Kingfisher Airlines firms up Heathrow plans
By Brendan Sobie
India’s Kingfisher Airlines is preparing to launch its first two international routes, connecting Bangalore and Mumbai with London Heathrow, at the end of August or beginning of September.
The carrier also is aiming to begin its first US route, connecting Bangalore with San Francisco, in September or October.
Kingfisher chairman Vijay Mallya confirms the carrier has secured two slot pairs at Heathrow and London will be its first international destination, with daily service from both Bangalore and Mumbai.
“We will start between 31 August and 3 September,” Mallya told a group of reporters during an unveiling yesterday of Kingfisher’s new Airbus A330-200 at the Farnborough airshow.
The aircraft at Farnborough is Kingfisher’s second A330-200 and was delivered last week. Its first A330-200 is now in Bangalore, where it is being used for pilot training.
Kingfisher over the next two months will take another three A330-200s plus five A340-500s. Mallya says the five A330s will be used to operate the new London services plus services from Mumbai to Hong Kong and Singapore.
He says Kingfisher as a new entrant at Heathrow has inherited the slot pair previously used by Brazil’s VRG, which earlier this year dropped all of its long-haul services. He adds Kingfisher has leased a second slot pair for an undisclosed sum from an undisclosed carrier which could become a codeshare partner.
Kingfisher will compete against British Airways, Virgin Atlantic Airways, Jet Airways and Air India on the Mumbai-London route but Mallya says there is enough demand to support all five carriers.
“London is a must-go destination for an Indian,” he says.
Kingfisher will only compete against BA between Bangalore and London. Mallya says the booming southern India market can easily sustain a second service.
Mallya says the carrier’s first batch of A340-500s will be used on a Bangalore-San Francisco service. “We will start in September or October,” he adds.
Kingfisher has been touting Bangalore-San Francisco since it ordered the A340-500 in 2006. Mallya says connecting the two IT hubs is attractive even in today’s environment because IT is one sector not impacted by the oil prices or slowing economy.
“For the Bangalore-San Francisco sector there’s a lot of demand. It’s a unique product because no one else offers it non-stop,” Mallya says.
Kingfisher was also planning to serve New York from Mumbai using the A340-500 but Mallya says this may be scrapped because there is already too much capacity in this market given current demand. “The New York flight we’re looking at very closely,” he says.
Kingfisher hopes to begin selling tickets on its initial batch of international services next month.
All of Kingfisher’s A330s and A340s will be in two-class configuration consisting of economy and “Kingfisher First”. Mallya calls the latter a “super business product” which will be priced “slightly higher than business class prices”.
Kingfisher First is basically a first class product without the divider between seats, which Mallya says is “unnecessary” in today’ environment.
There is also a “social area” in Kingfisher First, with a staffed bar, two sofas and bar stools. He says in the carrier’s A340-500s there will be two bars in Kingfisher First and a smaller one in economy.
Mallya says he got the idea of the bar from the Boeing 747, which used to have bars in the upstairs.
“We don’t see them anymore. They’ve all been replaced by seats,” he says.
Kingfisher’s widebody fleet will also feature a custom-designed first class seat from B/E Aerospace and an IFE system with large individual screens from Thales.
“It will be the best in the sky and the best in the sky won’t come cheap,” Mallya says.
Source : FlightGlobal
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India, the world's largest democracy, has a sorry record in sound and bold economic administration. Populist measures abound, and nothing is sacred or immoral in the perpetual quest to obtain and then secure the "gaddi".
Fuel pricing in India is a prime example.
Officially, the "Administered Price Mechanism" was abolished in 2002, but today, the Indian government has a greater control on the fuel market and prices than ever before. Private operators have been driven out of the market, and only the Government owned companies survive.
Government have become addicted to their windfall fuel tax income. In the last 6 years, fuel tax collections have increased almost 250% to a staggering Rs. 170,000 Crores (Rs. 1.7 trillion or US$ 41 Billion).
Indian bureaucrats have learnt well from the Europeans and their "tax and spend" Keynesian economic models. Fuel taxes are greater than the cost of the fuel. In Bangalore, when we pay Rs. 57 for a litre of Petrol, Rs. 32 is taxes, only Rs. 25 is the cost of the actual fuel. Internationally, the cost High Speed Diesel ex-refinery (excluding taxes, duties, levies, etc), is marginally higher than Petrol. Yet, in India, Diesel costs 35% less than Petrol, thanks to lopsided tariffs and populist driven subsidies.
