Hyderabad: Raring to go

A jewel in the crown of India’s rapidly expanding airport system is rising on a Greenfield site, approximately 30 kilometres south of downtown Hyderabad. The new Rajiv Gandhi International Airport (RGIA), scheduled for operation in March 2008, is being developed by the GMR Group in a public-private partnership that also includes the State Government of Andhra Pradesh, the Airports Authority of India and Malaysia Airports Holdings Berhad. The shareholding pattern of this consortium (GHIAL) has 63% held by the GMR Group, 11% by Malaysia Airports Holdings Berhad and the remaining 26% is held equally between the State Government and Airports Authority of India, a Government of India body.

One of the primary drivers of the growth in the Indian aviation industry stems from the buoyancy in passenger traffic, witnessed in the metro cities like Mumbai, Delhi, Bangalore and also at Hyderabad. The existing airport, in the heart of the Hyderabad city, has witnessed a growth of over 40% in the last two years and 43% alone in 2006-07, as the graph below depicts, for both domestic and international passengers. A study, conducted by Lufthansa, on possible growth in passenger numbers over the next five years, also supports the optimism that the GMR group reflects in its pace to build this world-class international airport at Hyderabad. Presently over 20 airlines are connecting passengers to over 32 destinations, in India, the Middle East and the Far East. This number will keep increasing in the coming years.

Traffic Forecast

The consortium (GHIAL) has a 30-year plus 30-year renewable concession to finance, build, operate, maintain, and expand the new airport. This agreement allows GHIAL to operate commercial and non-aeronautical functions from the airport, besides ensuring that no new airport is allowed to be built within 150km (airspace) within the first 25 years of operations of the airport. Another important clause in the agreement is the closure of the existing city airport with the opening of the new airport for commercial operations in March 2008.

Designed from the start as a magnet for industry and an engine for regional economic development, RGIA’s 5,500 acres are being transformed into an airport city, complete with hotels, retail and convention and entertainment complexes. There are also provisions for industrial and business parks, logistics parks and recreation facilities.

Also of help to the consortium is the identification, by the State Government, of the Shamshabad area as the new epicentre for economic growth. This fuelled a major appreciation in the real estate prices around the region. When the project work started in 2003, the cost of one acre of land was hovering around $7500. That has since risen to around $500,000-$600,000 for the same piece of land.

Another notable feature is a specified authority, Hyderabad Airport Development Authority (HADA), set up by the government for the development of this zone and aimed at ensuring planned and organised growth of both the industrial and residential clusters.

Extensive surface transportation infrastructure improvements are occurring around RGIA and to Hyderabad City centre, to improve passenger connectivity and foster corridors and clusters of aviation-orientated businesses and industries that will form a greater Hyderabad ‘Aerotropolis’.

At its core is a world-class 24/7 aviation complex, aimed at delivering superior service standards (3.5 in the IATA Global Monitor) and operational efficiencies. RGIA has been devised with a strategy for incremental expansion of the airport’s infrastructure and facilities, without the need to rebuild the existing areas.

Key Offering to the Passengers

• Capacity to handle 12 million passengers by 2008 (Phase I)
• 40 million passengers in final phase
• Terminal Building area of 1 million sq feet including basement
• Peak hour capacity of 3200 Pax.
• Baggage handling system with in-line screening
• 4 Inclined Baggage carousels
• 46 Immigration counters
• 62 Check-in counters with CUTE and 16 with CUSS
• 30 Escalators and 32 Elevators
• Several international and domestic F&B/ Retail Concessions and sufficient office space

Key Offering to Airlines

• Code-F Facility: A-380 can operate
• Quick turnaround- Full length taxiway and rapid exit ways
• 42 aircraft parking stands including 12 passenger boarding bridges
• Fuel Hydrant Systems
• Modular Cargo Terminal with a initial capacity to handle 100,000 Metric tonnes/year

Hyderabad’s new gateway will have the longest runway in South Asia (4,260m) with code-F features, along with an equally long taxiway that could be used as an emergency runway and help to reduce queuing time for aircraft on the runway. The airport will boast 42 parking stands (12 will initially be equipped with boarding bridges) and the modular design of its cargo terminal ensures that it can be expanded to handle more than 100,000 metric tonnes of freight annually. Numerous other facilities, such as maintenance repair and overhaul (MRO), flight-kitchen operations and office spaces within the terminal are under development. A list of key concessionaires awarded so far is enumerated below.

Concessions awarded for airport operations:

• Cargo operation
• Menzies Plc, UK
• Flight kitchens
• LSG SkyChef, Germany
• SkyGourmet, India
• Duty free
• Nuance AG, Switzerland and ShoppersStop, India
• Fuel farm and hydrant operation
• Reliance Industries Ltd.
• Hotel operator
• Accor with Novotel Brand
• MRO
• Lufthansa Technik
• Indian Airlines
• Car park
• Tenaga Parking, Malaysia
• Ground handling
• Indian, Air India and SATs, Singapore
• Menzies, UK and Bobba Aviation
• Hospital
• Apollo Hospitals

Airport city evolution

Incorporating the key features towards the evolution of an airport city in the future, the passenger terminal will house 4,300 sqm of airside retail (3,000 sqm in international and 1,300 sqm in domestic) and 500 sqm of landside retail. The joint venture company of Nuance AG, Switzerland and ShoppersStop, India, will work towards giving a unique duty free shopping experience for passengers, with their walk-through concept, for the first time in India. In addition, there will be a 2,500 sqm landside ‘Airport Village’ where passengers and ‘meeters and greeters’ can shop and dine in an aesthetic Indian ambience. Business and luxury hotels, a convention centre and a retail mall will be located adjacent to the passenger terminal.

