Clearly, the Sriperimpudur project was in the air for years. Clearly too, the politician-bureaucrat nexus was holding sway. In the end it is not only infrastructure financiers and banks that are not for Greenfield airports, it is also that airlines hate to fly to airports that bleed them dry.

June 10 -16, 2013

Lionel Messias

Soft landing on Sriperumbudur

It is difficult to ascertain at this point in time when the idea of another airport for Chennai - at Sriperumbudur - was first ideated; but in May 2007, the then Tamil Nadu chief minister M Karunanidhi did announce that his government had identified 4,820.66 acres of land for the proposed airport.  Coming from him as scam after scam in later years led to his party, the DMK, being criticised comes as no surprise.  But by February 2010 the Greenfield project was shelved.  With modernisation of the Chennai airport and taking into consideration traffic growth, the state and union governments decided not to go ahead with the Sriperumbudur project.  The main roadblock was the fact that the state government itself realized that many major cities in the world operate with one airport and Chennai really did not have the traffic volume to justify a second airport.

But the major stumbling block was the fact that the heavy additional expenditure involved to build a mass rapid rail link between the two airports could not be justified.

I have driven several times to Chennai and can report that it takes two hours to drive the 40 km from the Rajiv Gandhi memorial in Sriperumbudur to Ponnamalee High Road in Chennai where you can claim, in a manner of speaking, to have arrived inside the metro.The Chennai airport itself is another two hours away, day or night, it does not matter.

Synchronized flying

But, suddenly in August 2011 the Airports Authority of India (AAI), asked to build the airport by Karunanidhi, declared it was prepared to build the second airport for Chennai provided 5,000 acres was made available to it. Why did it change its mind?

Its chairman VP Agrawal said the International Civil Aviation Organisation (ICAO) had cleared the new airport project in its feasibility study earlier. Cost: around Rs 5,000 crore(Rs 1 crore = 1,00,00,000). It is critical to note here that the civil aviation ministry had earlier declared that the new airport would not be built by the private sector. In quick time the civil aviation secretary KN Shrivastava was urging the Tamil Nadu Government to send a formal proposal to the aviation ministry. By 2019-20, the present Chennai terminal would achieve its full capacity of nearly 40 million necessitating a new airport, he said, to buttress his case. Every passenger aircraft needs a pilot and a co-pilot and so it became quite evident who was who here. Shrivastava was appointed civil aviation secretary on August 1, 2012. Before that he was the joint secretary from October 16, 2006 to January 30, 2009.

There was no movement on the ground from then till May 2013 when civil aviation ministry's top officials landed in Chennai to meet state government bureaucrats (by this time M Karunanidhi had been replaced by Jayalalitha as chief minister) to push for Sriperumbudur. The airport will be built over 5,000 acres and will cost Rs. 20,000 crore, Agrawal, who accompanied the minister of state for civil aviation KC Venugopal, said this time around.

Like vultures circling overhead

Clearly, the Sriperimpudur project which was in the air for years, notwithstanding the willfully created market for land in and around the project site, was back and circling the air like buzzards do. Obviously, it will cost the AAI or whoever undertakes the work at least ten times more now and even more when the actual construction begins. Clearly too, the politician-bureaucrat nexus was holding sway over the travelling public.

These are bad times for airports in every sense of the word. In May 2013, the union government said it was looking to reduce airport fees at smaller airports to try and boost the flagging domestic aviation industry. Local carriers have to fly a portion of their routes to smaller cities and towns - an attempt to ensure connectivity for India's huge population. For every two flights made to profitable destinations, such as New Delhi or Mumbai, a domestic airline must make one flight to smaller destinations, like Srinagar. But airlines complain these routes are unprofitable and have added to their losses in an industry already dealing (and not so well either) with high imported fuel costs and expensive airport usage fees.

