarters politics and bureaucracy of various agencies involved at the airport quashed the push.

Bangalore epitomises the new India, PM Manmohan Singh is rumoured to have said "If Bangalore fails, India fails". We have to set and expect significantly higher standard, especially from a world class organisation like Zurich Airport. I honestly believe that the BIAL team is very capable, and I look forward to more from them, in the years to come.

If you consider the cost of land, connectivity, and scrapping of various existing infrastructure, the BIA is going to cost the Bangalore and Indian tax payer at least 15,000 Crore, if not more. We should demand and get our money's worth.

In the new resurgent India, we are finally attempting to jettison the yoke of monopolies, and getting ready to welcome the Competition Commission. In the changed economic environment, BIAL will still earn its investment many times over, even with HAL airport operating alongside.

I welcome comments on my blog. With pride I can say, as long as there is no offensive language, I will post any comment, no matter how positive or negative, of my views, it is.

Bangalore's commerce is finally going to get some relief, on the air cargo front. In the last few years, India, and Bangalore in particular, have arrived on the world stage. Air cargo has become an integral part of our daily lives. From cell Phones to car parts to computers, from garments to gold, from food to flowers, a wide variety of products are carried by air.

Bangalore has historically been a power deprived city. Consequentially, industry around Bangalore has always been "high tech", whether it was telephones (ITI), aviation (HAL), electronics (BEL), machine tools (HMT, Widia, BFW, Ace, Fanuc, Siemens), precision engineering (the list is endless), medical, and now IT, BT, ITES, and Hardware. This in turn drove demand for well educated and skilled workers resulting in the colleges and vocational institutes that dot the map in and around Bangalore.

Given the high value nature of of our commerce, and the lack of a sea port or adequate rail infrastructure, Bangalore has always had a high demand for air cargo. By value, more than 50% of Bangalore's total industrial output is sent by air. A staggering Rs. 50,000 Cr. The Customs in Bangalore collects almost Rs. 3,000 Cr. a year in duties. Both of these numbers are on the increase.

For much too long, Bangalore suffered from pathetic air cargo facilities offered by Mysore Sales International Limited (MSIL), and the Joint Working Group (JWG). As a result, almost as much cargo of Bangalore was diverted to alternate ports such as Chennai, as was transited through Bangalore. Despite a demand of over 200,000 tons per annum, these two operators manage only 120,000 tons.

Airbus, in its Global Market Forecast (GMF) predicts that domestic India FTKs (Freight Ton Kilometres) will increase at 17% per year average for the next 20 years. Freighter aircraft purchases will outstrip passenger aircraft purchases in India.

Airports in the 21st century are what railway stations were in the 19th and 20th century. Major drivers of a region's economic growth engine.

Singapore's Changi Airport is a great example of how air cargo drives growth. I have been visiting the Changi Free Trade Zone, since the mid 1990's. Every year, a new cargo agents building crops up. Given the space constraints, Changi has gone vertical with two levels of high ceiling warehousing (equal to 2 floors each), with another 3 levels of office space. The latest addition is the Cargo Megaplex building. Changi now has capacity of 3 Million tons of air cargo per annum, with another 180,000 tons at the dedicated courier centre. Changi has the ability to handle any type of cargo that can fit in to an aircraft. In size, in weight, and in storage requirement (frozen, chilled, cooled, or normal, live or dead or inanimate). Singaporeans love their live seafood, so every day plane loads of live fish in sealed water tanks, come from all over the world.

As more companies began outsourcing their entire logistics operations, warehousing and delivery, an entire logistics park has been created in the Changi Free Trade Zone, and the Upper Changi area just outside the airport.

A similar situation has commenced in India, led by IT majors, especially in Bangalore. Today we have integrated service providers offering their customers all the services post production till delivery of product to the customer. Keeping in mind the rather convoluted nature of Indian Customs and Excise, these integrated logistics providers have set up large bonded warehouses where goods are cleared from "in-bond", duty paid, and then delivered to the customer as required.

The BIAL consortium, promoters of the Bengaluru International Airport (BIA), very candidly admitted, that once they issued contracts to the cargo concessionaires, they completely forgot about cargo aspects of an airport, preferring to focus on passenger services instead. This resulted in a cargo terminal for airlines, but absolutely no facilities for the logistics agents and industry in Bangalore.

But all is not lost. Thanks to the delay in the launch of BIA, the two cargo handling concessionaires, Menzies Aviation and Air India SATS, who worked overtime along with some great last minute firefighting efforts by BIAL team, will offer cargo facilities, which while not world class, are a quantum leap ahead of what is presently available.

The cargo village is projected to be completed in the next 18 months, and given the demanding nature of Mr. Brunner and his team, I am sure it will.

When BIA commences operations, and given the capacity constraints at HAL, I strongly advocate going ahead on May 11, 2008, even if there are no festivities, cargo capacity will be at 300,000 tons per annum. One area of BIA, where capacity will not be overloaded on Day 1.

RGIA has stolen a march, but Bangalore has the pent-up demand to help BIA catapult over RGIA.

There are internal projections of at least 40% growth in the first year itself, and both Menzies and AI-SATS need to start thinking about expansion almost right away, to keep abreast of demand.

The food tastes of India is changing. The global Indian wants cheeses, fruits, vegetable, condiments, sausages, and meats from all over the world. Importers are bringing in refrigerator containers (reefers) by sea. Air cargo offers benefits of smaller shipments more frequently, resulting is less spoilage and wastage, which offset the high transport costs. Similarly expats want their speciality foods, be it American steaks, European cheeses, or Japanese fish. Small lots by air, makes sense. There are opportunities galore, and BIA, can become a "mini Changi" and a major distribution hub for India right away. This will require immediate attention, visionary planning, and serious work, by managements of BIAL and their cargo partners, Menzies and AI-SATS.

In the air cargo business, it is a perennial chicken and egg story. Cargo terminals are reluctant to invest in facilities before getting committments of business, and business is reluctant to plan, let alone commit, till facilities are in place.

BIAL, Menzies and AI-SATS should learn from the Changi experience, and I look forward to the day they deliver to Bangalore the true "world class" facilities which they are capable of.

Bengaluru International Airport (BIA), which will commence operations on May 11, 2008, is supposed to deliver us poor suffering Bangaloreans from the grind and capacity constraints we face at HAL airport.

Given the growth of air traffic in Bangalore over the last few years, however, it will be WE, who will have to learn to fly at times suitable to BIA's convenience, not ours.

I made this graph using data of the Bangalore International Airport Limited (BIAL), production programme for Summer 2008 (March to October 2008).


Time slots are a valuable commodity. Continental Airlines, just paid over $200 million for its landing slots at Heathrow Airport, London, to fly under the new "Open Skies" policy between the US and the EU.

