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AAI seeks funds to develop airports

The Airports Authority of India is desperately seeking more funds from the government to develop airports to keep pace with the robust growth that is expected to take place in the sector.

Sanjay Singh   New Delhi     Last Updated: February 2, 2011  | 13:14 IST

Ahead of finance minister Pranab Mukherjee presenting the annual budget later this month, India's airport operator the Airports Authority of India (AAI) is desperately seeking more funds from the government to develop airports to keep pace with the robust growth that is expected to take place in the sector.

A top AAI official said it needs to keep pace with the expansions which will be taking place in the next few years as airlines have announced major fleet expansion plans.

"Domestic airlines have announced major fleet expansion plans. We have to have airports to support double the fleet of what we have now in our country. The air traffic will almost double in the next few years. We have to upgrade our newly constructed airports as well as the older ones to keep pace with the demand, which will remain strong given the growth of our economy," said the AAI official who did not wish to be named.

"Ageing airports would be harmful for the aviation industry. It's not just about inducting new aircraft to meet the growing air traffic demand. It's about runway capacity and airport capacity," he added.

"We have a huge population of middle class who have the money and are willing to travel by air. Though we still have majority of the air traffic coming from the eight metro destinations, with the privatisation of 35 nonmetro airports the scenario would change very soon," the official said.

While IndiGo plans to acquire 180 Airbus aircraft, Jet Airways has an order book for 49 aircraft. Late last year, SpiceJet had signed a deal with Boeing to acquire 30 Boeing 737 at an estimated value of $2.7 billion.

The AAI has already disclosed plans to borrow Rs 900 crore this year and Rs 800 crore next year to fund the upgradation of the remaining 10 non-metro airports out of the total 35 such airports.

Last year, out of its total expenditure of Rs 2,700 crore, AAI spent Rs 1,200 crore on face-lifting of the non- metro airports.

The AAI had raised about Rs 550 crore last year through bank loans and guarantees but was not allowed to issue bonds by the finance ministry. "We will again try if the government could allow us to raise funds through bonds. If that is not happening then we may go for debentures," he said.

The AAI is also exploring funding from the World Bank. The AAI expects air traffic from non-metro airports to increase to 45 per cent of the total air traffic in the country in the next few years, up from 30 per cent now. It also sees a huge demand-supply mismatch in view of the few operators on the non- metro routes catering to a potential 30 crore passengers.

SpiceJet has plans to launch regional services from July this year. It will operate on 16 nonmetro routes with Chennai as one of its hubs. It would have at least three bases across the country for its operations to Tier- II and Tier- III cities.

Also, Indian airports across the country would witness further increase in manpower as domestic airlines have plans to hire large number of pilots and other staff for allied services.

Low-cost carriers like SpiceJet and IndiGo are planning to hire more than 2,000 people while Jet Airways will require over 300 pilots in the next three to five years. Aviation industry experts believe that the hiring spree will continue over the next few years on the back of robust growth in the number of domestic air passengers.

Courtesy: Mail Today 

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