Wind Beneath the Wings

Just to give one instance of how AAI missed the bus: The international terminal at Delhi8217;s airport was envisaged to be one wing of a four- or five-wing complex. The other wings never got built and the city made-do for 20-odd years.

Besides, the domestic terminals8212;the ones used by private carriers as well as the one that handles general arrivals8212;have not been refurbished for more than a decade despite the major boom in private airlines and passenger traffic.

So the onus is now on GMR-Fraport to first salvage the deteriorating situation and then embark on a plan that will multiply by several times Delhi airport8217;s capacity to accommodate passengers. The target: 80 million passengers by 2021, based on 8-10 per cent annual traffic growth.

But with growth in 2004-05 touching 20 per cent, the projections will have to be re-calculated on the basis of 12 per cent growth. Incidentally, the catch-up factor won8217;t go away completely: China is looking to stretch Beijing airport capacities to handle 80 million passengers annually latest by 2010.

While the next three months will see the finalisation of the documentation, agreements and finances of the joint venture company where GMR will have 74 per cent equity and AAI the remaining 26 per cent, by August-September, GMR is expected to come out with a detailed masterplan laying out the phasing and the projects to be undertaken over next decade or so.

But before that, once all the paperwork has been taken care of, the JV gets a two-year deadline to complete a set of mandatory tasks. According to the terms and conditions identified by the government well in advance, these infrastructure have to be in place before the 2008 Commonwealth Games:

New parallel runway: This will easily double the number of flights that can operate to and from Delhi. Currently, close to 32 aircraft operate per hour while several aircraft are put on hold above Delhi. A new runway will drastically bring down holding and allow more take-offs and landing per hour.

High-speed exit taxiways: Work on this has already begun. The new company will take over the construction and probably add more taxiways to ensure a plane occupies the runway for as little time as possible. The assessment is that such a taxiway at the end of each runway will reduce runway occupancy time by half: From an average of about 60-90 seconds to 20-50 seconds.

Satellite rescue and fire station: This will house the necessary equipment for using satellite-based tools for responding to emergencies in and around the airport.

New landside road to international/domestic complex: This involves the construction of a shorter road along the airport boundary between international and domestic terminals so that transfer of passengers can be done easily. In case of international passengers, the objective is to limit to an hour the timespan between landing and boarding a domestic aircraft.

New elevated front for international terminal and a fresh approach for arrival terminal: This essentially means that the entire facade of the international terminal at Delhi will undergo a change with a new elevated approach for departures and front road approach at the ground-level for arrivals.

Besides these, there are a host of short-term measures which will now come under the new joint venture. This includes expanding the area of the domestic terminal by over 10,000 sq m with a view to more than double the annual passenger handling capacity: From the current 1.35 million to 3.5 million.

The principal revenue earner for the private players in the days ahead will be the commercial ventures they undertake in and around the airport. These plans will include new duty free shops, shopping malls and other facilities, which will be laid out in the masterplan.

8216;My next priority: 35 non-metro airports8217;
Union Civil Aviation Minister Praful Patel in conversation with Pranab Dhal Samanta

Now that we have two consortia for Delhi and Mumbai airports, what is the timeframe we are looking at?
We want to hand over the airports in the next three months. Delhi needs to be ready for the Commonwealth Games by 2008 and even Mumbai needs to be ready soon. We have indicated to them the consortia that we must get the masterplan in four months time with the rider that it will be put through proper scrutiny.

The unions have launched an agitation. You are in talks with them but how will you ensure that they don8217;t interrupt the implementation of the project?
Of course, we will have to carry the employees with us. The two consortia have already said they will absorb 60 per cent employees. We will try and increase this through talks and will also find a way that the children of these employees get considered for jobs on retirement. Of course, merit will be the main criteria.

There have been legal questions raised on the process. How do you propose to see that this does not come in the way of implementing the project?
The government arrived at a decision after much deliberation. We put a lot of filters in the process, different committees were set up to ensure there is transparency and fairness. It was a collective decision of the EGOM and we hope now that this process will stand the test of law.

How do you visualise the two airports five years from now?
I am tired of saying we should have airports like in advanced countries. I think our airports should now set an example for other countries. But still, five years from now at least these two airports should be like Singapore.

Customs, Immigration and security also impact the performance of our airports. These will still be with the government. How will you finetune their working to meet the same standards set for private consortia?
It is not just about private consortia, these standards should be high because they also convey an impression of our country. We will be co-ordinating with concerned departments to ensure proper functioning on the ground. I think Immigration has been doing well. And to that extent, even these private consortia will be involved in the co-ordination.

With this out of the way, what is your next priority?
My next priority is to modernise the 35 non-metro airports This is an AAI-led process where technical consultants are being roped in for advice.

MUMBAI
Space Odyssey
THE Chhatrapati Shivaji International Airport8217;s problems start with the lack of space for its expansion. This is the reason why much stress was laid on the kind of transition plan bidders submit, bearing in the mind the difficulties posed by illegal encroachments and slums in the vicinity.

GVK-Airports Company South Africa ACSA, the selected bidder for Mumbai, has its task cut out. While even the Civil Aviation Ministry concedes that the current airport cannot be expanded to take the traffic boom after 2015, there is an incentive for GVK here: It will get first rights of refusal for the greenfield airport proposed at Navi Mumbai.

