Road to growth passes through airstrips

The $4 billion OP Jindal Group had been busy setting up a five-star hotel in Vidyanagar in Karnataka. But, it soon realised that it would need infrastructure to bring in tourists to the nearby heritage destination of Hampi.

Soon after, the Jindals opened its private airstrip for commercial operations. The decision proved a big success. Budget carrier Air Deccan now operates daily flights connecting Bangalore and Goa to Vidyanagar. Full-service carrier Kingfisher Airlines has also shown an interest in operating flights from Vidyanagar to Mumbai and Hubli.

This connectivity would mean a lot to the Jindal's business too. The group's steel plant near Vidyanagar is rapidly expanding and by 2010 it will become one of the country's largest integrated producer.

This in turn will promote rapid industrialisation of the entire area. "An airport will definitely boost tourism and economic development of the entire region," a Jindal executive said.

Like Jindal, several Indian companies are looking at upgrading airstrips to improve access to industrial projects. For instance, the Tata Group is keen to develop its airstrip at Jamshedpur, where Tata Steel's plant is located to accommodate larger aircraft. Reliance Industries, GMR Group and GVK Group have also joined the race.

Reliance Industries is looking at airstrips at its special economic zone in Haryana and some cities in Gujarat, where most of its business is situated. Airlines like Air Deccan are also exploring the business prospects of airstrip development.

For instance, it is in talks with Tata Steel to explore the possibilities of a daily flight from Jamshedpur to Kolkata. And the Andhra Pradesh government has also moved in""it is ready to upgrade airstrips in small towns and cities in a joint venture with private parties if airlines want to start services.

The Ministry of Civil Aviation (MoCA) is also planning to develop these airstrips and is expected to hold a high-level meeting with state governments for public- private participation. It is also encouraging companies to develop their own private airstrips and airport.

"Since airstrips enable regional connectivity, the government may give airstrips in blocks for development to private parties as it may not be feasible to run a single airstrip. It may also extend viability gap funding to support these projects," says a government official.

Viability gap funding is a subsidy provided by the government to cover the cost of developing infrastructure.

MoCA is also looking at setting up greenfield airstrips to be developed by private players built on privately-owned land.

"Airstrips are basically roads with more strength to handle aircraft. The maximum investment required for an airstrip, including night landing facilities, would only cost Rs 20 crore. With assured air connectivity, the developer can go for IT parks or other hospitality ventures around the airport as real estate prices would be lower when compared to the major cities," Air Deccan, managing director, G R Gopinath points out.