As per BIAL's own data, on its opening date, the new Bengaluru International Airport's (BIA) single runway, is already "fully booked" during the peak travel hours from 6AM - 10AM and from 6PM to 8PM.

The file indicates a maximum of 30 aircraft movements per hour, and you will observe that the 6AM-7AM and 6PM-7PM time slots are actually over booked.

May be BIA operators expect some spill overs in to other hours. It is also important for us to realise that the "Summer" period is the slack period in India for air travel. The Winter period from end October to end March is the peak travel period, when we can expect demand to increase by another 20%.

BIA may have a modular design for the terminal, but a new runway will take at least 2~3 years. The only option to the BIAL consortium will be to give airlines slots in the non-peak hours.

But wait a moment ....... is that not the situation in HAL right now ?

The new Bengaluru International Airport (BIA) will be opened on May 11, 2008.

The Election Commission may not have permitted any festivities and gala celebrations, but then, we Bangaloreans, are more interested in the long overdue additional capacity of the new airport.

Various government agencies are busy upgrading or creating roads, to improve access to the airport for the expected 25,000 vehicles per day, to and from the airport. The road from Vidhana Soudha till BIA is being widened and being made "signal free". The National Highway NH-7 from Hebbal flyover onwards till BIA, will be 8 lanes (6 on the highway, and 2 access roads). All of us, expect vehicles to "fly" on the highway and cover the distance to the new airport in under 20 minutes.

In our rush to ensure quick access to the airport, we have overlooked the pedestrians who need to cross the NH-7 highway, and their safety.

There are people on both sides of the NH-7 highway from Hebbal flyover till beyond Yelahanka, be it in housing colonies, factories, hospitals, schools, or malls. The National Highway Authority of India (NHAI) who is responsible for NH-7, has not provided any form of over-bridges or under-passes.

Those of us who use NH-7 currently, have seen people literally scampering across the highway, in fear of their lives. It is risky, not just for the pedestrians, but also the vehicles, especially two wheelers.

If we do not address this issue soon, I fear it is just a matter of time till serious accidents become the norm.

It is still not too late. The BBMP has designs for ready made Skywalks, which can be erected in less than a month. Advertisers will be happy to pay the Rs. 1.5 to Rs. 2 Crore each Skywalk costs, in return for the advertising rights, or BBMP can put these up themselves, and recover costs by advertising.

The barrier appears to be NHAI. It is the agency responsible for NH-7, not BBMP. The NHAI has grandiose plans for "double decking" the NH-7 like it is doing Hosur Road right now, and making flyovers at critical junctions. All plans on a 2~3 year time frame, at the earliest.

The last thing we all want to see, is a repeat of the recent Mysore Road incident, and a major dharna blocking traffic for hours on end, on the only decent access road to the airport.

Yesterday, a division bench of the Karnataka High Court directed the Union and State governments, and the Airports Authority of India to “explore the possibility of minimising, if not completely removing, the inconveniences and difficulties of the people”, and to immediately consider renegotiating the closure of the HAL Airport and levy of User Development Fee (UDF) on passengers, with the Bengaluru International Airport Limited (BIAL) consortium.

The Indian aviation market led by Bangalore, has revolutionised since the original Concession Agreement was conceived and signed. BIAL has probably realised that it has severely under-estimated the meteoric growth, and along with Bangalore, it is in an assured position, to realise its original profits.

In adopting an accommodative position, BIAL may not earn profits as quickly, as in an exclusive position, but definitely much faster than its original projections, when it commenced this project. In addition to good corporate governance, BIAL will realise the elusive benefit of great PR and community goodwill.

A non-exclusive BIAL will also allow for the areas around Devanahalli to develop societal infrastructure like housing, schools, business parks, etc., and this will reduce the pressure on BIAL and the State Government, and ease the life of employees at the airport.

The court judgement has given both the Union and State Governments, and BIAL, the political cover, to make a sincere effort and it is up to us, the residents of Bangalore, to be vigilant, and ensure, that this time we get a Concession Agreement, one in tune with the changed landscape of the Indian Aviation market, and one truly meeting the needs of Bangalore, and South Karnataka. Not just for our lifetime, but for those of our children also.

The stakeholders, including Bangaloreans, should involve the Indian Parliament's Departmentally Related Standing Committee on Transport, Tourism & Culture. This committee was also cited by the division bench in its ruling. I recommend you write to the Committee Chairman Shri Sitaram Yechury or Karnataka Rajya Sabha MP Shri Rajeev Chandrashekar.

Please do post your views as a comment using the link below.

The persons who filed a Public Interest Litigation (PIL) in the High Court of Karnataka, have won a victory today. It may not be all what they wanted, but it is a victory.

A bench of the High Court headed by the Honourable Chief Justice, today directed the Union of India and the Airports Authority of India to re-negotiate the Concession Agreement with BIAL consortium (promoters of the Bengaluru International Airport or BIA) and arrive at a situation where the inconvenience caused to the public is minimised, if not removed altogether.

This is a golden opportunity for us to redress the anti-competitive flaws in the contract and ensure a long term solution that truly delivers the airport with all the positive aspects of Public Private Partnership (PPP) enshrined.

What is your view ? Please post your opinion using the comments link below.

"Akash rescues Indian air defence after delays hit Israeli Spyder missile purchase....", screams a news headline from December 2007.

The Akash surface to air missile was tested at test facilities of the Indian defence forces in Kolar, most likely, the full fledged test facility of the Electronics and Radar Development Establishment (LRDE). The Kolar test facility is identified in the airspace map of Bangalore (as below), 30 nm east of BIAL, as VOD. VOD in airmap parlance means a Dangerous Area, and pilots, globally, recognise the red colour, and keep out of VODs like the plague.

The air map of Bangalore shows that this facility is proposed to be "shifted" from its existing area to an area somewhere in Sector "E" to facilitate the new Bengaluru International Airport being built by BIAL.

There are no public figures available, but I estimate this facility cost the taxpayers of India about Rs. 300 Crore (US$75 million). I wonder what the shift will cost the Indian taxpayer ?

More importantly, if this shift is being forced due to the commissioning of the BIA, in my humble opinion, the Indian tax payer via the Government of India, should demand, that the costs incurred for the shift, be reimbursed by the BIAL consortium.

I am very interested in hearing your opinion. Please post your on this article using the link below.

The public interface for the DRDO is on their website.

SHUTTING DOWN HAL AIRPORT

BAILing out of BIAL?

URL for this article http://citizenmatters.in/articles/view/88-BAILing-out-of-BIAL?

