Despite having presence in India for over two decades through its investment in Bengaluru airport, developing and managing a Greenfield airport in Uttar Pradesh has come to prove a whole different ballgame for Zurich Airports International. DANIEL BIRCHER, CEO of Zurich Airport International Asia and CMD of Yamuna International Airport Pvt Ltd told The Indian Express in an interview that the company was conducting passenger profile studies to identify the needs of travellers from a north Indian background. He also talked about the plans for the Noida International Airport in Jewar, which his firm expects to be operational by 2024. Edited excerpts:
How much has Covid-19 changed in terms of the targets set for the Noida International Airport?
Obviously, Covid-19 has impacted the industry itself, quite heavily. And I think what the industry has recognised, that by 2024, we will be up and running above pre-Covid levels for the domestic traffic and the Noida International Airport will be primarily catering for domestic traffic in the initial years. So, I don’t expect there to be an impact. The international part will maybe take one or two years longer to recover compared to domestic, so I don’t really see an impact there. We (Zurich Airport International) also operate airports in Brazil, where we are almost at 90 per cent of the pre-Covid level. There will be changes in the way we handle passengers not points, but the overall impact on the industry will be behind us by 2024.
You had bid quite aggressively to win the Noida Greenfield airport. Does Covid throw a spanner in the works for the plans on the basis of which that bid was made?
I don’t think so. From our point of view, there are several factors that determined this final proposal. The first factor is that we are convinced about the Indian growth story and we see ourselves as a trusted partner to the government and those underlying fundamentals have not changed.
I think India, with an increase in disposable income, propensity to travel, economic and city-side development in the larger catchment, whether NCR, Agra or maybe Mathura industrial corridor — these elements have not changed and we actually see more dynamics there. Last, but not least, when we look at the traffic studies and we have to take into account 40 years, we see traffic growth way beyond 200 million passengers and we know that the existing Delhi airport has final capacity of 110-120 million.
When it comes to the bids, we are reasonably close to the bid from the competitors, and GMR had the right of first refusal. So, taking this into account, we could not have bid lower. So I think this is a justified bid and we’re very confident that the airport will be a success and is much needed infrastructure for the NCR region.
What are your cost and investment estimates for the Noida International Airport project and how do you plan to finance it?
At this stage, we are in discussions with the banks. We are still working on an assumption of between Rs 4,500-5,000 crore and this will be financed with equity and with debt in Indian currency. The main reason being is that our main sources of revenue will be also in INR. It’s mainly a domestic airport, so that’s the typical set up, and we’re confident that we can close this in April. For the debt part, we are looking at financing in rupees so it’s mainly, India-based financial institutions that we are talking to.
For equity, are you looking for a financial partner or a strategic partner?
We have already been involved in India for over 17 years with Bengaluru airport. So we know the environment, and our mid-term objective is to have a portfolio — we’re looking at the other assets when they come up. So, I wouldn’t rule out that in future we might work together with a strategic partner to make sure that we have the necessary funds to reinvest. At the moment, for the development of the (Noida airport) project, up to the start of operations, we will do this ourselves. It is also easier to manage at this stage.
How is India different than other geographies where you are present, in terms of doing business?
In my current role, I’m also responsible for Zurich Airport’s Asia business development, and if I compare India with other areas here, I have to say India has a reasonably mature public private partnership legal framework. There have been numerous cases of successful privatisations and so the certainty and the clarity of the concession documents, the processes is a big help. So, as an investor, you understand and you know, the processes, you know the agreements you have to do. So, I think that is definitely, for us one of the reasons why we want to continue investing in India and support the national agenda of infrastructure building.
We are obviously aware that north India is not the same as south India. So, we are currently doing passenger profile studies to understand what are the needs and requirements of travellers from a north Indian background, so that we can tailor-make our product. With the diversity that India offers, across the country, this has to be taken into account.
How do you see the consolidation in India in the airports sector that has happened over the last one year or so? Has that changed circumstances from when Zurich Airport decided to place a bet here?
So we are observing obviously, what’s happening in the market and as I mentioned before, I think the successful models of privatisation in the past have continued, and I think it is a good move — India has now world class airports everywhere. And we, as an operator, are quite happy to collaborate with our peers in the NCR catchment but also with other peers in the country to jointly help make the aviation system as efficient and as cost effective as possible.
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