The Hindu Business Line : ‘Hyderabad is the perfect place for a hub in India’

Passengers from various parts of the country have made Hyderabad their transit point, whether for international or domestic connections. Shamshabad can provide the right facilities for such connectivity and become a cargo hub too.

MR KIRAN K. GRANDHI, MD, GMR HYDERABAD INTERNATIONAL AIRPORT

Ashwini Phadnis

The opening of the new airport in Shamshabad, near Hyderabad, might have been delayed and the Standing Committee of Parliament may have called for keeping the existing airport at Begumpet open, but the GMR group that is developing the new airport feels it has a strong case. Earlier this month, much before the delay in the opening of the airport was announced, Mr Kiran K. Grandhi, Managing Director, GMR Hyderabad International Airport Limited, met a group of journalists from Delhi at the new airport site. In a free-wheeling interaction that lasted close to two hours, Mr Grandhi outlined the group’s thinking.

Excerpts from the interview:

What are your views on keeping Begumpet airport operational?

We have traffic of 7 million people, of which two-thirds is domestic and the rest is international. If you are saying that domestic traffic has to theoretically be at Begumpet and international traffic at the new airport, then there are two issues. Earlier, a lot of people travelled to Chennai and then onwards. Now many passengers have made Hyderabad their transit point. I have also learnt that people from Kochi come to Hyderabad to travel to the Gulf because of the connections.

There are also passengers from Coimbatore. So, you see a lot of connections from domestic to international travel, but if domestic and international flights are going to be from two different airports, the travel time will increase. Then operational costs too go up. The operations staff will need to have two offices and two sets of operations. Secondly, today almost 100 per cent of the cargo at Begumpet is what the airlines carry.

Now, if you have an international flight at the new airport and something has to transported on domestic routes, then the cargo has to be transferred to Begumpet. No freighter can land there. We have requests from people who want to make Shamshabad a cargo hub.

Besides, Hyderabad is the perfect place for a hub in India, whether we own the new airport or not. If we split the traffic, we will not be able go to the next level. Why do people go to Singapore or Dubai? Because, from there, within one hour, they get flights to various destinations. If you can create such a facility here, then passengers have multiple options. We are introducing night parking for 30 aircraft. These aircraft coming in at night and leaving in the morning will feed international routes. So, the airlines’ load factors will also go up.

Please understand that this is the first time that we are getting a greenfield airport. Nothing was done in an ad-hoc manner. A study was done in 1990. A task-force was set up by the Andhra Pradesh government and the Government of India on when Begumpet would peak and when the new airport should come up. Land selection was also done on the basis of a study.

The Andhra Pradesh Government, in its vision document, had also said that the new airport should come up in 2008. It was only after this that the bids were called. Otherwise, commercially it would not have been viable for people to bid.Besides, because of the economic upswing, companies want to make use of the various opportunities coming their way. Duty-free, F&B operators and various concessionaires who are operating here see a lot of opportunities all over the country. They want to make Hyderabad their India headquarters.

What happens if the Government insists on keeping Begumpet open?

I will leave that for you to infer. Before we came into the picture, before the bidding was announced, the condition was that they would close the old airport. Before the bidding documents were finalised; the Union Cabinet decided that the Begumpet airport would be closed.

This followed a proper process and only after that were the bids invited. In 2001, GMR was the preferred bidder. From 2001-03 we went through the entire process of negotiations and drawing up agreements; we have done the financial closure and financial tie-up. Obviously the financial tie-up was done with all these conditions.

Now why are these issues being raised? There are a number of recourses available. The first is consultations. We have had a number of communications on airport transfer last year; trials too have been going on for the past year.

We are going to have 8,000 employees at this airport; only 1,000 employees are ours and the rest are from other agencies. It is more like running a mini-city. So we have to do consultations. The airport cannot shift overnight.

There are various checks and balances in the system. Two years back we started a consultative process where, as per the agreement, there is an Airport Coordination Committee chaired by us which has on it every stakeholder, be it the airlines or the regulatory agency.

Over the last two years, we have been interacting with them every month, telling them that this is the process and this is what we are going to do. That is at the operating level. For the past year, we have started airport transfers from cargo, ground-handling and other agencies.

And, for the past six months, we have been interacting with the Ministry of Civil Aviation and making presentations about the airport transfer because we have to give a notification six months ahead stating that we are going to shift. We have given the six-month notice and the Ministry has initiated discussions with us.

This is the background. Now we are having consultations with the Civil Aviation Ministry every week. Having gone through this much, we have a strong case.

The Rs 2,500 crore is not our money. We have the Malaysian Airport investment, we also have public sector banks, public funds, we are listed and we also have institutional investors. All these issues were discussed. We are right at the end of the game.

In India, the worst case scenario is the legal process and you know the answer there. If there is a real issue, we are open to discussions. We have an agreement with the Government, so what more do we need?

On the impact of the Government’s request for User Development Fee on domestic passengers.

It does have an impact. We are charging only international passengers. At the same time we are also focusing on non-aeronautical revenue. We have night parking for 12 aircraft at Begumpet. We will have night parking for 30 aircraft at Shamshabad, and the demand is growing.

We feel that we have to look at all other revenue sources and focus on both aero and non-aero revenue from the point of traffic, and, after that, we will take a call on what kind of charges we should have for domestic passengers.

Should we at all charge for domestic and short distance flights? We are working on various combinations. No time-frame has been set. We have discussed this with the board and it has agreed that there will be no time-frame.

How do you intend to increase non-aeronautical revenue at the new airport?

Any new airport certainly gives a push to demand. It brings in a certain flavour and more traffic because what happens is that as the experience in an airport is enhanced, the spending pattern increases; peoples’ preferences change. Duty-free, F&B, advertisements and car parking are some of the non-aero sources of revenue.

Airport shopping is impulsive shopping. So you have to make the environment better: make the queues shorter and lessen the check-in time. For example, now in Hyderabad we are trying to make announcements as few as possible.

In Indian airports every 15 seconds or every minute there is an announcement in English, then in local languages. The sound echoes, so we have made announcements localised. If there is a sitting lounge, the announcement is made only there.

We are trying to see how the airport can be made quieter. For example, the airport in Athens is completely silent. There are no announcements. There is that extreme example. What I am saying is that if the experience in an airport is good then the chances of people making this a preferred airport are higher, and consequently spending patterns may change too. If that happens, the traffic pattern changes.

Related Stories:
Domestic airlines worry over operations at new airport
Govt yet to decide on user fee at new private airports
In Hyderabad, where do they go…old airport or new?

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