Pressure on the government to keep Bangalore's HAL airport running is beginning to gain ground. While much of the angst is over traffic snarls, the arguments are substantive and deserve attention.

Even as the launch date of Bengaluru International Airport is nearing, a storm has risen over closure of the HAL airport. A public interest litigation petition filed by G R Mohan, B Krishna Bhat, R K Mishra and others in this matter, was admitted by the Karnataka High Court on Monday, Meanwhile, seven unions representing Indian and Air-India employees have given notice for a nation-wide strike against closure of the airports in Bangalore and Hyderabad.

The government on it's part is committed to close the current airport. It has signed a concessional agreement (CA) with BIAL where one of the terms is to not allow any other airport within 150 kms radius of the new one. As per the agreement, HAL airport is to shut down operations on 30 March when the new airport becomes operational.

Bangalore City Connect, an initiative with membership from the IT/BT industry to address Bangalore's infrastructure issues and the Bangalore Chamber of Industry and Commerce (BCIC) have proposed that the new airport share a traffic of about 4 million passengers with the current HAL airport to avoid congestion at the new airport. The motivation for this proposal is that BIAL cannot handle the projected traffic for 2008-9 anyway, because of rapid growth. In its revised estimates, BIAL has projected a traffic of 13.2 mn for 2008-09 and 23.6 mn for 2013-14. At the time of commissioning the project BIAL had estimated a traffic of only 10.1 mn passengers by 2010 and 13.9 mn by 2015-16.

Speaking to Citizen Matters, Devesh Agarwal, who heads the BCIC Committee on Infrastructure and is a member of the BCC, explained that sharing traffic with HAL is not going to affect BIAL revenues as the new airport will still function at 70 per cent capacity in the first year and over 80 per cent capacity from the second year. This is fantastic by industry standards, he argues. With both the airports functioning, the BCC estimates the traffic to reach 30.5 mn by 2013. Agarwal made a detailed presentation at the Center for Public Policy, IIM-Bangalore recently where he made out a case for keeping the HAL airport open.

"Going by the rate of growth of air traffic in Bangalore, which is much higher than what they had projected initially, BIAL is going to reap a windfall. They know it and is therefore unwilling to give it up," says Agarwal. He is emphatic that they are not against BIAL. "We recognize their role in Bangalore's future. But they should also get the goodwill of the citizens. Their high priced approach is going to have an impact on Bangalore's economy as a whole," he adds.

The Bengaluru International Airport is scheduled for takeoff on 30 March 2008. BIAL Chief Executive Officer Albert Brunner, in statements made to the media, is confident of the airport being fully functional by end of this month.

BIAL is the consortium representing Siemens, Larsen and Toubro, Unique Zurich Airport, the Karnataka State Investment and Industrial Development Corp (KSIIDC) and the Airports Authority of India (AAI) which has developed the new airport.

Among them, Siemens holds the maximum equity stake of 40 per cent, followed by 17 per cent each by Larsen and Toubro and Unique Zurich. The balance 26 per cent is shared equally by AAI and KSIIDC.

Asked to explain how, he says, "Not just passengers but cargo will also get affected since it is an integrated operation. Most of the perishable and other cargo that uses air transport will be impacted by the higher prices they have to shell out. This is eventually going to be passed down to the consumers."

As things stand, unless the government renegotiates the CA there seems no way it can back out of the deal now without breach of contract. Not unless BIAL is willing to take a relook at the clause in the public interest.

There may be scope for renegotiation of the contract. The argument against closure of HAL airport hinges on the fact that the passenger traffic flow calculated by BIAL and presented to the government, was grossly underestimated. The first phase of BIAL, initially being designed to cater to a traffic flow of 5 million passengers has been modified to accommodate 10.3 million passengers, after the Civil Aviation ministry, realizing the higher-than-expected growth, mandated the changes. This modified capacity too is inadequate to handle the volumes expected this year itself.

On the other hand, HAL airport reportedly recorded a 33 percent growth in the nine-month period April-Dec 2007. According to latest reports, HAL airport registered a traffic flow of 9.93 million passengers during this period. It is given this rate of growth that the 2008-09 traffic could actually end up at 13.2 million, which, as noted earlier, places BIAL short of capacity. Many traffic forecasts, still missing the target

The traffic forecast which forms the basis of building any new airport, was in this case undertaken by two agencies; Simat, Helliesen & Eichner, Inc. (SH&E UK), appointed by KSIIDC (Government of Karnataka) in the year 1999 and later by Lufthansa Consulting (LHC). LHC is an independent subsidiary of the Lufthansa Aviation Group which also owns Lufthansa Airlines. SH&E had projected a traffic of only 8.4 million passengers by 2020. BIAL which was one of the bidders for the project, appointed LHC in 2002 to revalidate the SH&E traffic forecast. LHC had projected a traffic of over 8 million by 2010.

In the meantime, some key policy changes happened after 2002. In 2003 the then Vajpayee government announced an open-skies policy for ASEAN countries. What was started by the NDA government was then taken up by the UPA government in 2004, when a new and more liberalized aviation policy was framed. In April 2005 the open-skies policy was extended to the US by the Civil Aviation ministry. It must be assumed that while extrapolating passenger traffic growth, any study would take these factors into account.

By the time BIAL began work on the new airport, it was July 2005. BIAS says that it appointed LHC once more during that year to update the traffic forecasts and develop planning parameters. Yet, despite the rapid changes in policy, LHC seems to have stuck to it's earlier estimates and projected a passenger traffic of only 8.5 to 10.1 million by 2010 and 11.3 to 13.9 million by 2015.

Furthermore, "The BIAL deal was signed during the NDA regime and it was said that HAL will be operating side by side. But, as soon as UPA government came to power it had to sign one more agreement about the closure of HAL airport, as UPA didn't want to have any roadblocks in its policy on infrastructure," says Rahul Chauhan, an aviation enthusiast and analyst. He blogs at review-airlines.blogspot.com.

In reality, air passenger traffic at Bangalore has shown accelerated growth rate back to back. The HAL airport catered to 4.1 million passengers in 2004-2005, 5.6 million passengers in 2005-06 and 8.1 million in 2006-07. Meanwhile, BIAL's projections for 2015 is expected to be breached next year itself!

Concessional Agreement

One explanation for underestimating these figures could be that it gives BIAL more room while negotiating with the government for concessions. For example, let's take the User Development Fee (UDF) that BIAL has been allowed to charge passengers.

In his presentation, Agarwal points out that BIAL will be collecting a UDF of Rs.758 and Rs.1073 for domestic and international passengers respectively. This includes a 12.24 per cent service tax but not the Passenger Surcharge Fare (PSF) levied by the government which is another Rs.225 being currently collected from both categories of passengers. Of this surcharge Rs.70 will go to the operator, in this case BIAL. So the total increase under this head for the passengers works out to a whopping 337 percent and 477 percent respectively!