Mumbai is the country8217;s busiest airport, handling over 12 million passengers a year. By the AAI8217;s own submission, international terminal 2A and domestic terminal 1B are saturated. With a total of 10 domestic airlines entering the market by the year-end, Mumbai will be busy, given that it is the most sought-after destination by all carriers.

With this scenario in mind, certain short-term measures8212;like adding another 7,000 sq m building area to the complex8212;are already underway. After formation formalities, the JV will take up this task as well as related plans like expanding the car park and modernising airport infrastructure.

But, as in Delhi, the government has laid out certain mandatory tasks in Mumbai which the consortium has to complete within two years of the operation agreement becoming effective ie 2008. Consider these:

New domestic terminal: Simply put, it8217;s imperative. Going by information supplied to the Civil Aviation Ministry, domestic airlines will add nearly 400 aircraft over the coming five-seven years. The commensurate increase in the numbers of passengers and the growing affordability of fares all call for a state-of-the-art new domestic terminal in Mumbai.

International terminal expansion: Mumbai receives the maximum international passengers in the country but its terminals are constrained by space. An expansion has long been on the cards but now the onus falls on GVK-ACSA to deliver8212;and deliver soon.

International cargo terminal: In 2003-04, air cargo traffic grew by 9.1 per cent across the country with the maximum rise recorded in Mumbai. Last year, it grew by a record 20.4 per cent and the projection is that it will rise three times by 2010. With an economic growth rate of 7-8 per cent, this is one segment where attention is needed and Mumbai must prepare first.

New international terminal access road: The JV is mandated to develop the existing road network and create fresh access routes to the international terminal. The idea is prompted by traffic congestion on the road system around the international terminal.

International terminal expansion: With one of the terminals already saturated, this is a must to meet increasing passenger traffic. The nature of expansion is, however, for the consortium to decide as it may involve eviction action in the vicinity.

New high speed taxiways: Just as in Delhi, this is to reduce runway occupancy time to avoid delays because of congestion in the air. The problem has emerged as a major concern of late as planes are getting delayed by 20-30 minutes for want of a slot to land or take-off.

It is important to note here that global technical advisors had indicated a possibility of a second runway with limited scope in Mumbai but this too will need space. The government has left it for the private developer to take a call on this though it has managed to initiate simultaneous operation from the existing criss-cross runways.

The J-V can take this further or look for other options. The main work in Mumbai will involve large-scale renovation without causing major disruption to existing traffic. This is the singular biggest challenge faced by the private developers and needs to be addressed in fair amount of detail in the masterplan.

Putting plane to paper
After the selection of the consortia, the signatures
THE toughest part of the race is possibly over, now begins the tedious bit. Having selected the private consortia for the modernisation of Delhi and Mumbai airports, the government will now begin the process of negotiating the details with each of these bidders.

The AAI has already moved on registering separate companies for Delhi and Mumbai airports. Once done, it can divest majority control to the selected bidders. But before that, the Civil Aviation Ministry will need the minutes of the February 1 Cabinet meeting that approved the Empowered Group of Ministers8217; recommendation endorsing the selection of the two consortia.

LETTERS OF OFFER: The minutes will be the basis for the Ministry to direct AAI to issue letters of offer to GMR-Fraport for Delhi and GVK-ACSA for Mumbai. Negotiations will begin with both parties, which will express interest in taking 74 per cent share in the two companies. A condition for becoming the majority partner is a payment of Rs 150 crores for each airport.

SHAREHOLDERS8217; AGREEMENT: Once the deposits are made, talks will begin on the shareholders8217; agreement. This will set the terms and conditions under which the JVs are formed, one of which will be that the private consortia seek to maintain a performance standard equal to the Asian average of 3.6 in the IATA International Air Transport Association airport survey.

This will also set out the composition of the board and formalise the revenue-sharing model to be followed. AAI will get 45.99 per cent revenue in Delhi and 38.7 per cent in Mumbai. Plus as 26 per cent stakeholder, it will get its dividend share.

OMDA: Thereafter begins the discussions on the crucial OMDA Operations, Maintenance and Development Agreement. This, the most important document of the process, will have two dates, one when it is finalised and the other when it becomes effective. It is the latter date on which the airports will be officially handed over and the date from which the clock starts ticking on the quality targets, see Speed Dating.

This document contains the kind of commitment in terms of tasks to be undertaken as well as the concessions which the AAI and the Centre will make for the private players. According to officials, this is an overarching agreement which will hold the entire deal together.

LAND LEASES: The Land Lease Agreement extends airport land under AAI to the two private players for a period of 30 years, extendable by another 30. This again is linked to the OMDA as its signing is mandatory for the overarching agreement to become effective.

STATE SUPPORT PACTS: Besides these, there are two state support agreements, one on behalf of the Centre and the other the state government concerned. While the Centre, through the first agreement, will commit itself to provide Customs, Immigration, security and related facilities, the second agreement will bind the Delhi and Maharashtra governments on law and order as well as civic facilities around the airport.

What is important in the above two agreements is that the consortia will obtain an assurance that they cannot be held responsible for lapses on the part of Customs, Immigration, law and order, municipal and even ATC-related problems. This is critical as the JV8217;s performance standards can get adversely affected on account of lapses in these services.

SUBSTITUTION AGREEMENT: Linked to the OMDA is the Substitution Agreement, which spells out the arrangement with the financiers to the JV. Essentially, it guards against any withdrawal of finances by a certain financier and caters for quick substitution.

The entire process of finalising and signing these agreements can take anything between three and six months. Officials, however, are optimistic that the airports will be handed over latest by August or September.