The one fuel that is truly free in pricing is Aviation Turbine Fuel (ATF). Thanks to the government induced haemorrhaging, and the traditional, but wrong view, of air travel being a luxury, oil companies are using deregulation on their favourite whipping boy -- ATF. In India, ATF costs double than prevailing international prices.
The results are plain to see. Despite being leaders in the global airline growth story, airlines in India, today, are bleeding, and bleeding bad. Losses in 2008-9 fiscal, are expected to cross $2 billion. Unable to sustain, in sheer desperation, airlines are hiking air fares, cutting back schedules, deferring aircraft deliveries, laying off staff, even considering importing their own fuel.......... in short, anything, to cut down losses.
This has resulted in air traffic crashing all across India. In Bangalore, the shining example of India's air traffic growth, from an annual growth rate of 33% year on year, for the first time since 2001, air traffic is actually falling to levels below that of the previous year.
Additionally, due to the remoteness of BIAL airport, regional air traffic is decimated, with air passengers switching to trains and buses instead. We might be tempted to say "so what". But we overlook the productivity aspects in the slower transit time of trains and buses. And in today's globally competitive economy, productivity matters.....a lot.
The operators of the Bengaluru International Airport, BIAL, now face an additional quandary. The airport terminal is reportedly, under capacity, and needs immediate expansion. Till now, their primary source of revenue, has been landing charges levied on flights. Thanks to a reduction in flight operations by the airlines, their income stream and cash flows have been reduced. So BIAL is increasingly forced to rely on passenger based User Development Fee (UDF), which has both the Government and passengers united in their opposition.
An imposition of UDF by BIAL on domestic passengers will only aggravate the already bad situation, and result in a further compression of air traffic. A downward spiral into a bottomless pit.
A possible solution requires bold decisions. Something both the political and administrative establishment in India are not known for.
- Government has to pledge at least 10% of its fuel taxes towards public transportation infrastructure. My friends in the auto industry will hate me for this suggestion, but our cities are choking in their own growth.
- ATF pricing should be reduced to international price parity. Ex-refinery, and taxes, union and state. Everyone should share the burden, including the airports and airlines. They must pass on the savings and re-invigorate the market, not use it to butress their bottom lines. The downstream impact of the aviation industry is far greater than the losses sustained by price reduction. We must not forget, every aircraft purchased by India, results in huge "offsets" i.e. mandatory exports of other goods and services.
- A moratorium on UDF for at least 12 months by all airports in India. Keep costs low. It will pinch, but the increase in flight operations will butress some of the revenue loss.
- Allow HAL airport to handle regional air traffic. By sticking to its hardline, BIAL will only continue to drive passengers away from the air, to trains and buses. A negative for all stake holders, including the citizens of Bangalore.
- Diverting part of the regional traffic to HAL will also give BIAL breathing room, and delay the need for investment in a costly second terminal, till global economic conditions improve.
- Forget a "temporary terminal". Passengers will not accept travelling 50km, paying a UDF, and then using a "tent".
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Plane truth: Trains fare better
By Nandini Chandrashekar, DH News Service, Bangalore:
Frequent short haul air travellers from Bangalore seem to be preferring the train, discouraged by the distance and time taken to travel to the new Bengaluru International Airport (BIA).
South-Western Railway officials here have noticed a great increase in passengers notably on the Shatabdi trains running between Chennai and Bangalore. Booking on these trains have been steady at 100 per cent beginning from the month of May.
Five trains ply daily between Bangalore and Chennai at present, excluding a weekend train. While most of these trains do experience heavy traffic, the Shatabdi has been facing unprecedented rush for the past two months and the trend appears set to continue.
Bangalore Divisional Railway Manager Akhil Agarwal told Deccan Herald that booking had increased significantly on Chennai, Hyderabad and Kochi-Trivandrum routes.
“We are going to observe this for a couple of more months and if the trend continues, then we will either add coaches to the existing trains or add a new train on the route.”
Shatabdi trains at present are running with seven coaches and these are likely to be augmented to 10 coaches.
