Delhi airport to have 4 runways

GMR draws up Rs 20,000 crore makeover plan.

The GMR-Fraport consortium, which has won the government's contract to modernise the Delhi airports, has drawn up a Rs 20,000-crore makeover plan to be implemented in the first 15 years.

This includes three all-new terminals, each capable of handling 35 million passengers a year. These will be integrated, handling domestic as well as international traffic.

According to details of the consortium's forthcoming master plan gathered by Business Standard, the first of the new terminals will come up in under three-and-a-half years from the date of signing of the operational management and development agreement with the government.

The existing terminal will then be used for other purposes, such as housing airlines' offices. The Delhi airport will eventually have four runways. A parallel runway will be constructed by the end of the second year itself to ease traffic congestion "" it is common for flights to circle for 25-30 minutes waiting for landing clearance "" against the mandatory requirement of a new runway by 2010.

In the first phase, to be executed by March 31, 2010, the consortium will have to make a mandatory capital investment of Rs 2,800 crore.

GMR-Fraport, which has named its consortium Gateway for Modern India, is likely to fund the project by a combination of 70 per cent debt and 30 per cent equity.

The average interest on debt across various businesses of GMR is about 11 per cent and the group will be hoping to raise more at similar cost.

According to analysts, that will give it a profit margin of 8-9 per cent even after sharing 46 per cent revenue with the government, as under the contract. This is worked out on the basis of the current level of the profitability of the Delhi airport, which earns an annual net profit of about Rs 135 crore on a turnover of about Rs 400 crore.

The equations will change once revenue jumps as the consortium expands non-aeronautical activities by developing retail and hospitality.

By the end of phase I in 2010, the non-aeronautical activities are projected to bring in 60 per cent of the airport's revenue, including cargo services, against only 30 per cent now.

In the airport venture, the GMR group will be the single largest shareholder with 46 per cent equity, followed by Airports Authority of India, which gets 26 per cent in lieu of the land it will provide.

Fraport and Malaysian Airports will have 10 per cent equity each, while India Development Fund will have 8 per cent. The private consortium has been awarded the lease for an initial period of 30 years, which can be extended by another 30.