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AAI to raise capex in FY18 for airport expansion, building more hangars

Livemint:  January 17, 2017

New Delhi: Airports Authority of India (AAI) will raise its capital expenditure by 25% in the fiscal year starting 1 April to expand existing airports and builds hangars for hundreds of planes that airlines are ordering.

Budget airline SpiceJet Ltd ordered 100 planes last week while GoAir confirmed an order for 72 planes days before that. Indian airlines have ordered more than 700 planes and some are adding as many as two planes a month.

“We’ll be spending Rs2,500 crore in the next financial year. In 2016-17, capital expenditure was Rs2,000 crore,” said AAI chairman Guruprasad Mohapatra, an IAS officer from Gujarat cadre.

A significant portion of this spending will go towards expanding a dozen of the 125 existing airports that AAI manages.

Traffic is expected to rise 17% to 261 million passengers in the year ending 31 March, AAI said, adding that aircraft movements will increase 15% from the previous year.

AAI has asked all major domestic airlines, including Air India, SpiceJet, Jet Airways (India) Ltd, IndiGo (InterGlobe Enterprises Ltd), GoAir and Vistara to give it estimates of how many hangars and night parking bays they will need over the coming years.

Night bays are airport areas where planes are parked every night while hangars are used for plane maintenance.

Airlines have said they want more bays than hangars.

“We are going to construct a lot of bays in the next financial year,” Mohapatra said.

Passengers have complained that state-run airports, unlike those run by the private operators in Delhi, Mumbai, Bengaluru and Hyderabad, lack cleanliness.

AAI had appointed Boston Consulting Group to carry out a detailed survey across its major airports to improve efficiency and plug such gaps.

The findings of this survey are now being implemented.

Machines of the size of a portable room cooler have been installed outside washrooms of Kolkata airport to allow passengers to report the cleaniness of washrooms by pressing one of the two buttons. If many passengers press the “unsatisfied” button, an alert goes to the airport manager, the chairman explained.

He said price negotiations are on to buy and install these machines at about 10 additional airports.

The cost of cleaning airports has risen three-fold under a new contract-cleaning model, Mohapatra said.

AAI has decided to give 80% weightage to the cleaner for his expertise and experience and only 20% to the amount bid when contracting a cleaning agency.

In most government tenders, those with the lowest bid win the contract.

Mohapatra said no privatization is expected in the coming year but the terminals of Jaipur and Ahmedabad will be handed over to a private operator for the next 15 years under a new operations and management model.

Based on the experience of these two airports, tenders for which are already out and a pre-bid meeting scheduled for 5th February, AAI will decide whether to follow a similar model.

Another area of focus for AAI in the coming year would be automation of airports.

The state-run airport operator is working on the airports of Vadodara and Vijayawada to make them what Mohapatra called “e-enabled”, which includes options to pay digitally at the airport, automatic issuance of e-boarding cards to a passenger’s MOBILE PHONE and ending manual frisking.

To fund the ongoing expansion, AAI recently increased charges at most of its airports, drawing protests from airline lobby group International Air Transport Association (IATA), which represents majority of the international airlines.

IATA said that the hike was done without any stakeholder consultation and asked the authority to roll back the increase. Mohapatra said there was no question of a rollback. “The increase was done after a gap of nine years,” he said. “Nobody reminded us yearly when we didn’t increase charges for nine years.”

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.