Officials are still keenly watching the other sectors like Hyderabad and Kochi. There has been a definite increase in bookings on the Hyderabad route as well, but a senior railway official pointed out that it could also be due to the introduction of the Garib Rath train in the month of February.
The route towards Kochi and Trivandrum is a busy sector any time of the year and it has been difficult to establish the reason.
Travel agents have no doubts whatsoever, about the decline and the reasons for it. Rakesh P of Jagadish Air Travels admitted that they had a staggering 65-70 per cent drop in air ticket bookings to Chennai after the opening of the new airport. His clients clearly expressed their unwillingness to travel the long distance to the airport for a 30-minute flight.
He also said a considerable number of his clients who flew to Chennai to visit the consulates now prefers Shatabdi or a bus. In fact, so popular has been the demand for buses, that the agency started bus bookings as well to keep in tune with the customer requirements.
Another travels, Classic Air Travels, has also experienced a 50 per cent drop in their bookings to Chennai.
Interestingly enough, the passenger traffic to Hubli and Mangalore has fluctuated slightly, but nothing to indicate decreased air travel.
The reason, says Rakesh, could be because the number of travellers on this route have always been less, due to high costs and the ones that did travel could well afford it and would continue doing so.
Buses to Chennai seem to be faring pretty well considering that this is considered to be a slump season.
Phanindra Sama, CEO of redbus.in, the online portal offering reservations for 300 bus companies, said that sale of tickets to Chennai had jumped by about 35 per cent.
The increase was across all kinds of buses as the travel time is only five hours.
This time advantage seems to have encouraged software companies, who send their employees to obtain visas, to take the bus.
“There is a definite cost and time advantage to taking the bus to Chennai these days,” he added.
Source : The Deccan Herald
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Air passenger traffic takes a hit on high fares
Anirban Chowdhury / New Delhi July 11, 2008
Dips 4 per cent in July first week for the first time in 3 years.
For the first time in the past three years, the first week of July has seen the domestic air passenger traffic declining by 4 per cent over the year-ago period. After slowing down to a single digit in the past few years, the passenger traffic slipped into the negative zone this month.
"There has been a decrease of 5-6 per cent in the first eight days of July for full-service carriers compared with that in the same period of 2007," said Ankur Bhatia, executive director, Bird Group, which controls Amadeus India, one of the leading technology providers to the Indian travel industry.
Amadeus provides one of the largest ticket reservation platforms for the airline industry in the country.
Apart from full-service carriers, executives of low-cost carriers like JetLite and Simplifly Deccan confirmed that their numbers had gone down. Experts said taking a marginal growth of SpiceJet and IndiGo into account, the overall passenger traffic would go down by close to 4 per cent for the industry in the July.
According to figures released by the civil aviation ministry, the domestic passenger traffic in the country had seen a double-digit growth in the first quarter of 2008.
The growth in the first quarter of this calendar year was 11.12 per cent over the same period last year. The growth fell to a single digit in April compared with 8.65 per cent growth in the same month last year.
The growth in May came down to 2.9 per cent over the previous year's.
The ministry figures for June have not been compiled yet, experts and airline executives said, adding that the negative growth would have started in the last week of June.
The decrease has happened primarily because of two reasons — increase in prices leading to lower load factors and a cut in capacity in the last couple of months.
The average price across airlines and sectors has increased by more than 100 per cent this year over that of 2007. This has led to a significant dip in the average passenger load factor (PLF) to close to 60 per cent for most carriers(compared to an average PLF of 70-75 per cent last year).
Besides, in the last two months, the airline industry has cumulatively cut around 10 per cent of the total domestic capacity deployed in the country by cancelling 160 of a total of around 1,600 daily flights operating in the country.
Taking an average of 100 seats per aircraft, this would mean that around 16,000 daily seats had been taken out of the market. This two-month cut would have offset most of the capacity increase that happened last year.
Source : The Business Standard
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HAL airport: Centre may seek more time to get back to HC
The issue of keeping HAL airport open even after the new airport becomes operational has become contentious as the agreement signed with the promoters states that the existing airport will close when Devanahalli starts functioning
Ashwini Phadnis
New Delhi, July 8
A decision on whether the HAL airport in Bangalore should be reopened is likely to get delayed with the Centre planning to approach the Karnataka High Court seeking more time to reply on the matter.