"Based on the now revised traffic estimates for 13.2 million for 2008-09 and 21.4 million for 2012-13, the operator will collect a cool Rs.523-856 crores every year just from user charges. The total cost of the project is Rs.2500 crores which can be amortised in flat four years," points out Agarwal.

This is unheard of since infrastructure projects of this size usually take anywhere upwards of 15 years to break even. While the business logic favors BIAL, the government has failed to ensure that it's not biased against users of the airport. This is one of the concerns being voiced by citizens.

Member of Parliament from Karnataka, Rajeev Chandrashekar, speaking to leading financial daily Business Standard, on Monday drew a parallel to the Enron fiasco. They too had a contract with the Maharashtra government which involved a high cost of power. Citizens opposed it and the government had to eventually renegotiate the power purchase agreement. Countering the argument by BIAL that there should be no civil airport within a 150 km radius of the new airport, he asked them to be sensitive to the needs of the community they wish to operate in as a business.

It must be remembered that with Enron there was also a "Counter-Guarantee Agreement" with the Center. In the end of course the company itself imploded under the burden of its ambitions.

If you look at the concessions given to BIAL in totality, including the development rights over approximately 4,000 acres of land made available for the project, it starts looking like a huge subsidy. It must also be noted that the reported CA terms are similar to the ones granted to the consortium led by GMR group which has developed the new Hyderabad airport. There, the land allocation for the project is 5,495 acres.

Chauhan, for his part, disagrees with such contracts. "If there's a requirement, there should be another airport for the city. For, Bangalore I strongly believe that it indeed requires HAL along with BIAL," he says. He wonders whether the Aviation Ministry is helping it to grow or is it trying to halt the growth of the industry, with such kind of policies and agreements.

Accessibility - a rough ride ahead

Sheer economics apart, there is also a serious question mark on smooth access to the airport given the traffic and road conditions in Bangalore. The estimates of time taken by passengers from the city to reach the airport ranges from anywhere between 90 minutes to over 3 hours depending on where one is located. In a run from the city press club to the new airport at 7.50 am on Friday last, it took media personnel about 90 mins to reach the airport and 155 mins back into the city. Currently, however, the streamlining of Bellary Road is still on and the road-widening project, is not yet complete.

Frequent fliers, IT and BPO firms and other corporates are going to be hit the hardest, especially those located in the Electronic City and ITPL belt. For them it's not only more operating costs but also a logistics nightmare of just trying to figure out how to get their staff to and from the airport in time.

All said, Agarwal makes a strong case for keeping the HAL airport operational. Given that every estimate of air traffic over the past several years has proven to be wrong by a significant margin, how can we ensure that BIAL will actually service the true demand in the city, he asks.

"It is hard to conceive shutting down a fully functional infrastructure like HAL airport and then discovering that demand outstrips supply, because little can be done at that time," he flatly points out. �

Samuel Jacob

12 Mar 2008

Samuel Jacob is a Bangalore-based journalist. He writes on urban infrastructure, planning and development issues from a ecological perspective. (Note: Statistics used in this report has been culled from analyst presentations, DGCA statistics, and media reports over the past few years.)

Are Private Airports in India Ready to Take Off?

Published: April 03, 2008 in India Knowledge@Wharton

http://knowledge.wharton.upenn.edu/india/article.cfm;jsessionid=a830e6c0e14039162818?articleid=4274&CFID=8109838&CFTOKEN=33128394&jsessionid=a830e6c0e14039162818#

http://www.mynews.in/fullstory.aspx?storyid=3808#

On March 14, Sonia Gandhi, chairman of India's ruling United Progressive Alliance government at the Center, inaugurated the new private sector airport at Hyderabad in the southern state of Andhra Pradesh. It was a false start, though: Several airlines, citing the need for more time to move into the facility, delayed the airport's launch for another week. Just a couple of days earlier, the government in Delhi had asked the country's other high-profile, private sector aviation project -- the Bangalore International Airport (BIAL) -- to postpone its planned March 30 opening until May.

While delays on large projects like these are not unexpected, India's program for privatization of airports has faced opposition from the beginning. On March 12, some 15,000 employees of the Airports Authority of India (AAI), which is responsible for civil aviation infrastructure in the country, went on strike to protest the privatization of the airports in Mumbai and Delhi and the decision to close the currently operational airports in Hyderabad and Bangalore when the new ones opened. Earlier in the month, airport taxi drivers had gone on strike to protest these changes as well.

Strikes may seem trivial in the larger mosaic of airport privatization, but they add weight to the growing opposition to the model of civil aviation infrastructure development that the government has adopted. Unable to fund these projects, the government has turned to public-private partnerships which, in theory, allow it to tap into the efficiency and entrepreneurial problem solving that private companies can offer. But delays, mounting project costs and concerns about monopolies are clouding the horizon of consortium-led projects to upgrade or build new airports. While many feel complete privatization might be the way to go, others argue that airports are a basic component of infrastructure, and as such should exist for public benefit, not profit. The debate is critical: According to the government's own estimate, some 500 airports will have to be set up as greenfield projects or refurbished by 2018.

The two catalysts of India's economic growth have been telecom and civil aviation. They have both speeded up the pace of doing business. But there is a difference. "Telecom has definitely been an incredible success," says Milind Sohoni, professor of operations management at the Indian School of Business (ISB), Hyderabad. "But the wireless revolution has been the big story. Wireless technology has circumvented to a certain extent the infrastructural issues: One doesn't need copper wires to be laid or huge telephone exchanges built. However, on the air transportation side, while liberalization has brought in private carriers and capacities are being added by the day, the need for more physical infrastructure is very high."

Building airports requires a lot of money, and the government does not have it. The total project cost of the Hyderabad airport is $600 million. At Bangalore, the budget is $300 million. A GMR Group-led consortium, which has won the modernization project for the Indira Gandhi International Airport in Delhi, has recently increased its project estimate to $2.2 billion. A similar upgrade for the Mumbai airport by a GVK-led consortium has a budget of $1.3 billion. A new airport is also being planned at Panvel, about 35 kilometers from the existing Mumbai airport, at a projected cost of $2.5 billion. Moreover, these figures tend to be revised -- always upwards.

With the rapid growth in the industry, further investments will be needed. According to the ministry of civil aviation, the number of flights at Indian airports went up from 636,947 in 2002-03 to 1,007,593 in 2006-07. The figure is expected to reach 1,420,130 by 2009-10. The numbers of passengers carried are 48.69 million, 96.40 million and an estimated 144.76 million, respectively.

