GMR to copy Memphis airport model to increase non-aero revenues

The volatility in aviation turbine fuel (ATR) has triggered GMR Hyderabad International Airport (GHIAL) to change gear from aero to non-aero operations.

Currently, revenues from aero operations contribute to three quarters of us total revenues. The rest comes turn non-aero operations. GHAIL is looking at reversing this ratio to offset the turbulence in global ATF prices. It is trying to emulate best practices adopted by some of the leading international airports in the world such as Memphis airport, which get a large chunk of their revenues from non-aero operations.

As part of its new strategy, the airport is exploring a tie-up with Agriculture and Processed Food Export Development Agency (APEDA) and freighter companies to enhance revenues from this segment according to a senior official in GMR.

“Our teams have gone to Memphis airport In the US, the global cargo centre, to study the cargo operation models. They will submit a detailed report after studying other airports in the US and Europe in the coming three months. We will rope in a consultant to design a plan to take the idea forward,” he said. With the presence of Federal Exchange and the largest cornea bank in the world, Memphis airport is the nerve centre of cargo operations across the world. For instance, 5,000 faulty laptops are brought to Memphis each day and airlifted overnight after repair at the airport. The GHIAL is exploring such a model here.
The airport will also open a separate website to facilitate banking transactions and cargo operations online. The Greenfield airport in Hyderabad has seen a drastic dip in air transport movements (ATM5) during the last few months due to the volatility in prices of aviation turbine fuel (ATF).

The airport had 260 to 270 ATMs a day in Jun-08. This has dropped to 210-220 in August, leading to a dip of 50 ATMs a day. Several airlines planning to start new trips have also defined their plans. “British Air for instance, has postponed new trips from Hyderabad from October to December this year said a GMR official

‘According to him, the airport expects a 15% increase in passenger traffic this year against 35% last year “ATF sale volumes have also come down from 800-850 kilo liters a day to 500 kilo liters a day in August” he said. Although the state-owned oil marketing companies cut ATF prices by over 16% on Sunday, this may not translate into cheaper airfares. The airport currently records eight million passengers a year and it is forecast to reach l2 million by20l0.

(c) Centre for Asia Pacific Aviation.