The court had sought the reply of the Centre by July 18, but the thinking is that it would be better to seek some more time from the court rather than give a hurried representation.
“The Centre is seeking the official view of the State on its stand on the issue. Besides, the report of the Airports Authority of India (AAI) on whether there was a capacity constraint at the new airport, which could be sorted out by reopening HAL airport, is also being examined.
All this will take some time and therefore, the view of the Centre is to seek more time from the court to make a representation,” a senior Government official said.
The Centre has been asked to report to the court after examining the capacity of the new airport, seeking the views of the State Government on having two airports in Bangalore and considering issues relating to connectivity to the new airport.
The HAL airport closed on May 24 when the new airport at Bangalore became operational.
The issue of keeping HAL airport open even after the new airport becomes operational has become contentious as the agreement signed with the promoters states that the existing airport will close when Devanahalli starts functioning.
The demand for keeping both the airports open has come from several quarters, including citizen groups and Parliamentarians.
In March this year, the report of the Parliamentary Standing Committee on Transport, Tourism and Culture on the closure of Bangalore and Hyderabad airports had strongly suggested that the existing airports in the two cities be kept open for commercial operations.
Source : The Hindu Business Line
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Mr Albert Brunner, CEO, Bangalore International Airport Project
Jul 08, 2008
Bangalore International Airport Limited (BIAL), the owner and operator of the new Bengaluru International Airport, is a public limited company, registered under the Indian Companies Act. A private-public venture, the project realized so far and the upcoming phases are being built and will be operated by the company for the next 30 years with an option to continue for another 30 years. BIAL is committed to establishing the new Bengaluru International Airport as India’s leading airport in terms of quality and efficiency and set a benchmark for the future commercial development of Indian airports. The new airport is located about 35 kilometers north of the city. This will allow both the city as well as the airport to develop. It is spread over an area of approximately 4000 acres and besides the regular airport services it will offer a hotel, shopping mall, food courts and other convenience amenities in the upcoming project phases.
Albert Brunner, Chief Executive Officer (CEO), Bangalore International Airport Project, is a Civil Engineer by profession and is from Zurich, Switzerland. He has also had postgraduate trainings in business administration. Albert Brunner was appointed as CEO of Bangalore International Airport Limited in 2002. Under his leadership, the Company reached Financial Closure in June 2005 and the construction of the airport began in July 2005. Mr. Albert Brunner has been in the airport business for the last 17 years and has served as a member of the Executive Board of Zurich Airport Authority from 1995.
Replying to Anil Mascarenhas of India Infoline, Albert Brunner, CEO, Bangalore International Airport Project, says, “Operation-wise, we have reached a high level of performance.”
It’s been a month since you started operations. What are some of the recent developments?
The airport is just about a month old or should we say young and encouraging announcements such as the launch of the Deccan Aviation Skylimo (helicopter service to and from the city) on July 01 are taking shape. It is the first of its kind in India.
Four new international airlines have started operations from Bengaluru International Airport since it began operations, due to increased capacity. They are Air Mauritius that began operations on May 27, Tiger Airways on June 01, Oman Air on June 16 and Dragon Air (Subsidiary of Cathay Pacific) on July 02.
Where connectivity is concerned, some of the aspects that have delighted airport users at Bengaluru International Airport include the promptness and efficiency of BMTC Volvo bus services and so far connectivity has not been a block for most passengers. We do realize that the connectivity for the companies situated in the south is still an issue and will work together with the Government of Karnataka to improve the same.
Operation-wise, we have reached a high level of performance. Most of the flights leave on time as long as they arrive on time. This is confirmed by all international airlines and most of the domestic ones as well.
The airport’s design and planning have a lot in store for future expansion. Could you give us an idea about the same?
The Master Plan of the Bengaluru International Airport has been developed to fulfill the need for an operationally efficient and passenger friendly airport for Bangalore. It ensures that the size and capacity of the airport facilities can be gradually expanded based on the passenger and cargo growth.
The Master Plan not only includes provision of premium land for commercial real estate developments such as office parks, retail, entertainment and hospitality but also land reserve for a rail link to the city. The intention of BIAL to develop an Airport City is in line with the increasing attention being paid to ‘Aerotropolises’ globally.
