Southern States vying to clinch airport projects

By V. Jayanth

A new or expanded international airport has become a sine qua non for improved infrastructure and better access. So the three southern States of Karnataka, Tamil Nadu and Andhra Pradesh are vying with one another to clinch an attractive deal for their airport projects. The Karnataka Chief Minister, Mr. S. M. Krishna, has decided to use the private sector to send the right signals to foreign investors.

Among the leading lights of industry, the Infosys chairman, Mr. M. R. Narayana Murthy, has emerged as Mr. Krishna's ``brand label'' to sell Karnataka. It is not surprising that the Karnataka Government has chosen Mr. Narayana Murthy to head the Bangalore International Airport committee. Along with a team of senior officials and other representatives from the private sector, this committee is expected to start the preliminary work on the airport. It would also be entrusted with the task of picking the most suitable consortium from the two short-listed bidders to become the major partner for the project.

The committee is expected to begin work on levelling the ground, fencing the 3,000-acre site and getting the project off the ground. Mr. Krishna believes that his Infosys mascot would instill confidence among foreign investors and ensure early completion of the new airport. But he cannot depend on such labels to make the airport succeed. The final selection of the foreign partner, who is expected to have a 73 per cent stake in the more than Rs. 1,000-crore project, would be made in three or four months.

More than getting the airport construction started, the Karnataka Government must campaign for more flights to and out of Bangalore and for more international airlines to connect the Garden city. If it really emerges as the Silicon Valley of India, it must generate enough domestic and international traffic to make the new airport viable and profitable. Obviously, the foreign investors would be looking for early returns on the huge investment.

Sensing the multi-dimensional threat from the neighbouring States, Tamil Nadu has realised that it must consolidate its position as the premier gateway to the south. There is no doubting Chennai's lead among the airports in the region and it continues to attract more airlines and international traffic.

The Tamil Nadu Chief Minister, Mr. M. Karunanidhi, has taken it up with the Prime Minister, to convert the Chennai airport expansion programme from the leasing route that the Civil Aviation Ministry has in mind, to a joint venture offering, so that a substantial investment flows in to create the much-needed capacity for the future.

Tamil Nadu's suggestion is to build a new international terminal opposite the existing airport (Porur side). This could be a joint venture involving the Airports Authority of India (AAI), the State Government (or TIDCO) and a foreign partner. Since Mr. Karunanidhi appears to have lined up a couple of foreign investors, it should not be difficult to convince the Centre. A new international airport that can meet the expanding needs up to at least 2020 may be the right way to ensuring Tamil Nadu's leading status on this front.

As Andhra Pradesh, the Chief Minister, Mr. N. Chandrababu Naidu, has used his clout with the Centre to sign a Memorandum of Understanding with the AAI for construction of a new airport at Shamshabad at an estimated cost of Rs. 1,320 crores.

A steering committee is being set up with representatives from both sides to begin preparatory work and carry on the project till a joint venture company is formed. Mr. Naidu may have to scout for a private sector or foreign investor to take a major stake in the proposed venture.

But Hyderabad's main problem will be ensuring adequate international traffic to make the joint venture viable. Attempts to connect the so-called ``cyber city'' to Southeast Asia and West Asia have not been all that successful till now. Investors would want more traffic originating from and coming into Andhra Pradesh.

For the past couple of years, both Air India and Indian Airlines have not been able to expand their services out of this region for want of new aircraft or sometimes a shortage of crew. Though new services were provided to both Bangalore and Hyderabad, they have not taken off very well. Under the bilateral agreement, Malaysian Airlines has also been authorised to connect Bangalore. Perhaps, once the disinvestment exercise in the two national carriers is completed, additional services could become a reality.

These three southern States must learn from the Kerala experience - where NRIs took the lead in building the Kochi airport. Unfortunately, the new airport company has not even been able to generate enough revenue to service the debts. A lot many things have to be tied up before launching a new airport.

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