‘AAI is always there to provide the services required for business and general aviation’

V.P. Agrawal, Chairman, Airport Authority of India (AAI) says that factors responsible for financial problems of airlines are fuel price, airfare, capacity and route rationalisation. In the second instalment of the interview with SP’s AirBuz, the AAI Chairman lays out the plans and progress of various infrastructure projects undertaken by AAI.

SP’s AirBuz (SP’s): The existing Mumbai airport is expected to reach saturation very soon and the situation may become unmanageable if a new airport is not made available on time. What is the current status of the Greenfield airport project at Navi Mumbai?

V.P. Agrawal (Agrawal): Government of India has granted in-principle approval to the Government of Maharashtra for a Greenfield airport at Navi Mumbai. In turn, Government of Maharashtra has already appointed City and Industrial Development Corporation of Maharashtra Limited, to see that this project is taken to its logical end. Associated spade work such as land development by cutting on hills and filling, shifting of EHBT lines, water supply, power, etc, have since commenced in right earnest and are in progress. Environment and coastal zone clearances have been obtained. Detailed Project Report (DPR) and other bid documents are also being prepared by the promoters.

SP’s: While the revenue of the Airport authority of India (AAI) from Delhi International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL) alone has doubled in the last five years, most of the private airlines in India are in serious financial difficulty with even their survival in doubt. Has the AAI considered providing some respite to operators from high airport and other charges?

Agrawal: I could not agree with you more on the financial health of Indian carriers but I am afraid I cannot endorse your suggestion of respite by AAI. Permit me to dispel the perception that the charges levied by AAI are in any way contributing to the financial state of the airlines. Factors responsible for financial problems of airlines are fuel price, airfare, capacity and route rationalisation. Erratic behaviour of the rupee vis-à-vis the US dollar in the last six months has compounded the problem for airlines. The first three factors—fuel price, fares and capacity work in tandem but the rupee factor has now given an entirely new dimension to the problem. As is known, aviation turbine fuel (ATF) now accounts for nearly 50 per cent of the operating cost of Indian carriers for domestic operations. In the last one year, the rupee has depreciated more than 16 per cent against the US dollar. As airline business is largely dollar denominated in terms of aircraft purchase or lease and consumables, for every dollar spent, the airlines will have to earn more rupees in India where earnings are shrinking because of fares being below cost, over capacity, and rising fuel prices.

SP’s: What are the plans for and progress if any in the development of infrastructure for business and general aviation as also for operation of helicopters?

Agrawal: There are no separate infrastructure development plans for business or general aviation, as they operate out of the same airports. As regards helicopters, it is the prerogative of the Director General of Civil Aviation (DGCA) to regulate their operations. AAI is always there to provide the services required for types of operations.

Part 1 of this interview was published in SP’s Airbuz, April-May 2012 issue.
For the first part of the interview click http://spsairbuz.net/story.asp?Article=273