Please elaborate on Aerotropolises.
An Aerotropolis is a city in which the layout, infrastructure and economy are centered around a major airport. Experts in the field are of the opinion that Airports will shape business location and urban development in this century as much as seaports did in the 18th century, railroads did in the 19th century and highways in the 20th century.
We envision the airport city to be a flourishing destination in itself; people will not only come here to take flights but also to relax, do business and shop. It will provide growth giving a strong impact on economy and creation of jobs.
What is the annual passenger-handling capacity? What are your expansion plans?
Infrastructure at an airport is not designed to an annual capacity, but to a peak hour demand. Under the present traffic scenario, Bengaluru International Airport can easily handle the traffic for the next 2-3 years. During this time, we want to realize the next expansion.
The Master Plan of Bengaluru International Airport has been developed to fulfill the need for an operationally efficient and passenger friendly airport for Bangalore. It ensures that the size and capacity of the airport facilities can be gradually expanded based on the passenger and cargo growth. The land at our disposal allows us to develop the airport up to a capacity of approximately 40 million passengers a year.
We are working towards the next expansion phase of the new airport. However, kindly note that we are currently at a planning stage. The work on expansion is in line with our commitment to expand the size and capacity of the airport infrastructure in line with the projected passenger and cargo growth. We will keep you informed as soon as we have some concrete plans to announce.
Given the sharp spike in ATF, have you witnessed a drop in passengers? Many flights, which otherwise used to be full are seeing vacant seats, especially in the business classes. What is your take on the situation?
As of last week, the total number of flights was 1120 (per week). This figure includes both international and domestic flights. In comparison to the first week of operations, there is a 2% reduction in the total number of flights. This is due to a 3% reduction in domestic flights* per week. International flights however have shown a 4% increase (from 134 flights to 140 flights) per week. *Due to operational reasons, Go Airways has suspended operations till Sept 15, 2008 and Paramount Airways has reduced frequency.
Walk us through the revenue streams from the airport. Landing and parking charges may be a large part of the income?
The revenue from the airport is divided into aeronautical and non-aeronautical revenues. Since the airport is only a month old, it is a bit early to comment on the aeronautical and non-aeronautical revenue split. However, approximately 15% of revenues are expected to come from the non-aeronautical avenues.
Aeronautical revenue: A very important revenue stream for the airport is the User Development Fee (UDF). The Concession Agreement specifies that BIAL will be allowed to levy UDF from embarking domestic and international passengers for the provision of passenger amenities, services and facilities. The UDF is used for the development, management, maintenance and operation of the airport. While international passengers flying out of Bengaluru International Airport pay UDF, domestic passengers are not being charged this fee for the first three months of airport operations.
Landing charges at BIAL to be paid by airlines as per the current AAI charges levied at other international airports in India. Landing charges at BIAL are in fact lower than what was charged by HAL for all carriers. According to the concession agreement, BIAL could adjust the landing charges to the inflation rate since 2001, this will lead to an increase of 38% but BIAL has totally waived of any such increase.
Tell us about your cargo facility. What is the utilization now?
In line with international standards, BIAL selected the consortiums of Air India & SATS and Menzies Aviation with Bobba Group to handle cargo at the new airport. With an allocated area of fifteen acres and an initial capacity to handle approximately 350,000 tons of cargo annually, space constraints will no longer exist at the new airport.
Following are some of the salient features:
- The cargo facility has domestic and international cargo in the same premises.
- The concessionaires have designed the cargo facility which is under Full CCTV Surveillance all areas 24/7.
- The concessionaires offer cargo facility to airlines and shippers at the best international standards and competitive prices
- The warehouse management is backed up with tried and tested IT systems which has features like RF wireless Hand-held Mobile Terminals, Barcode System Management, Management on Cargo, Storage Locations, ULDs, Doors etc, Inventory Check, Breakdown Management, Build-up Management, Dangerous Goods Management, Damaged ULD Management, Damaged Cargo Management, ULD Inventory Management, truck Queue Control
- The cargo concessionaire provide facilities like pallet storage systems, separate storage space for small and loose cargo, track and trace inside their facility.
- Out of many, the cargo warehouses have the following facilities for the users: Banks, conference rooms, training rooms, business centre, help desk, staff canteen, truck parking.