The airlines have correspondingly increased their fleet acquisitions. The most ambitious is that of the National Aviation Company of India Ltd. (NACIL), the newly-formed entity coming out of the merger of the erstwhile domestic and international national carriers Indian Airlines and Air India. The company has a current fleet strength of 140 and has another 111 planes on order. Others are not too far behind. Air Deccan has 43 planes with 92 ordered, Jet Airways has 75 with 44 ordered and Kingfisher Airlines has 35 with another 60 on the way. Even minnow IndiGo Airlines, with 15 planes currently, has ordered 100.

Negotiating with Devils

The government is in no position to fund the infrastructure needs for this sort of growth, and many planners still belong to the "Hindu rate of growth" era -- their projections are way below the mark. One example is the Delhi-Gurgaon expressway, which has just opened: Traffic on the first day was greater than that projected for 2013.

Public-private partnerships (PPPs) -- all the new airports and upgrade projects fall in this category -- have therefore been largely welcomed. Companies such as Delhi International Airport Ltd. (DIAL) and Mumbai International Airport Ltd. (MIAL) have a 74:26 shareholding pattern, with the private consortium holding the majority stake and AAI and the state government the remaining 26%. The revenue share, however, is loaded in favor of AAI; in Delhi, for instance, it is entitled to 46% of the earnings.

The initial opposition to the PPP arrangement came from the Left, which successfully stonewalled private sector leadership in the Chennai and Kolkata airports. The current model is an AAI-led PPP, which brings none of the private sector skills to the fore. The combined budget for the upgrades is $1.5 billion, so it is likely that the private sector will be given a greater role in the future.

Rajgopal Swami, chief financial officer and spokesperson for the GMR group, says that PPPs are the best way forward. "Traditionally, seaports have provided the impetus to growth in the hinterland around them," he says. "In this century, in the context of globalization, airports are the gateways to a country and will act as catalysts for growth. Privatization provides a means of developing the airport infrastructure space rapidly by spreading the effort over several players. A PPP model allows efficient development of infrastructure by combining the strengths of the public organization with the entrepreneurial skills and business acumen of private enterprise."

The first PPP airport to get off the starter's block was the smaller $100 million Cochin International Airport (CIAL), in the southern state of Kerala. That's been a success story; it has been making a profit since 1999. In 2006-07, on a turnover of around $40 million, its profit after tax (PAT) margin was 35%. While CIAL says such handsome returns are a result of efficient operations, critics contend the company has been overcharging in the absence of competition.

Critics have been more vocal about plans to close functioning airports that pose competition to the new private ones, as in Bangalore and Hyderabad. "The current noise [over the new Bangalore airport] is because a public sector monopoly has been replaced by a private sector monopoly," says Devesh Agarwal, president of the infrastructure committee of the Bangalore Chamber of Industry & Commerce (BCIC). "A public sector monopoly is a relatively known devil and it is a devil with whom the industry and consumers can negotiate. In a public sector monopoly, there is some sense of public propriety. The private monopolies, on the other hand, are there only for profit. That is their guiding principle."

The new Bangalore airport will charge a "user development fee" (UDF) of $22 per international passenger. There was a proposal to levy a similar charge on domestic passengers, but that may not happen as the budget airlines, which are opposed to adding the fee to their ticket prices, have threatened to walk out. CIAL, meanwhile, has stopped charging a UDF.

"The government should not subsidize the UDF," says Agarwal. "It is the responsibility of BIAL to find its own funding and revenues sources." Sohoni of ISB agrees. "Government subsidies [of the fees] may not be the solution," he says. "One needs to think of different ways of funding such capital expenses, for instance, through bonds or private funding."

'No Such Thing as Free Money'

Sohoni feels that complete privatization of airports is not the answer to India's needs, either, especially when it comes to the larger airports. "In fact, that is not the answer anywhere in the world. It has to be some kind of public-private co-operation. In the U.S., it is the local government or municipality that owns the facility, and it then subcontracts a whole bunch of activities to different private entities -- from operations to the strategic management aspect to futuristic decision making.

"At the end of the day, the airports are for public benefit and, if it is complete privatization, there are a lot of issues around who is making the money and whether anything will be done for the public good."

Swami of the GMR group disputes that premise. "While there is merit in the view that the airport is a public good, there is no such thing as free money," he says. "Any government subsidies are actually paid out of government revenues -- read taxpayers' money. A subsidy actually ends up by having the non-user pay for a part of the user's costs. UDF is a method by which the user pays for the use of the facilities."

The revenue model is a very tricky question, according to Sohoni. "On the one hand, there has to be an incentive for private players to come in and there has to be a sustainable business model," he says. "At the same time, it cannot be monopolistic pricing. One has to be careful about who is doing the pricing and how it is being done and what kind of regulations are in place to make it an even playing field."

"Most good airports around the world make more money from their commercial revenues than from their airline revenues," says Albert Brunner, CEO of BIAL. "In India, this is a potential that has not been tapped at all. BIAL expects to make 15% from commercial channels to begin with."

A study by the Delhi-based Faculty of Management Studies points out that airports in India are looked upon as infrastructure providers, when they should be treated as businesses. AAI has not developed any non-aeronautical streams of revenues, and as private sector companies move in to rectify this, fees will eventually come down, say analysts. But that thought won't prevent any unrest in the interim. At London's Heathrow airport, the British Airports Authority, owned by Spanish construction company Ferrovial, has just won the right to hike passenger charges to pay for infrastructure improvements. As in India, the budget airlines are protesting loudly.

Needed: Easy Access

While some problems may be common to Heathrow and Bangalore, there are others that are uniquely Indian. The biggest complaint for fliers in Bangalore is that the new airport is too far away. Supporting infrastructure like roads to and from the airport's location -- the responsibility of the government -- has not yet materialized. Taxis will be charging as much as $25 for an airport drop -- a large sum by Indian standards. By comparison, the earlier airport was very accessible -- as long as traffic jams didn't intrude.

Swami of GMR feels that critics are putting the cart before the horse. "Basic infrastructure like roads, water and sewerage are, of course, needed to set up an airport," he says. "But it is difficult for any other supporting infrastructure to precede the airport because most of this is led by private enterprise, which will wait for the market to mature before investing in anything other than real estate procurement."

"Airports by their very nature have to be set up away from the main portion of the city," says Sohoni of ISB. "Until now in India, air travelers were not a major part of the total traveling population. But now that it has been growing significantly, it is essential to have a simultaneous development of rapid, easy and affordable access to the airports."

"It is the responsibility of the government to create the connectivity in parallel," says Agarwal of BCIC. "But, as we have seen time and again in India, the government tends to abdicate its responsibility. Whoever is building the airport should also be responsible for creating the connectivity. It should be an integrated project."

