The country’s third-largest airport, Bangalore International Airport Ltd (BIAL), is set to raise about $2 billion for building a new terminal and runway which are expected to become operational within three years.

Bhaskar A Rao, Chief Financial Officer, BIAL, told BusinessLine that the company expects to raise funds at 0.25-0.50 over the MCLR (marginal cost of funds-based lending rate) with a tenure of about 15 years.

“We are looking to raise funds through a combination of bonds and bank finance,” he said. At present, BIAL has a debt of around ₹1,550 crore. For the initial period, BIAL had invested ₹3,800 crore for building the airport as well as expansion.

Rao said the current terminal has a capacity of 20 million passengers, whereas the current traffic is about 26 million passengers. The new terminal will increase the capacity by another 25 million passengers, which will be enough for another five-six years.

At present, the traffic is growing at about 13 per cent year-on-year and is expected to settle down at a steady 10-12 per cent. The air traffic movement is about 38 per hour with a daily passenger traffic of about 90,000.

“The air traffic growth has been phenomenal, and we are going ahead with a new runway, which is on the south side and should be ready by 2019. The new terminal should be completed by the first quarter of 2021.”

This will be the first significant investment for the principal shareholders of BIAL after the exit of GVK and Zurich Airport. The stakes of these two entities, which is about 48 per cent, was picked up Canada-based The Fairfax Group. Siemens holds 26 per cent, while the Airports Authority of India and the Karnataka State Industrial Investment Development Corporation own 13 per cent each. Karnataka government Chief Secretary is the BIAL Chairperson.

Rao said 70 per cent of the total revenues come from aeronautical operations and the rest from non-aeronautical ones. At present, the user development fee (UDF) is ₹306 for domestic passengers and ₹1,226 for international passengers.

Nearly 85 per cent of the passengers at BIAL are local passengers as the airport is more of a destination port and not a hub port where the number of foreign passengers is much higher.

The UDF is expected to be revised during the next quarter. The airport regulator allows the management to revise the UDF every five years, termed the control period. BIAL’s first control period got over in 2016, and the formula for computing the UDF has also been changed with only 30 per cent of non-aero revenues being used to subsidise aero charges.

Rao said the regulator has been extremely fair and that the management has been supportive of all the initiatives of the Ministry of Civil Aviation. He also clarified that no new airport can come up within a 150 km radius of BIAL, and if HAL wants to revive its airport for commercial use, BIAL holds the first right of refusal.

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