Advertisement
X

Skid Marks

Mumbai's airports need to expand, and now. But how?

Disembarkation Point?
  • Nearly a third of the 2,000 acres of Mumbai airport land is either encroached on, occupied or leased
  • The rehabilitation of the slum dwellers may take time unless GVK can tie up with the city's developers
  • Until there's clarity on land availablity, GVK can't pursue plans like building an extra runway or build parallel ones
  • Mumbai's passenger handling capacity can go up only if the ATC can factor in multiple aircraft landings
  • Two new airports means competition unless GVK can grab the contract to build at least one of them

***

T
he policymakers—the Maharashtra state government and the Planning Commission—are excitedly talking about a third airport in Mumbai. This is even as Mumbai is still awaiting cabinet approval for its second international airport, expected to be built in Navi Mumbai and for which land was acquired 25 years back, in 1982. Worse, this is happening as Sanjay Reddy, chairman, GVK group, which has bagged the mandate to modernise Mumbai's existing airport with its domestic and international terminals, is grappling with "the most difficult infrastructure project in the world right now".

These are, to say the least, the inherent contradictions in the planning process. There are difficulties in the ongoing makeover of the terminals at Sahar and Santa Cruz. But still the city is preparing for newer ones. The reason, says Rajeeva Ratna Shah, member-secretary, Planning Commission, is the inherent limitations in the current modernisation plan. He feels the existing terminals will be able to handle just 40 million passengers annually. However, in the near future, the city will need an infrastructure to handle 90-100 million.

If the Navi Mumbai airport—which will have capacity to handle 60 million passengers and will be spread over 2,000 hectares—does come up, Shah thinks Mumbai will need another one to tackle the growth over the next few decades. "Planning for new airports should begin at least 30 years in advance to avoid cost escalations. So the new master plan for the Mumbai metropolitan region should include the zoning of the land for a third airport to prevent huge cash outflows at a later date," feels Shah.

But experts feel the state and Centre should instead be chalking out strategies to successfully expand and modernise the existing terminals. And help the GVK group to roll out its airports-related master plan. To be fair to GVK, the issues concerning Mumbai airport aren't easy to sort out. Reddy admits that the Mumbai airport was "not an easy cup of tea". The first problem, he says, is property size. "We've access to only 2,000 acres, while all the new airports—in Delhi, Bangalore and Hyderabad—are being built on a minimum of 5,000 acres," he explains.

Of the 2,000 acres, nearly 275 acres is encroached by 80,000 squatters. Another 180 acres is occupied by a plethora of housing colonies belonging to agencies like Air India, Airports Authority of India (AAI) and the Post & Telegraph department. An additional 253 acres is leased to AI, Indian Airlines, Jet Airways and catering firms. "We are faced with a constant flux as far as preparing a final estimate of actual land available to us is concerned," explains Reddy.

Therefore, the group is busy negotiating with some agencies to relocate them, signing MoUs with others, and seeking the help of relevant authorities to find developers who can rehabilitate the slumdwellers outside the airport area. The strategy for the rehabilitation process is to partner with the city's builders, who have land elsewhere in the city and are willing to take over such a project.

Given this lack of clarity on availability of land, GVK's plans are in a limbo. It wanted to build a single passenger terminal at Sahar for all travellers, and use the facilities at Santa Cruz only for cargo operations. But the group can't finalise it until it knows the area that it can actually use for modernisation. Even the idea of building a new runway is stuck because of the 147 high-rise buildings that stand in the way of the proposed flight path. "We are evaluating whether to build a new one or focus on improving the two existing runways by building parallel taxiways," says Reddy.

However, the efficient usage of the two runways depends on air traffic controllers (ATCs), who have to be trained to conduct multiple landings. Still, Rudy Vercelli, coo, Mumbai International Airport Ltd (MIAL), a JV between GVK, Airports Company South Africa, Bidvest group and AAI, is confident he can increase aircraft movement from 30 to 44. But he has his doubts whether the two terminals can handle 40 million passengers, especially as the number will be achieved soon. Between April '06 and February '07, 20.25 million passengers floated through Mumbai's terminals.

Another problem is that as per the modernisation contract, MIAL has to share 39 per cent of its revenues with AAI, which is an added pressure on the former's topline. Vercelli says that's the least of his problems. "A percentage sharing with the government works better in modernisation projects as the private operator doesn't have to cough up an upfront payment regardless of incoming revenues. Under this arrangement, we're only sharing a fixed amount of what we earn," he explains.

The argument makes sense if the GVK group can ramp up revenues and profits over the next few years. But this will depend on whether it can solve the several issues confronting Mumbai's terminals. This is probably why experts like Jayesh Desai, director, Ernst and Young, question the modernisation process itself. "The government should have auctioned off the prime land of the existing terminals and slowly moved the airport operations out of the city," he says.

While doing that, the government should probably have also thought of building a much larger airport, instead of thinking about a second and a third one. Explains Kapil Kaul, CEO (Indian subcontinent), Centre for Asia-Pacific Aviation, "The GVK group is investing $1.7 billion in the modernisation project. Given the constraints, it will take longer than expected for it to upgrade the terminals, increase efficiency and build non-aeronautical infrastructure like malls and hotels. It should be allowed to stabilise and become sustainable before competition is put in their way."

Agrees Desai, "There is a huge question mark on the investment-worthiness and the profitability of both the terminals...they are profitable but operating profits aren't enough to service the investments required for expansion." The new airports will also force GVK to take over the Navi Mumbai one in order to avoid a price war—inevitable in case a different operator bags the project.

Despite these short- and long-term issues, Reddy puts up a brave front: "We have no worries even if we don't get the Navi Mumbai airport. The airlines will always look at us favourably in light of the catchment area of their passengers and the commuting time to reach our airport in comparison with out-of-the-city ones."

Advertisement
Published At: