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ePaper created 2017-02-14, 09:48:07 | version 1.33.0
aVIaTION 9 A game changer in the offing, Government allows commercial usage of land under aai In a major development in the union budget 2017, the government has allowed vast tracts of land held by the airport authority of India to be used for commercial purposes. The decision will have major financial implications for airports, especially in tier-2 and tier-3 cities, making them more viable to operate, eventually giving a much needed booster shot to regional connectivity. have a positive trickle-down effect in making flying cheaper. Involvement of private sector in airports will make airports more profitable by bringing efficiency gains. Also, the move is set to create a heathy competition amongst the different modes of transport as it is set to effectively reduce the travel time between short distances as well as windfall gains for real estate developers. Significantly, as part of AAI’s larger efforts to increase non-aero revenues, the authority had been focussing on the monetisation of its lands for a while as was announced by the AAI chairman Guruprasad Mohapatra, last year itself. The emphasis has been laid on inviting private players for operation and maintenance of airports at tier-2 cities. This same has already been taking place in the form of inviting bids for O&M contracts for Jaipur and Ahmedabad airports. The move is aimed at enhancing the capacities of tier-2 city airports as well as generating new resources for building airports in tier-3 cities. Allowing business activities on the land around airports in smaller cities is a move targeted to attract more takers for establishing these activities. There are around 44 potential airports that can be developed, as per the Federation of Indian This proposal has the potential of being a game changer for development of airports in the country regional connectivity. specifically for available new It is set to unleash a lot of un-utilised assets and make sources of revenue for development of airports. handling rates at airports as well as development of new airports will now be cheaper by getting subsidised through commercial exploitation. It will immensely benefit the aviation industry as a whole. ,, Ceo-CorporAte, Airports seCtor, Gmr GroUp P.S. nAIr By AnAgAt ChoudhAry The Union Budget 2017-18 has proposed allowing the Airports Authority of India (AAI) to use its lands for commercial purposes. AAI has been undertaking airport infrastructure upgradation projects for the last couple of years with the involvement of the private sector under the PPP model. However, the interest of the private sector in these projects has been limited to the major airports. AAI owns around 55,000 hectares of land in urban areas across the country. Under the previously existing norms, this airport land could only be used for aviation and airport related activities like parking facilities. As per senior officials, AAI, which is a functionary of the aviation ministry, had already applied for relaxation in the land usage norms upon being requested by the concerned private parties in 2010. Not allowing commercial development of non-aeronautical activities made these projects unviable as some of these airports tend to receive very low footfall and hence were of little interest to the private sector. Notably, the total revenue for airports globally from non-aero activities constitutes almost 40% of the total revenue whereas in AAI’s case the figure stands at just 20%. As per sources, this amendment to the AAI act is just a predecessor for inclusion of terminal buildings of airports closed for passenger flights. In accordance with the latest proposal, AAI is set to start monetising up to 10% of the near about 55,000 acres of land held by it. During the budget presentation, Finance Minister Arun Jaitley had said “The Airports Authority of India Act will be amended to enable effective monetisation of land assets.” Civil Aviation Minister Ashok Gajapathi Raju has said that AAI could monetize around 2000-3000 acres of land belonging to it and utilise the funds for the development of airport infrastructure. Raju also said that the increase in non-aero revenue would help reduce aeronautical charges on airlines which would help them in bringing down their operational cost and hence eventually AAI owns around 55,000 hectares of land in urban areas across the country. Under the previously existing norms, airport land could only be used for aviation and airport related activities. Chambers of Commerce and Industry. This entire project is a part of the more ambitious government venture to connect airports in remote areas under the Regional Connectivity Scheme, UDAAN, which seeks to improve the connectivity within various parts of the country as well as putting a cap on small distance airfares. The proposal however, will not impact private airport operators like GMR and GVK group operating in the country as they are bound by the original Operations Management and Development Agreement, through which the commercial development of five and ten percent of the total lands in Delhi and Mumbai respectively, may be used for commercial activities. The move in fact is expected to help them improve their valuations as both the groups have previously indicated they would like to sell stakes to reduce debt. Although, some experts still Lufthansa’s first A350-900 deployed on its Delhi-Munich route, a first for India Adding more weight to its presence in India, in a first, Lufthansa recently initiated commercial services of the A350-900 on its Munich to Delhi route, connecting the capital to Lufthansa’s vast global network. The Lufthansa A350-900 landed in the early hours of February 11 from Munich and was greeted with the celebratory water canon salute at Delhi’s Indira Gandhi International Airport. Delhi becomes the first destination "The launch of Lufthansa worldwide to welcome Lufthansa’s most modern and environmentally friendly long haul aircraft, the A350-900. A350 services in Delhi marks an important milestone in our growing partnership with India. This game-changing aircraft reflects the values of the new global Indian, and reaffirms our commitment to this important market by introducing the very best and latest in air travel,” said Wolfgang Will, Senior Director South Asia, Lufthansa Passenger Airlines. As a special gesture for customers, the departure of Lufthansa’s A350-900 from Delhi was commemorated with a grand ribbon and cake cutting ceremony. Passengers boarding the flight were greeted with a ‘First Flyer’ certificate and an iPad cover, specially handcrafted by economically disadvantaged women of Purkal Stree Shakti Samiti. Additionally, an ‘insta photo booth’ was created at the departure terminal that allowed passengers to capture moments of their journey with Lufthansa’s A350-900. The aircraft offers Lufthansa’s most modern on-board product, assuring passengers the highest level of comfort in all travel classes, with a wider cabin, self-service area in Business Class, new seats in Economy Class, bigger windows, large TV screens, innovative mood lighting, personalized playlist and much more. claim that even though the move maybe a step in the right direction for the aviation industry, it remains to be seen whether private players will be willing to express interest in such projects. As per a former AAI chairman, “If all the land at an airport is converted to commercial land then future accusation of land for airports could become a big financial issue.” A former senior official of the Ministry of Civil Aviation added that monetisation of land by the AAI was an old practice by means of leasing the land out on a consideration of land rent or revenue share. In-fact it was this same practice that allowed the Centaur hotel to come up at Mumbai airport. P. S. Nair, CEO-Corporate, Airports Sector, GMR Group, speaking exclusively to TourismFirst said, “This proposal has the potential of being a game changer for development of airports in the country specifically for regional connectivity. It is set to unleash a lot of un-utilised assets and make available new sources of revenue for development of airports. Handling rates at airports as well as development of new airports will now be cheaper by getting subsidised through commercial exploitation. It will immensely benefit the aviation industry as a whole.” He further added “The existing agreements that GMR has with the various airports do not have any retrospective effect. We already have agreements in place which are not likely to get impacted by this proposal. We will have to wait and see how the AAI will handle the tenders that has been released for the Jaipur and Ahmedabad. The in-built clauses will have to be scrutinised more closely for us to get a better idea of the same. If there is an opportunity for us to get involved in the larger development of airports, we will be very actively pursuing the same. This is a very big opportunity for us to get in to the development of airports. We are looking forward to such opportunities and are eagerly waiting for the situation to pan out.”