By when do you expect to start expansion here?
BIAL forecasts cargo volumes of approximately 220,000 tons in the first year of operation as opposed to a capacity of 350,000 tons. Both the cargo terminals at the new airport can be expanded when the need arises.
Furthermore, BIAL has the land reserve to allow more cargo handles to operate at the new airport in order to boost the import/export cargo volume. The new airport will see both a quantitative increase in terms of export facility area and qualitative improvement, in terms of storage and handling capabilities, to promote the outflow of goods globally.
The new airport will see both a quantitative increase in terms of export facility area and qualitative improvement, in terms of storage and handling capabilities, to promote the outflow of goods globally which mainly consist of garments, pharmaceuticals, machinery spares and perishables.
What revenues do you expect from commercial activities? We hear your advertising concessionaire JC Decaux has already sold out 70 per cent of its advertising space.
Yes, BIAL has chosen JC Decaux as the airport’s advertising concessionaire for a period of seven years. A world leader in outdoor media, JC Decaux builds and manages all media space throughout the airport. The company brings in a wide range of international expertise and experience, thereby positioning the airport as an exclusive property offering state of the art media options.
At Bengaluru International Airport, we have aimed to create world-class advertising opportunities which are on par with other international airports. Due to the superior opportunity at our airport we have received a very encouraging response from the market. We, currently, have foreign as well as local brands present at the airport. It is our constant endeavor to create unique and innovative advertising solutions at the airport.
Could you give us an idea about the revenues you see from here and for how long are the rates negotiated typically?
We have a rate card for promotions and JCDecaux will be better positioned to give you the relevant details.
What kind of incentives or government help would you seek?
Building an Airport within the PPP model has its set of challenges given the magnitude of the project. Our main challenge was to deliver this project on time. All other aspects have been of learning for us and we could not have done this without the tremendous support received by the government authorities as well as the Private Promoters. At this point, the focus needs to remain on further developing the connectivity form the city to the airport.
What is the customer feedback so far?
It’s been almost one month, since BIA started its commercial operations and we have received overwhelming responses from travelers to and from the Airport. Passenger feedback has been key to improving the airport facilities. While many have congratulated BIAL on the first class facilities and access road to the airport, many passengers have also given objective feedback on the service and amenities.
Most passengers have been empathetic to the fact that a project of this magnitude has initial interruptions and have expressed their support. All the feedback received has been compiled systematically and action has been initiated for each of them.
Brief us on the latest ownership pattern of the airport. Any stake sale etc in the near future? Reports mentioned about BIAL seeking a valuation of up to $2.5 billion to raise about $200 million in equity to fund the second phase of the airport’s development. Could you give us more details.
Bangalore International Airport Limited (BIAL) is Public limited company under Indian Companies Act formed to design, build, own and operate the greenfield private sectorowned and operated airport in India. Private promoters hold a 74% stake in BIAL while the state holds the remaining 26%.
The shareholding is as follows:
Karnataka State Investment & Industrial Development Corporation – 13%, Airport Authority of India – 13%. Siemens Projects Ventures – 40%, Larsen and Toubro – 17% and Unique Zurich Airport – 17%.
Of the total cost of Rs24.70bn, 16% is equity investment, 14% is state support from GOK, 65% is debt and the remaining 5% is internal accruals or security deposits.
It is important to understand here that the state had set aside a certain amount for this project. Hence, the equity contribution by the private players had to accordingly be in the shareholding ratio, keeping the state investment amount in mind.
Regarding reports mentioned about BIAL seeking a valuation of up to $2.5 billion to raise about $200 million in equity to fund the second phase of the airport’s development, I would like to reiterate that this is not true. There have not been any talks in this regard between the shareholders.
The Karnataka chief minister spoke about negotiating with BIAL to keep HAL airport open. What is your view?
As you are aware, HAL was shut the day BIAL was operational, ie on Friday, May 24, 2008. We have always maintained that Bangalore needs a single aviation platform for both domestic and international traffic, to allow seamless transfer between domestic and international flights for passengers, cargo and efficient airline operations. All successful aviation hubs in Asia (Singapore, Kuala Lumpur, Hong Kong, Seoul) have developed out of such a single platform. Examples cited where a city has several airports (New York, London) have above 100 Mio. passengers, compared to the 10 mio of Bangalore. Since Bangalore has a strong business market and ideal location, the new airport will serve as a regional hub for South India attracting investments and businesses that will lead to significant growth and job creation. In the current scenario, Bangalore stands the chance to become a hub for south India as against Hyderabad and Chennai.