Agarwal said he may be calling for keeping the earlier Bangalore airport open. But that does not mean he is opposed to privatization. In fact, he feels the first step should be privatization of AAI. "The government needs to get out of AAI," he explains. "In the telecom sector, Bharat Sanchar Nigam (BSNL) was corporatized and competition was introduced. But BSNL did not fold up. Instead it became a leaner, meaner organization and today everyone is benefiting, the operators as well as the consumers."

Agarwal adds that the PPP agreements were handed out at a time when the government was desperate for private investment in airports. "The government has accepted unreasonable demands from the private sector investors," he says, indicating that it may be time to reconsider the current plans. Others seem to agree: The Parliamentary Standing Committee on Transport, Tourism and Culture has recently submitted a report suggesting the government find ways to keep the Bangalore and Hyderabad airports open.

Adding a fresh dimension to this debate is the realization that even when the upgrades of Mumbai and Delhi are completed, capacity will not be adequate. A new airport close to the existing one in Mumbai has been a consideration for some time. Now, an airport has been proposed in Greater Noida, which is about 70 kilometers from the existing Delhi airport. Under the terms of the existing Delhi PPP, there are restrictions on any new airport coming within a range of 150 kilometers, so a reworking of the PPP arrangement is inevitable. One proposed solution may be to lower the AAI's 46% revenue share to compensate the GMR consortium in charge of the Delhi upgrade for the new competition.

But will the new airport be competition? According to another clause, the GMR consortium will get the first shot at developing any new airport around Delhi, if its own bid is within 10% of the highest bidder.

Meanwhile, all of these issues are taking management time away from other issues -- such as better airports.

Brunner of BIAL explains that the International Air Transport Association (IATA) rates airports on a scale of one to five on 27 different parameters, like accessibility, parking facilities and ease of check-ins. Some of the best airports, like Changi and Zurich, are in the range of 3.9 to 4.1. "In India, the best rating that any airport has managed to achieve until now is only 2.6," he says. "According to our agreement, BIAL has to achieve a minimum rating of 3.5 for the new international airport. If we do not achieve this, we are obliged to return the airport to the government."

Hopefully, May 10th will be an event filled for Bangalore.

During the day, we will have polls, and I pray that citizens of Karnataka will choose to replace the stagnation of coalitions, with one party, to lead the way forward.

The night will bring to fruition a long running plan of having a new international airport. News reports indicate that BIAL has been informally given to go-ahead to commence operations from midnight of May 11th.

Many people believe that I am opposed to the new Bengaluru International Airport. Nothing can be further from the truth.

I welcome BIAL airport, but for reasons detailed in other articles in my blog, not exclusively.

I want the best for Bangalore and Karnataka and in my humble opinion, retaining old infrastructure will only help.

But that is for another article.

For now, congrats to the whole BIAL team, and good wishes for the success of the new airport.

Planning in the air
— Sunita Narain

http://www.downtoearth.org.in/editor.asp?foldername=20080415&filename=Editor&sec_id=2&sid=1

http://www.business-standard.com/common/news_article.php?leftnm=10&bKeyFlag=BO&autono=317853

India has added two more swanky symbols to bolster its first-world ambitions: the Rajiv Gandhi international airport in Hyderabad and the gleaming Bengaluru international airport in our software capital. But look beneath this glitzy façade and you will find another instance of development on the cheap. We refuse to admit that our dream of world-class infrastructure is not grounded on the hard reality that we are a rich and poor country at the same time. As a result, we do not think differently and plan for solutions that suit our needs.

Our distaste (rightly) for crowded airports, lack of facilities and reported inefficiency leads us towards massive investment in refurbishing or building new facilities by the private sector.

Nothing wrong. But we never considered the cost of building and maintaining these facilities and how they would be paid for. In the meantime, air travel has become cheaper, driven by the surge of new and low-cost airlines, competition and public incentives.

New airport new private owners say they require passengers to pay a hefty user development fee—up to Rs 1,000 per head to cover their investment; require airlines to pay higher ground handling charges to maintain the new facilities we craved for; and of course, we would have to pay higher rates for cars to be parked in the new multilevel facility. These costs, if accounted for, would make the attractive air travel option less desirable. So, naturally airlines don't want this to happen.

What then is the option? The developer—private and poorly regulated—wants to make money. Government can't risk taking sides: with the articulate air passenger lobby on the one side and the powerful development company on the other. The answer is to find another short-cut: developers are asked not to charge passengers (air travel is subsidized) but instead make more money from "extra-curricular" revenue options: open more malls and build more real estate and take larger shares of the profits of these publicly held assets.

We can call this public-private partnership and live with it. But this is still not the entire story. We forget public investments, which are required to be made so that private investments can work. In our quest to make private profitable and to keep costs low, we end up short-changing these basic requirements and believe that glitzy exteriors will make our nightmares go away.

Take the case of Gurgaon, Delhi's mall-infested suburb and the creation of private developers. It has glass exterior building, which boast of international looks. But it has no provision for water supply, it has no facility for collection or treatment of sewage, it has no garbage site and certainly has never invested a penny in building public transport services. Who will invest in the public services? Who can invest in the services that we have never planned for?

Similarly, in our fancy new airports ask how much (or little) attention has been paid to air traffic control. Bengaluru airport is reported to have traffic of 500 aircraft each day; it needs a minimum of 80 air traffic controllers. But it has only 25 on staff. While air travel has boomed in the country, personnel, essential for air traffic control, have not been trained or recruited.

Aviation experts say that if we improved our radar reach and connectivity and had more skilled air traffic controllers we could greatly increase the number of flights. This would call for public investment in surveillance equipment and in training institutes. We build swanky airports instead, which we cannot pay for. So we subsidize them at the cost of developmental work.

Similarly, we want cheap air travel so we do not pay for its cost of fuel, even go as far as argue that it is an essential service for the aam admi. On the basis of strident lobbying by the airline industry, the minister for civil aviation has reportedly asked state governments to reduce the value added tax on aviation fuel. Already, much to the glee of industry Andhra Pradesh, Kerala and now Maharashtra have brought down taxes from 25 per cent to 4 per cent. This is the diesel-car phenomenon in the air—we want high class mobility but we will run our expensive cars on cheap fuel, we will not pay for parking, forget about costs of pollution or congestion.

We have also increased air travel to such an extent that there are crippling congestion problems in air. Much like our solution to road congestion, we believe that we can build our way out of this mess. It is estimated that between Delhi and Mumbai, congested airways lead planes to circle for half-hour each way during peak hours. This means that the plane consumes extra fuel and emits extra pollutants—all this while it is estimated that every month six new aircraft are added to the skies. Congestion increases and we wait for the infrastructure to be geared for this growth.

