Viability of new Terminal 3 at IGI Airport questioned

The swanky new Terminal 3 (T3) at the Indira Gandhi International Airport may have brought New Delhi onto the list of largest terminals in the world. However, how DIAL, the joint venture by GMR Infrastructure, Airports Authority of India, Fraport and Malaysian Airport Holdings, which had undertaken construction of the airport, will ring in the revenues especially in a recuperating global economy, remains to be seen.
“Airports are lumpy investments. Given the capex on the new terminal, Delhi airport is expected to break even in 2-3 years,” says Sidharath Kapur, CFO-Airports for GMR Group, adding that T3 is not an over-investment.
Air traffic has cautiously picked up from the earlier slump over the past six months. Being a regulated business, reasonable profitability would need to be ensured through tariff increases approved by the regulator and also through focus on non-aero revenues.
GMR is hoping the Delhi airport will see around 8% growth in traffic this year.
The Airport Economic Regulatory Authority (AERA) has asked global consultancy KPMG to review the project cost that has been submitted by DIAL. Amber Dubey, director at KPMG Advisory Services says that his firm will be scrutinising the increase in the cost from that of the masterplan. In December 2007, the project cost was estimated to be around Rs 9,000 crore. However, the final cost has been estimated to be upwards of Rs 12,000 crore.
27/06/10 Lisa Mary Thomson/Economic Times

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Categories: Airports Jun 2010