Last but not least it has to be mentioned that the concession agreement, which clearly stipulates the closure of the then-existing airport, has always anticipated a growth of the new airport. The concession agreement even indicates future expansion steps. Therefore it was always clear: When the new airport opens, the old will be closed. Thereafter the new airport has to be expanded in order to always meet the demand.
What is your expectation regarding the high-speed rail link between the city and the Bengaluru International Airport (BIA) at Devanahally. By when do you see it happening?
From a passenger and environment point of view a rail link to the airport is absolutely essential and BIAL has always maintained that. The high-speed rail link would enhance the convenience and comfort of the traveler. For exact timelines of the project, the state authorities would be better positioned to answer you.
Give us details about the low cost terminal. What kind of activity and business do you expect?
There has been a lot of speculation on this topic. While we are working on the next expansion of the airport, kindly note that nothing has been finalized yet. The work on expansion is in line with our commitment to expand the size and capacity of the airport infrastructure in line with the projected passenger and cargo growth. We will keep you informed as soon as we have some concrete plans to announce.
What is the total cost so far incurred. In the next two to three years, what is the amount set aside for the airport. How would it be funded?
The project cost of phase I currently stands at Rs24.70bn. This cost does not include the added investment of approx. Rs10bn made by the selected concessionaires. Phase II of the airport expansion which will include another runway and terminal building is expected to cost more than phase I. An intermediate expansion of the existing terminal building will cost approximately $20mn.
Source : India Infoline
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Venkatesha Babu
Bangalore: Seventeen years after it was conceived, the Bengaluru International Airport became operational on the night of 24-25 May after several delays. From the day of its launch, the airport has been in the news mainly for the wrong reasons, from complaints over poor connectivity to inadequate toilet facilities. This, however, doesn’t seem to faze Albert Brunner, the soft-spoken chief executive officer of airport operator Bangalore International Airport Ltd (Bial), who has been leading the project since 2002. In an interview with Mint, Brunner responds to the criticism and controversy surrounding Bial. Edited excerpts:
Can you give us an overview of where things stand today?
We opened on the 24th of May. Whereas the first flight was perfectly fine, the first day was a disaster. We had teething problems in two areas, operation-related and infrastructure-related.
People waited for 20 minutes for the staircase to attach to the aircraft. I would be fuming if it had happened to me. They had to wait for 40 minutes for baggage, another reason to get angry. Then you had to wait for one hour to get a taxi. The reason (was that) the service provider did not get the licence for taxis. When we opened we had 89 taxis, now we have 800 taxis.
You see, the cumulation of all these things gave us a bad name. I do not want to look for excuses, we have to solve it, but most of it was not under our control. Still, we were the one to take responsibility. Infrastructure-wise, we don’t have enough toilets, we had underestimated—the layouts were bad. We have now increased the number of toilets, added area wise 45%.
When people had to get out, we needed staircases and bridge or bags to be brought out, it was the responsiblity of the ground handler who is the service provider. Unfortunately, many of the airlines wanted to do the ground handling themselves. And for a long period, they had not signed the contract with the ground handlers. At a very late stage, they said to the ground handlers: “you do it”. But neither they had trained personnel nor equipment.
Why bad blood between you and Kingfisher Airlines?
Kingfisher has always said that they want to make Bangalore their operational base. And (Kingfisher owner Vijay) Mallya has requested for additional facilities. When they complained about the problems in the first two days, they complained in a very professional way, whatever they said was very justified. And we really solved it in a professional way. In view of this, I can’t understand the bad remarks from Mallya about us. Because he has the least reasons to speak like that. He asked for a lounge, we have given him that, he has a Kingfisher bar there. Whatever he requested, we have given him. He wanted space for office, we have given it. But they are yet to begin work on it. I personally do not understand why he made such remarks.
We have offered him whatever he wanted—office space, MRO (maintenance, repair and overhaul facility). The first time he came to the airport, he may have expected a much bigger airport, which is grand. But we have always said we do not want to build a status symbol, we want a functional airport; whenever the need arises, we can increase the size. Maybe he was disappointed...