But we never learn that unless we plan differently, the pace of infrastructure development will never keep pace with growth. Take the now famous Delhi-Gurgaon highway, which was planned for everyday traffic of 160,000 vehicles in 2016, but opened with 130,000 vehicles earlier this year—daily vehicle numbers have already crossed 150,000. The result is even longer waits at the many-gated toll plaza and even longer time to get past jammed city roads. The car-lobby answer is to build even broader roads—even double-decker flyovers. The answer is certainly not to provide dedicated bus services or have rail connectivity between the two cities. That would require planning to suit our needs and pockets. But no, that would be a travesty. Even if we get grounded—in air and on the road—we are after all stuck in swank and have not even paid for the costs of our travel. How much better can it get?

At the turn of the century, back in 2001, the Managing Committee of the Greater Mysore Chamber of Industry, was host to a highly respected IAS officer. This officer had a background in transportation having served as the Managing Director of K.S.R.T.C. On deputation as a special officer, in the newly formed BIAL consortium, the IAS officer pitched the committee extolling the virtues of "state of the art, world class, airport" Bangalore was to soon have.

Even today, I vividly remember making only one short observation to this officer......"Sir, please remember, no airport can afford to be an island. Please do not overlook connectivity or ancillary facilities".

This officer, for whom I still have respect, snubbed me in front of the whole committee for my observation. Given the state of affairs, I wonder if that officer would like to re-visit the incident.

All of us are concerned about connectivity for the passengers, yet we are oblivious to the needs of cargo, and the airport workers. In our blind haste, let us not forget the security guard who will ensure our security, the check-in agent who will give us our boarding pass, the baggage handler who will put our bags in to the aircraft, the cargo agent who will get our cargo to the airport, and the whole army of workers who will make the airport tick along.

For every 1 million passengers about 1000 airport staff are needed. An annual 14 million passengers equals about 39,000 daily arriving and departing passengers, who require an army of 14,000 airport staff or 28,000 daily arrivals and departures of airport staff alone. What about their needs ?

There are no decent facilities for these vital human cogs, or their families, in the airport system. Employees of airlines and other businesses connected with the airport, face the Devil 's Alternative. Either commute 2~3 hours every day, paying a packet out of their meagre earnings, or then move to facilities nearer to BIAL, like Yelahanka, still about 18kms away. Families are getting uprooted, children's lives getting disrupted, all because of the complete lack of facilities near the new airport.

Airlines, cargo agents, customs agents, airport shops, etc., are loosing staff, especially female staff, who prefer to resign and find alternate employment instead of enduring the rigours of commuting and working at the new airport.

No airport can afford to be an island......isolated from the city. We need to ensure the comfort of those who will ensure our comfort at the airport.

Bangalore has the distinction of being the first city in India to conceive and sign-up a private consortium for building an airport. It is another matter that Hyderabad gained from our and the BIAL consortium's efforts and path breaking experiences, and pipped us to the "airport opening" finish line.

However, our inexperience with Public Private Partnerships (PPP) is now coming home to roost. As a nation, as a state, as a city, and even as individuals, we did not realise we were signing away our freedoms!!!! Freedom from monopoly, freedom from land-grabs, freedom from inadequate infrastructure, freedom of flexibility, freedom of competition, freedom from exorbitant charges and fees.

I am writing this blog entry while on a visit to Penang in Malaysia. This "small to medium sized" airport has a capacity of 5 million passengers with 8 aero bridge equipped gates. BIAL plans to handle 14~15 million passengers with the same number of 8 aero bridge gates.

I next head to the best airport in the world -- Singapore Changi airport. Herein lies the loss of our next freedom - land grab. Changi airport, with only 3,212 acres is already handling 35 million passengers per year, and has capacity for over 69 million passengers with a constructed passenger terminal area of over 1 million sq. meters. By comparison BIAL received 4,000 acres, for a terminal of 71,000 sq. meters and a passenger capacity of 11 million passengers. If we scale the BIAL terminal to six times its size to reach the same 69 million passengers, BIAL will still have less than 45% of Changi's already built terminal area, for the same number of passengers with 125% of the land area. So why the extra land ? Incidentally, Changi is already in progress on a Terminal 4.

More importantly, Changi airport was given only 1,062 acres. It re-claimed its balance 2,150 acres from the sea at its cost. BIAL has been "sold" 4,000 acres at a paltry Rs. 5 lakhs per acre, which is today, "guidance" valued at Rs. 200 lakhs per acre. BIAL knows it is sitting on a gold mine. It will be the blunder of the century for BIAL to ever abandon its agreement, even if the government decides to keep HAL open. So why is the Government hesitant to perform its obligations to its citizens in preference to its obligations under the contract ?

The primary motivation of inviting private sector participation in the new airport was to improve competitiveness, productivity and efficiency, and to deliver better services, at competitive prices, while using lesser resources. Instead we, airport users and airlines, are facing higher charges, inconvenient transport, unavailable infrastructure, and a company that practices the strangling of all competition in every domain connected to the airport.

Many industry pundits claim that BIAL has not followed an open, free and fair bidding system when selecting contractors to provide various functions at the airport. I give BIAL the benefit of doubt. BIAL representatives repeatedly claim, that BIAL has selected at least two vendors for every operation, in order to ensure competition and therefore best service at the lowest possible price. Yet, when it comes to BIAL itself, the consortium is fighting tooth and nail, and sparing no expense, to eliminate competition, by forcing the closure of HAL airport.

The Governments of India and Karnataka may be ruing the day they signed on the concession agreement with BIAL. They have accepted a concession which has not provided for any form of competitive environment in this critical infrastructure sector. They have imposed on Bangalore a private consortium that is acting like the monopolies of old, one that will dominate and even strangle our economy by preventing competition. A recent parliamentary report on the airport issue in Bangalore and Hyderabad noted that “profit maximization seems to be the most primary motive”. People at the airport, are terrified of speaking in public, lest the offend the leadership of BIAL, and invite their immediate wrath and terrible retribution. The truth is being suppressed.

When it commenced operations way back in July 1981, like all other airports globally, Changi airport derived 60% of its revenue from aeronautical operations like passenger fees, landing and parking fees etc. 40% was from non-aeronautical like duty free shopping, etc. Today, Changi is following the global trend, and deriving 60% from non aeronautical sources, thus reducing passenger and airline fees to the 2nd lowest in the region. BIAL has dedicated over 300 acres towards an "aerotropolis", but is delaying the construction so that it can earn its revenues from us, airport users and airlines, first, and then "maximise profits" by earning more from the aerotrolpolis.