Now, the authorities are planning to soon reduce charges to land and park planes at 80 smaller destinations across the country to give airlines more incentive to fly there, civil aviation minister Ajit Singh said in May. This pilot project, which will target existing airports and disused airstrips, could then be rolled out across smaller airports, Singh said. "The aim is to make these airports almost cost-free for smaller planes," he added. But fees at big city airports like New Delhi and Mumbai won't be reduced. States also levy taxes on fuel of between 4-30 per cent which the civil aviation ministry has no authority to regulate. Fuel payments account for around 40 per cent of Indian airlines' operating costs. Airport-related costs, such as landing fees and security charges, make up around another 10 per cent. So, in the end it is not only the fact that infrastructure financers and banks are not enthused by Greenfield airports, it is also the lack of enthusiasm of the airlines who hate to fly to airports that bleed them dry, that poses a problem.

Mopa could follow in KRC's tracks

So, where will Mopa juxtapose itself, as a small airport or as an international airport? Or, will it simply get caught between the devil and deep blue sea. Just like the Konkan railway which was imposed on India's west coast by the stubbornness of one man only, George Fernandes, who by a coincidence was a constituent of the Bharatiya Janata Party-led National Democratic Alliance that ruled over India then. It was built between 1990 and 1998 at a cost of Rs 3,555 crore.

When last heard of, the Konkan Railway Corporation Ltd (KRCL) claimed it had narrowed its losses in FY 10 and aimed to turn profitable from 2011-12. The Corporation reduced its losses to Rs 10 crore in FY 10 as compared to Rs 79 crore in the corresponding period the previous year. The Konkan Railway suffered losses of Rs 384.67 crore during 1999-2000 mainly due to the high cost of its debt. How difficult it has been to turn around can be seen from these losses: Fiscal March 04- Rs 357.73 crore, March 05-305.48 crore, March 06-235.61 crore, March 07-233.28 crore , March 08 -144.99 crore.

Now you see it, now you don't

India's aviation policy is also like a yo-yo, foreign experts have even described it as a disappearing act. Now you see it, now you don't. In the context of its current policy or, rather lack of it, Mopa might not have a place in Indian aviation history. For instance, will Mopa be recognized as a stopover (and for what reasons) or focal point by both international and domestic carriers? The union government wants to encourage air connectivity to move beyond the large metropolitan cities to tier-2 and tier-3 towns across India. At present 36 per cent of domestic capacity is deployed to connect just the six largest cities to each other. The question again is how will Mopa fit into this arithmetic?

Standalone regional airlines have had a disastrous run: Paramount and MDLR failed and most recently Mantra has also suspended operations. Intra-state air taxi operators such as Ventura in Madhya Pradesh are struggling while Captain Gopinath's Deccan Shuttles in Gujarat closed within months of starting. The trouble is quite a few airlines were launched as a result of the entrepreneur having an excess of black money (MDLR/Haryana), joining the rat race as it were (Paramount/Hyderabad) and plain egotism (Deccan Shuttles). After he sold Air Deccan to Vijay Mallya, Captain Gopinath never really got it out of his head and tried several times to re-enter the airline business with Deccan Aviation, Deccan 360, Deccan Cargo (and its arm Express Logistics). Cash rich Religare Voyages Ltd, which ran Air Mantra, stopped operations eight months after it flew. The Religare group is promoted by ex-Ranbaxy Labs promoters Malvinder and Shivinder Singh (brothers), and owns Fortis Healthcare; financial services including broking, lending, asset management, wealth management; life and health insurance; and owns SRL Diagnostics among others. But the brothers failed miserably when they plunged into the airline business.

When in Mumbai many billionaires found it too expensive to park their private jets and choppers (approx 15 of them) they simply took them to Gujarat (in Ahmedabad) where bay parking fees are one-third of Mumbai's. But the question: why buy private jets for use in your home state if you have to park them in another; remains unanswered. Can Mopa withstand such unpredictable competition in the future leave alone take off amidst the inconsistencies of the present?

(Next: Aranmula International airport)