Realising the new Bangalore Airport

In order to keep pace with the rapid development of Bangalore as India’s leader in information technology, biotechnology and the services industry, the Government of Karnataka and the Airport Authority of India decided, in 1999, to call for international consortia to build, own and operate a new Greenfield international airport in Bangalore through an open bid.

Construction of the airport began on 2 July 2005 and will last, including the testing phase, 33 months. The new Bangalore International Airport is estimated to open for commercial operations on 2 April 2008. The current progress is very good and the construction is on track (see Panel 1).

It took almost a decade from the stage of land allocation and acquisition, to the signing of the shareholder agreements in January 2002 and finally the start of construction. In the time BIAL had to negotiate the legal framework (see Panel 2), the Government of India had already planned to privatise other airports. BIAL, being the first private airport, had to set the right precedents for the other private airports and therefore all agreements, like the concession agreement and the CNS ATM agreement, had to be finalised carefully.

The main observation during the formation of the legal framework was the unprecedented growth the aviation industry faced. India’s economy experienced a remarkable growth trend and analysts predict GDP growth rates of 6% to 10% p.a. for the next 10 to 15 years. Karnataka’s growth levels are seen as even slightly above the national level, mainly owing to the positive development of Bangalore as the Silicon Valley of India and also the strong growth of other sectors like pharmaceuticals and biotechnology. At the same time, the reform orientated Government of India liberalised the civil aviation sector by allowing domestic players to come up with more private airlines and sanctioning more foreign airlines to fly into India.

These two factors, growth of economy and civil aviation liberalisation, led to a significantly increased demand for air travel and resulted in high soaring traffic figures. BIAL now had to verify the airport capacity and take necessary steps to make the airport practical for years to come.

When the project was designed initially, BIAL had anticipated a traffic volume of approximately 5 million passengers in the first year of the operation. However, this figure was already reached by the time we started construction. The big challenge was to significantly increase the project, which was already under construction, without jeopardising the initial airport opening date. The redesign process, along with the formal approval, took more than 9 months and by the time the increased project was approved, half of the construction was complete. Despite this challenge, the project is well on track and will be ready for operation in April 2008.

The new airport will be able to handle 11 million passengers annually. The increased project consists of a terminal building with 8 passenger boarding bridges, 1 double arm aerobridge, 9 remote bus gates, a runway of 4000m in length with an efficient taxiway system, an apron with 42 Code C aircraft stands (including 8 contact stands) and an airside and landside road system. This includes sufficient parking space, as well as the necessary auxiliary buildings. The aviation fuel facility, cargo warehouses, flight catering kitchens and aircraft maintenance hangars will be built by selected service providers. This project will cost approximately Rs. 1930 crores, which is equivalent to approximately US $ 430 million. It will be financed by equity, debt and a state loan.

The Master Plan of the new Bangalore International Airport has been developed to fulfil the need for an operationally efficient and passenger friendly airport for Bangalore (see Panel 3). It ensures that the size and capacity of the airport facilities can be gradually expanded, based on the passenger and cargo growth. The land at our disposal allows us to develop the airport up to a capacity of approximately 50 million passengers a year. The Master Plan not only includes the provision of premium land for commercial real estate developments such as office parks, retail and entertainment, as well as hospitality, but also land reserve for a rail link to the city.

BIAL is committed to establishing the new Bangalore International Airport as one of India’s leading airports in terms of quality and efficiency and is looking to set a benchmark for the future commercial development of Indian airports.

Summary

Building a new private Greenfield airport in India is much more than a construction project. It means setting up an unprecedented legal framework, coping with huge time pressures and recruiting and training personnel from a large talent pool with limited experience in airport management. It also requires the selection of partners such as caterers, ground handlers and retailers, who are willing and able to provide service in accordance with the highest international standards.