With 1,000 acres of airport land set aside for commercial development, GHIAL, headed by businessman GM Rao (GMR), is fully focused on finding ways to make the most efficient use of this asset and optimise the airport’s non-aeronautical revenues. It is currently seeking permission to establish a 250-acre Special Economic Zone (SEZ), to offer infrastructure for export-oriented manufacturing activities and the IT industry. Many other similar projects are on the drawing board.

Such commercial developments will impact on both the airport’s financial bottom line and its competitiveness, by providing the necessary revenues for future facility modernisation and by keeping airline costs down so that the airport is attractive to more carriers.

Development of an Aerotropolis

In addition to creating one of Asia’s leading passenger and cargo hubs, a pivotal objective of GHIAL is to attract investment to its surrounding areas, thereby serving as a driver of regional economic growth. Hyderabad has quickly become a hotbed for financial services, IT, pharmaceutical and other high-tech industries, yet congestion and rapidly inflating land prices in the city are worrisome. Since these industries are also intensive users of aviation and there is ample uncongested land in the adjoining airport region, special efforts are being made to create a greater Hyderabad aerotropolis, to house time-critical industries and boost their competitiveness.

Airport Master Plan

With the airport project being uniquely positioned between two highways, National Highway 7 towards Bangalore and the State Highway to Srisailam, the airport offers passengers two points of entry into the facility. The above picture depicts the airport master plan and the two entries from either side.

Also included, is the country’s longest elevated expressway of 11.6 km, from the city centre to the National Highway, to Bangalore leading into the airport. The State Government has also identified a number of high traffic density corridors and is working out an integrated plan to decongest them. This includes building flyovers, widening roads, traffic signal synchronisation and no-parking zones on congested lanes, among other measures. The airport operator is also planning to introduce Dedicated Airport Shuttle services from different points within the city, at reasonable fares, for easy commuting. This is as the government is stepping up the pressure to get the connectivity to the airport completed in time for commercial operations.

Another unique feature for passengers, being planned for the first time in India, is the City Check-in facility at two identified locations. For both of these locations, the consortium has identified land and started the process of working with the government to get clearances for offering this facility. Passengers can check in their luggage, collect their boarding cards, meet their friends or relatives and later take the dedicated airport shuttle, as is being done in major airports globally like KLIA.

In the medium-to-long term strategy, the consortium has mooted the idea of a dedicated rail link to the airport. The benefits of a direct train link will help passengers to reach the airport in 23 minutes, along with the other accrued advantages of reduced traffic congestion, lower consumption of fuel and improved standards of living. As a responsible airport developer, the GMR group has appointed the Delhi Metro Rail Corporation (DMRC) to do a feasibility study. Once the Detailed Project Report is prepared, it will be shared with the government to initiate a global tendering process for selecting the right vendor. The group will decide at that point in time, whether they should participate in the tender or not. The basic idea is to promote the concept of a dedicated rail link as is prevalent in large airports like Heathrow, Kuala Lumpur, Frankfurt, Hong Kong etc.

The key to this is the development of major airport access roads (‘aero-lanes’) and airport-area rail links (‘aero-trains’), to speed the movement of passengers and cargo between the airport and significant residential and commercial nodes.

The State of Andhra Pradesh (a GHIAL partner) is working diligently to secure clearances, rights of way and financing to provide this infrastructure, with considerable progress to date. In addition, the state government is building both an inner ring road and a large outer ring road, to create speedier connections to the airport from across the region.

In terms of construction progress, approximately 40% of the airport’s new elevated expressway is complete, with rapid progress being made. Construction of the 24 km first phase of the outer ring road is likewise brisk, with airport connectivity expected in early 2008. Work has already commenced on the 47km second phase of the outer ring road. Such surface transportation improvements will provide the new airport with excellent connectivity to Hyderabad’s 6.5 million residents, as well as opening up new tracts of land, accessible to the airport for business development.

This improved accessibility and the features of the new airport, have already begun to attract industry to its environs. India’s IT giants, INFOSYS and WIPRO, have been provided nearly 1,000 acres of land, adjacent to the new airport, for expansion of their operations.

In addition to these developments, the State Government is promoting a substantial number of high-tech clusters on the east side of the airport along the Hyderabad-Srisailam highway.
Among the most notable is FAB CITY, the semi-conductor manufacturing complex being developed by SEM India Ltd, in partnership with US-headquartered AMD and Singapore-headquartered Flextronics. The State of Andhra Pradesh has taken a minor stake in FAB CITY, which is being developed on a 1,200 acre site diagonally opposite the east side of the new airport.

Two other initiatives of the State, along the same airport corridor, are the Rajiv Gandhi Hardware Technology Park and a Nanotechnology Park.

There is little doubt that an aerotropolis is forming around Hyderabad’s new Rajiv Gandhi International Airport, despite the fact that its opening is still a year away. Once airport operations commence, it is likely that more and more aviation-orientated firms will cluster near RGIA and along its transportation corridors, giving explicit structure to Hyderabad’s emerging aerotropolis.

About the author

Mr. T Srinagesh, 49, is the Chief Operating Officer of GMR Hyderabad International Airport Ltd. He oversees the entire Business Development and Commercial function. He is a graduate from IIT Madras, specialising in Chemical Engineering and also has a PGDMA (MBA) from IIM Bangalore, specialising in finance. He has 25 yrs of experience, starting his career with the Indian Aluminium Company (Indal) as a Senior Process Engineer. His expertise lies in commercial and financial aspects of power and infrastructure development in the private sector and extends to concluding complex and structured transactions for such projects. A cheerful person with an excellent sense of humour he is a passionate trekker and is happily married with one daughter.