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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."
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