The opening of Bangalore Airport will represent a new start in Indian Aviation with regard to the experience of the passenger on the ground (see Panel 4). Bangalore, being the Silicon Valley of India and probably the most modern and multicultural city in the country, shall have an airport that stands for the new modern and international India, proud of its culture and history, but part of the global economy.

BIAL envisage the airport, together with the real estate commercial development, to be a flourishing destination in itself. People will not only come here to take flights but also to relax, do business and shop. It will have business centres, tax-free shops, entertainment centres, a mall and office space etc. It will strengthen and foster the economic growth of the city and the state.

Panel 1: Current Progress

Construction overview

In August 2007 the new Bangalore Airport will have reached its 26th month. The total project is approximately 80% complete.

The Terminal building

Most works are now at various stages of completion. Completed works include the roof, the front and back glass façade and the side walls. Additionally, within the terminal building, the installation of the escalators, structural supports for the glass elevators, structural steel works for the retail and duty free concessionaires, structural works for the baggage handling (departure area) and the installation of the three carousel structural supports is complete.
Activities in progress include the granite flooring works, the granite cladding of the columns and various installations including boarding bridges, the fixed link bridge connecting the terminal building and the fire alarm detectors and light fittings.

Airside Works

The runway was completed in April 2007 and the airfield lighting cabling works are nearing completion. The paving works at the taxiway are now also complete. On the apron area, the laying of 381,000sqm of concrete is 52% complete. This includes the isolation bay.

Other buildings & infrastructure

At the Air Traffic Control tower, the structural works are completed. The top cabin aluminium frameworks are in progress and the cabin cladding works will now commence.

• The earthworks for the main access road are nearing completion. The construction of the underpass continues.
• At the car park, the base pavement layer is completed and the installation of the pavement blocks has commenced.
• The laying of the external water pipeline network is progressing well, with 25 out of 27km completed. The sewage line laying works are also nearing completion, while the installation of the pumps and other equipment in the sewage treatment plant continues.
• Nav-Aid (navigation aid) buildings: At the Radar Tx building, the roof slab concreting is nearing completion. The civil works for the DVOR building are completed. The finishing works in the two localiser buildings are in progress. The foundation work for the two non frangible glide path buildings is completed and the foundation work for the frangible glide path structure is also completed.

Partner selection

BIAL has completed the selection of all concessionaires including: Aviation Fuel Facility, Ground Handling, Cargo Facility, Flight Catering, Food & Beverage operations, Retail & Duty Free, Airport Hotel and Into-Plane Fuelling Service.

Airport opening preparedness

BIAL has completed the Airport Readiness Plan (ARP). This plan ensures that all primary and secondary core processes in an airport are set up and all agencies involved in the performance of these processes are established, trained and tested before the airport opening date.
Obtaining the relevant Airport licences is also a critical function for the airport to become operational. This requires creating manuals i.e. Security, Emergency and Maintenance, all of which are close to completion. In addition, the Safety Management System (SMS) manual has been completed and submitted to the Directorate General of Civil Aviation (DGCA) for approval. Based on the schedule, the licensing process, which involves certification of the above manuals by DGCA and the Bureau of Civil Aviation Security (BCAS), will begin at the end of September 2007.

Panel 2: The Legal Framework includes the following:

Concession agreement

The Government of India has granted the exclusive right and privilege to BIAL to carry out the development, design, financing, construction, operation and management of the airport for a period of thirty years from the airport opening date, with an option to extend the concession for another 30 years.

No new or existing airport will be permitted to operate as a domestic or international airport within 150 km. The Government of India, represented by the Ministry of Civil Aviation, is committed to equal treatment and non-discrimination of all international airports and to renew the bilateral agreement constantly.

The concession agreement recognises that BIAL may carry out any activity or business in connection with the handling of aircraft, passengers, baggage and cargo at the airport. BIAL may at any time grant the service provider rights to any party for the purpose of carrying out such activities on such terms and conditions as are reasonably appropriate.