Comparison with GMR Hyderabad International Airport Ltd, which built a bigger facility relatively more smoothly?
We wanted construction of the airport (to take off) in 2002. We could begin construction around mid-2005, the time we wanted to open the airport! During the same time we had unprecedented gowth in aviation, because we had a proactive civil aviation minister who opened the skies. They allowed new airlines.
Our promoters were disappointed with the slow progress... It would have been impossible for us to go to the board to tell them that we will be building a bigger airport and we need to redesign. Nobody would invest one additional rupee for that—they never knew whether we would succeed or not. I made a new traffic study and went to the board for additional money. We had two choices—either we stop and redesign, which will result in further delay or begin construction and during construction, try as much as possible to expand the airport without delaying the opening. We increased the scope of our contractors by 70% without delaying the opening date. We went from Rs1,412 crore to Rs1,930 crore and finally we had to increase (the cost) to Rs2,470 crore because of delays.
Hyderabad, which was two or three years behind us, were carefully watching. They even copied our concession agreement and it is not a joke.
It is said within a year Bial will get full in terms of handling capacity...
(Interrupts)... It makes me angry. Even the ministry speaks about annual capacity. There is nothing called annual capacity. Peak-hour capacity (is what matters). We don’t have peak hour for 24 hours.
If airlines want to operate, when the slots are full between 6 and 8, we ask them to come the next hour and we have space. You spread the peaks over the day, if you could do that over 24 hours, then our capacity would be 24 million.
What are the indications on the past one month in terms of traffic?
Presently, we get a feeling that there is a slowdown. It may be a seasonal slowdown, it is a slow season now. But we should see how it grows. Let us assume that we have an increase of 15%, then next year we may have around 11.5-12 million, this we can handle, another 10% we can handle, then it will be a bit tight.
But for two-three years down the line, infrastructure building has to start now. Right ?
We started our planning process around nine months ago. We know, we need the second runway by 2012-13, if we continue to grow as we grow now. We need a second terminal at the same time, four years from now. Next week we’ll go to the board and give the preliminary information and three months from now, we’ll give a concrete proposal.
Is the additional investment linked to valuation and divestment of stake as there has been talk of Bial being valued at $2.5 billion (Rs10,775 crore) or more?
Fact is that we do not have revenues from domestic passengers. User development fee (UDF) is the backbone of our revenue and 80% of traffic is domestic and we don’t have revenue (from domestic traffic) for the first three months. Therefore, there is a certain reluctance (on the part of our investors for additional investment).
None of them have, however, said I am not interested in infusing additional money. None of them have ever said we (have to) go public for funding. I give you my word it has never been discussed. It could be a solution because it is cheaper than borrowing from banks but (it is only one of the solutions being considered).
What is the investment for an intermediate terminal?
We are thinking whether we need to build a functional terminal or a slightly bigger shell that can accommodate more people. It is being considered. Building should be below Rs100 crore and the apron expansion should be more... that would mean an investment of another Rs200-300 crore at least.
There is apprehension that the project is goldplated and you have not opened the books completely.
We are completely transparent. There are two representatives of Karnataka and government of India and the books are open to them.
Feeling among investors?
Initially we projected break-even in seven-and-a-half years. However, since then we had to make more investment but we also have more passengers. If we could charge the UDF, we will break even in five years. As I told you before, we need to invest further. Really, it is the (capital) appreciation of the airport, not the revenue, that makes (this project) more interesting for the investor.
Airlines are bleeding. Your outlook? Seen any cancellation of short-haul flights ?
Airlines are our customers. They are in a tight position, GoAir and Paramount have suspended one flight each. We have no indication of a slowdown for the winter schedule. In September, we will get a clear indication.
Arguments in favour of keeping the short-haul flights from the old airport and indemnifying Bial for those losses. Comments.
I feel sorry that they still come up with those arguments. You can indemnify our loss but in the long run, it is the loss of the city. The city will lose out having a strong airport and an opportunity to attract lot of international airlines and make it stronger. Airlines are already losing money. They will also lose money by (spending on) additional resources in two airports.
K. Raghu contributed to this interview.
Source : The Mint
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