I have been monitoring the Bangalore aviation scene for over 15 years now, with a close focus on air cargo. The average citizen of Bangalore, has very little appreciation on the vital role of air cargo in our daily lives. From fruits to flowers, from car parts to computers to cell phones, over 50% of Bangalore's GDP is transported by air -- Rs. 50,000 Crore or US$10 Billion. The Indian Customs authorities collect almost Rs. 3,000 Crore per year in customs duties, despite the fact that Bangalore is the technological hub of India, with many importers enjoying "duty exempt" status. Globally, less than 6% of a product's cost is spent on logistics. In India it is over 15%. Given rampant inflation today, who amongst us would not like to see a reduction of 9% in our expenses ?

BIAL management has conveniently, completely "overlooked" the air cargo operations of Bengaluru International Airport. BIAL was to commence operations with two warehouses and a measly 300,000 tonnes per year capacity. Even this target is not achieved. One warehouse is up, the other is not. More importantly, there are no provisions for the Customs officers, and some last minute "accommodations" are being made. A Customs authority already stretched thin on manpower is now forced to operate from HAL airport in parallel to BIAL. There is no cargo village for Customs and Cargo agents' offices, and it will be 1.5~2 years before any permanent establishment is created. By comparison, Changi airport has 4 Cargo Agents "Megaplexes" which have a capacity of 3 million tonnes per year, and 180,000 tonnes in courier/express cargo. Even the small Penang airport, that I am writing this blog from, has a capacity of 360,000 tons. Right next to the airport is the Bayan Lepas semiconductor complex, home to all the major IC manufacturers. Shut Penang airport down, and world production of electronic goods will grind to a halt.

Industry in Bangalore is being denied the Freedom of flexibility and competition, and ultimately it is we Bangaloreans who will suffer as our city's economy is slowly strangled. Will Prime Minister Dr. Manmohan Singh's statement "If Bangalore fails, India fails" come true ?

Consumers in Bangalore should take initiative and highlight the anti-competitive situation in the aviation sector, to the Competition Commission in India. While at it, we should force the quick adoption of the Airports Regulatory Authority Bill, drafted back in September 2007, which calls for the creating of a competitive regulatory authority.

In The Times of India, Bangalore, on Tuesday, March 25, 2007, page 22 featured an article by Mr. Albert Brunner, CEO of BIAL.

The editors of the paper issued a challenge at the end of the article to counter the arguments of Mr. Brunner.

Accepting the challenge, I put forth my arguments to debunk certain myths created by BIAL and sent it in to the editors on March 26, 2008.

For some reason, the editors, who published Mr. Brunner's viewpoint immediately, have not yet published my arguments, more than 1 week after submission. I find it hard to believe that The Times of India is promoting a one-sided view ?

Depending on which stake holder of the the Bengaluru International Airport Limited (BIAL) consortium you listen to, the capacity of the new BIA airport is 9 million passengers (as per Airports Authority of India) to 12 million passengers (Mr. Albert Brunner).

However, no one has claimed a capacity of over 12 million passengers. At best, we are informed, that the terminal has a modular design and can be expanded as and when required.

We know from news reports, and BIAL's own reports, that 448 flights per day are planned for the summer schedule (effective March 31, 2008), up from the current 320~330 flights at the HAL airport. This represents a growth of 35.75% on airport opening day. We also know from current AAI records that the 330 flights per day at HAL airport is resulting in 10.5 million passengers per year. Simple extrapolation shows that the 448 flights will result in 14.25 million passengers from the airport opening day itself.

So my question to Mr. Brunner and all the stakeholders of BIAL (Siemens, L&T, Zurich Airport, AAI and KSIIDC) is where do you plan to put the additional 2.25 million passengers ? Surely BIAL does not have any means of expanding a terminal overnight.

Bangalore airport delay: Carriers' expansion plans hit air pocket
Anirban Chowdhury / New Delhi March 31, 2008

http://www.business-standard.com/common/news_article.php?leftnm=3&subLeft=1&chklogin=N&autono=318466&tab=r

The one-month delay in the opening of the new greenfield airport in Bangalore may affect the expansion plans of over a dozen-odd international as well as domestic and cargo carriers who were planning to introduce additional flights from the city.

While the opening of the new airport has got delayed, the existing airport has refused to allow any additional flights due to capacity constraints.

According to executives at Bengaluru International Airport Ltd (BIAL) - the operator of the Bangalore international airport - the delay will force the carriers to operate new flights after one month of the summer season is over, leading to potential loss of revenue.

The main carriers that are expected to be hit are Air Mauritius, Tiger Airways, Oman Air, Dragon Air, Thai Airways, domestic carriers like Kingfisher and Simplifly Deccan, and cargo carriers QuikJet and Jett8.

According to estimates, nearly 100 additional planned weekly flights (domestic and international) may also be hit.

The new airport will commence operations from May 11. "We have said that due to capacity constraints at the existing airport, no new flights can be operated from here. We will, therefore, continue to handle the same number of flights as we did in the winter months," said an AAI (Airports Authority of India) official.

"From the point of view of the airport and these airlines, there is definitely a loss of revenue. The planned flights would have led to an increase in the number of flights by 30 per cent," said a BIAL executive.

"More than the domestic carriers, the decision will hit the plans of international airlines, which have to plan their summer schedules well in advance in accordance with their global network," said an industry expert.

Four international airlines -Air Mauritius, Tiger Airways, Oman Air and Dragon Air - were planning to start their first Bangalore flights from the new airport. According to BIAL figures, airlines like Emirates, Thai Airways and Malaysian Airlines, which already operate from Bangalore, had also sought permission to start new flights.

"Dragon Air was supposed to start its maiden Bangalore-Hong Kong flight from May 1 but we had to defer it to May 24 due to the delay at the old airport," said Tom Wright, general manager (India), Cathay Pacific, which owns Dragon Air.

Domestic airlines Kingfisher and Simplifly Deccan had also applied for new slots for their domestic and international flights. Domestic airlines had requested for a 25 per cent increase in slots from around 1,084 flights a week to around 1,355 flights. Cargo airlines like Quikjet and Jett8 were also looking at starting flights from Bangalore.

"Our international flights from Bangalore to San Francisco and Hong Kong will not be hampered since we are starting from August, but we will have to re-adjust our new domestic flights out of Bangalore," said Hitesh Patel, vice-president, Kingfisher Airlines.

Kingfisher's plan to start a Bangalore-Nagpur-Indore flight this summer will have to be deferred, according to sources.

"We were going to deploy six aircraft in Bangalore but we have only been able to deploy five. But since we are going ahead with our increase in flights with these five aircraft, this will put a pressure on our fleet," said a Simplifly Deccan executive.