Devanahalli airport: crucial talks on cutting down cost this week

By Our Special Correspondent

BANGALORE, AUG. 12. Crucial high-level discussions on pruning down the estimated cost of the Bangalore international airport project are likely to be held early this week.

The airport project ran into difficulties after the State Government reportedly found that it would have to shell out Rs.430 crores as equity in the total cost of about Rs.1,300 crores. This would be in addition to the cost of land acquired for the airport, planned to come up at Devanahalli, which could amount to another Rs.200 crores or more.

A nine-member high-level committee chaired by the Principal Secretary to the Finance Department, Mr. C.Gopal Reddy, is expected to have detailed discussions with the Siemens-led consortium (the overseas partner shortlisted for the project) with the focus on cutting down costs. Besides the State Government, the Airports Authority of India is a partner in the venture. A final decision is to be taken based on the total expenditure involved and the State's share in it.

The international airport project was conceived nearly 10 years ago with the existing HAL Airport in the City barely able to cope with the increasing number of domestic and international flights. The Indian Airlines and Air India operate 16 international flights each week from or through Bangalore to overseas destinations such as London, New York, Singapore, Muscat, Dubai, Sharjah, Kuala Lumpur, Jakarta and Bangkok.

In their presentations, both consortia were reported to have asked for an immediate financial commitment from the Government as its share, in addition to the land for the airport. However, the Finance Department expressed misgivings about investing such a large amount. The total financial commitment may mean cutting down on the budget for other sectors and returns on the airport project may not match the investment, experts had told the Government. This factor led to the present discussions which would amount to a renegotiation of costs.

The other details to be negotiated would be an Airport Development Agreement for the State Government to provide other inputs such as land, roads, water supply and power. The air traffic control (ATC) will be provided by the Department of Civil Aviation and the State Government has to coordinate with the Centre on navigational, landing and parking facilities and the charges for these.

The State Government has compelling reasons for completing the long-awaited international airport project as soon as possible. The IT sector, which has large export earnings potential, has repeatedly asked for a larger airport and explained this was necessary for faster economic growth. The IT corporates have expressed fears that overseas investment may go, instead, to Hyderabad where an international airport is likely to come up faster. The existing Bangalore Airport is unable to cope with increasing cargo shipments to overseas destinations, according to many exporters.

The profitability of the Devanahalli airport has been questioned by several financial and aviation experts. More international flights have to touch Bangalore if the project is to be financially viable and the State Government has not managed to attract enough overseas airlines to include the city in their flight schedules. The much better equipped Madras International Airport is only a short flight away and has been on overseas flight schedules for many decades. Whether overseas airlines find it makes good business sense to include Bangalore in their operations remains a big question.

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Section  : Southern States
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