KOCHI, 31 March 2007 — The Cochin International Airport Limited (CIAL) plans to convert 1,300 acres of undeveloped land surrounding the airport into India’s first “airport city” that will include hotels, shopping malls and a golf course. Approximately 10,000 non-resident Indians have invested in the CIAL.
The 67th meeting of the CIAL’s board of directors approved the 2007-2008 budget of Rs.1.25 billion ($28.7 million). The entire project envisages investment worth Rs. 50 billion ($1.1 billion) over the next eight years, CIAL’s Managing Director S. Bharath said. Air passenger traffic is expected to grow from 1.8 million to 2.4 million per year.
“This includes budgeted spending by the company on both the capital and revenue expenditure,” Bharath said.
CIAL officials said the major projects for this fiscal period include the construction of an information technology zone, a golf course and a country club, expansion of the airport road, a new international-terminal project to accommodate 2.4 million passengers per year, a cargo hub for perishable agricultural products and the new parallel taxi track. The cargo hub will help facilitate export of Kerala’s harvested products, including seafood and poultry, especially to the Arabian Gulf market.
The board authorized the managing director to appoint a consultant to make the final master plan of the technology park, which will reserve space for CIAL investors. Bids will also be accepted for the golf-course contract.
Board members say that the commissioning of the parallel taxi track would help decongestion of the runway and enable its maximum utilization, generating more revenues for CIAL. The improvements to the Indian state’s transportation hub is a move to lure more carriers to operate flights from Cochin, which will provide a link from European and US destinations.
CIAL decided, however, to back away from a much-trumpeted proposal to get into the airline business. The board agreed that Air Kerala International Services Limited would alter its Memorandum of Association following New Delhi’s decision not to give the CIAL subsidiary permission to fly out before fulfilling conditions on fleet size and domestic flying experience.
Former Chief Minister Oommen Chandy included the budget airline on his list of priorities and had asked federal aviation authorities to waive the 20-aircraft minimum and other requirements.
Critics of Air-India and airline regulators have said that the fares are artificially high because India’s two dominant carriers — Air-India and Indian Airlines — have no competition in this lucrative NRI market and that the requirements to get into the market are too restrictive. (The government had given Air-India Express — a subsidiary of the Indian giant — similar wavers.) Chandy said he was hopeful that intense federal lobbying efforts would bear fruit since the state government controls the company as the single largest stakeholder.
Earlier this month, Aviation Minister Praful Patel told Parliament that Kerala’s request was not being considered and the Gulf routes are “presently reserved only for the Air-India and Indian Airlines”. State government officials have also scaled back their lobbying efforts.
“The issue of starting an airline service can be reviewed later,” said Bharath. “In the meantime, (the CIAL subsidiary) can start charter helicopter services linking tourist destinations like Thekkady, Munnar, Kumarakom, Kovalam, Shabarimala and Guruvayoor.”
Bharath said the new company could also start dedicated cargo freighter services “as this would not attract any restriction from the Ministry of Civil Aviation.”
The CIAL board has now authorized the managing director to explore the possibility of undertaking similar activities and place a detailed proposal before the board at the next meeting.
The board also decided to appoint a consultant to conduct a detailed analysis of the ground-handling capacity and to recommend a suitable business model by the time the agreement with Air-India expires in two years. The company plans to take over ground operations from Air-India, which earns some 450 million rupees ($10.3 million) a year from the operation. With the increasing air traffic movements, the revenue from ground handling is expected to go up substantially and contribute to the CIAL’s growth.
The board has also decided to appoint a reputed human-resources consultant to revamp the existing company policies and to study and submit necessary proposals on various employee-related issues. It agreed to co-opt Chief Secretary Lissie Jacob as the ex-officio director on the CIAL board.
The airport has registered impressive revenue from its duty-free business, thanks to an aggressive promotional campaign. It now contributes 25 percent of the airport’s total revenue, Bharath said.
Run jointly by the CIAL and Alpha Kreol India, the Indian arm of multinational Alpha UK and UAE-based Kreol Group, it claims the lowest duty-free prices in the Asia/Middle East region.
“Passengers arriving at Indian airports were typically used to a dull, dreary airport with the sleepy duty-free shop relegated to one corner of the airport. Now, that’s a thing of past. You’ll be amazed at the transformation,” Bharath said.
The duty-free section extends over 14,000 square feet at the arrival area. The operation registered an annual average growth of 50 percent in sales since its launch eight years ago.
“It’s so much more convenient for travelers to make purchases at the landing destination and avoid the inconvenience of carrying it, especially during long-haul flights. It also minimizes the risk of damage,” said Bharath. Cochin airport is India’s fourth-busiest airport and is expected to fuel the retail growth further.
“It demands a corresponding increase in passenger amenities. The increasing number of low-cost airlines preferring Cochin has also enhanced duty-free sales and several new projects and initiatives within the airport also augur well for Cochin,” Bharath added.
Bharath also said Jazeera Airways, the Middle East’s first private scheduled airline, had maintained an on-time performance of 93 percent throughout 2006. A number of airlines, including Saudi Arabian Airlines, Oman Airways, Emirates, Qatar Airways, Gulf Air, Air Arabia, Silk Air, Kuwait Airways, Srilankan and Mahan Air now fly to Cochin.
So far 18 projects have been cleared for takeoff, including an aviation academy and aircraft maintenance hangar unit.
CIAL, the first airport outside the ambit of the Airports Authority of India, was formed as public limited company with equity participation from the Kerala government, financial institutions and NRIs, a majority of whom are Keralites based in the Middle East. The state government holds a 26 percent stake in CIAL.
Traffic at the airport has also picked up tremendously from 76 flights per week in 1999 when it was inaugurated to more than 315 flights of 11 domestic and 14 international airlines every week. British Airways is expected to be the next international airline to touch down here before the end of the current fiscal year.