Shareholders agreement

A shareholders agreement was signed between the Karnataka State Industrial Investment and Development Corporation Limited, the Airports Authority of India, Siemens Project Ventures, Unique Zurich Airport, Larsen and Toubro Limited and Bangalore International Airport Limited on 23 January 2002. The purpose was to develop an airport with private sector participation at Devanahalli, near Bangalore, in the state of Karnataka, as a greenfield project. The agreement specified the percentage of issued and paid up share capital of BIAL as well as its break up between the private and state promoters. Private promoters would hold 74% of the equity, while the state promoters would hold the remaining 26%.

Operation and management services agreement

An operation and management services agreement was executed between Unique Zurich and Bangalore International Airport Limited in April 2005. Under this agreement, Unique will provide, procure and coordinate the provision of operation, management and maintenance services to the new Bangalore International Airport. The aim will be to ensure that the new Bangalore International Airport is operated and managed as a world-class, state-of-the-art, international airport.

State support agreement

An agreement was signed between the Government of Karnataka and Bangalore International Airport Limited on 20 January 2005, wherein the former will provide financial support to improve the viability of the new airport project and enhance the bankability of the initial phase. In pursuance of this, the Government appointed agency, the Karnataka State Industrial Investment and Development Corporation, has provided the airport site to BIAL free from all encumbrances under the Land Lease Agreement. Also, a state support agreement of Rs. 350 crores would be made available by the Government of Karnataka to BIAL for the purpose of this project.

EPC agreement

An agreement was executed on 11 March 2005 between BIAL and the EPC contractors – Larsen and Toubro, Siemens Limited and Siemens AG, under which the latter will design, procure, construct and complete the new Bangalore International Airport project on a lump sum, turnkey basis.

Land lease agreement

A Land Lease Agreement was executed on 20 June 2005 between the Karnataka State Industrial Investment and Development Corporation (KSIIDC) and BIAL under which KSIIDC, the owner of the airport site of approximately 4000 acres, will lease it out to BIAL.

CNS/ATM agreement

A CNS/ATM agreement was signed in April 2005 between the Airports Authority of India (AAI) and BIAL under which the former is responsible for the provision of air traffic services.

Financing agreement

A common agreement was signed on 11 March 2005 between BIAL and ICICI Bank under which Rupee facilities to the tune of Rs. 735 crores would be provided by the latter towards the new Bangalore International Airport project.

Panel 3: The Master plan is envisioned as follows:

The BIAL Master plan has been developed to fulfil the need for an operationally efficient, passenger friendly airport.

Around the world, airports have been expanding their facilities to include retail outlets, office spaces and other commercial developments. Encompassing all of these non-aviation facilities and more, the new Bangalore International Airport aims to set a benchmark for the development of future airports in India.

The Master plan ensures that the size and capacity of the airport’s facilities are in line with the passenger traffic forecast and projected cargo growth. The facilities range from runways and taxiways to security and staff houses.

The Master plan is being prepared in line with current ICAO standards and recommendations, IATA guidelines and AAI requirements.

The additional phases will incorporate more facilities, which will be developed based on projected passenger traffic forecast and growth requirements.

Panel 4: New start in Indian aviation/unique features of the new Bangalore airport

1. Passenger transfer under one roof
2. Star hotel just opposite the terminal building
3. Short ways
4. Common use of check-in counters
5. Swing gates
6. 5 level in-line baggage screening
7. Optimal security equipment (8+5+4)
8. State of the art IT infrastructure
9. AOCC (to aid in collaborative decision making)
10. Creating a competitive environment (selection/conditions for concessionaire)
11. Open fuel access

Note: Bangalore International Airport Limited (BIAL) is a Public Limited company under the Indian Companies Act, formed to build, own and operate the first Greenfield private sector-owned and operated airport in India – the Bangalore International Airport. Private promoters hold a 74% stake in BIAL while the government holds the remaining 26%. The site of the future airport covers an area of approximately 4000 acres. It is situated at the Highway NH7, 35 km from the business district of the city.