Bangalore has the distinction of being the first city in India to conceive and sign-up a private consortium for building an airport. It is another matter that Hyderabad gained from our and the BIAL consortium's efforts and path breaking experiences, and pipped us to the "airport opening" finish line.

However, our inexperience with Public Private Partnerships (PPP) is now coming home to roost. As a nation, as a state, as a city, and even as individuals, we did not realise we were signing away our freedoms!!!! Freedom from monopoly, freedom from land-grabs, freedom from inadequate infrastructure, freedom of flexibility, freedom of competition, freedom from exorbitant charges and fees.

I am writing this blog entry while on a visit to Penang in Malaysia. This "small to medium sized" airport has a capacity of 5 million passengers with 8 aero bridge equipped gates. BIAL plans to handle 14~15 million passengers with the same number of 8 aero bridge gates.

I next head to the best airport in the world -- Singapore Changi airport. Herein lies the loss of our next freedom - land grab. Changi airport, with only 3,212 acres is already handling 35 million passengers per year, and has capacity for over 69 million passengers with a constructed passenger terminal area of over 1 million sq. meters. By comparison BIAL received 4,000 acres, for a terminal of 71,000 sq. meters and a passenger capacity of 11 million passengers. If we scale the BIAL terminal to six times its size to reach the same 69 million passengers, BIAL will still have less than 45% of Changi's already built terminal area, for the same number of passengers with 125% of the land area. So why the extra land ? Incidentally, Changi is already in progress on a Terminal 4.

More importantly, Changi airport was given only 1,062 acres. It re-claimed its balance 2,150 acres from the sea at its cost. BIAL has been "sold" 4,000 acres at a paltry Rs. 5 lakhs per acre, which is today, "guidance" valued at Rs. 200 lakhs per acre. BIAL knows it is sitting on a gold mine. It will be the blunder of the century for BIAL to ever abandon its agreement, even if the government decides to keep HAL open. So why is the Government hesitant to perform its obligations to its citizens in preference to its obligations under the contract ?

The primary motivation of inviting private sector participation in the new airport was to improve competitiveness, productivity and efficiency, and to deliver better services, at competitive prices, while using lesser resources. Instead we, airport users and airlines, are facing higher charges, inconvenient transport, unavailable infrastructure, and a company that practices the strangling of all competition in every domain connected to the airport.

Many industry pundits claim that BIAL has not followed an open, free and fair bidding system when selecting contractors to provide various functions at the airport. I give BIAL the benefit of doubt. BIAL representatives repeatedly claim, that BIAL has selected at least two vendors for every operation, in order to ensure competition and therefore best service at the lowest possible price. Yet, when it comes to BIAL itself, the consortium is fighting tooth and nail, and sparing no expense, to eliminate competition, by forcing the closure of HAL airport.

The Governments of India and Karnataka may be ruing the day they signed on the concession agreement with BIAL. They have accepted a concession which has not provided for any form of competitive environment in this critical infrastructure sector. They have imposed on Bangalore a private consortium that is acting like the monopolies of old, one that will dominate and even strangle our economy by preventing competition. A recent parliamentary report on the airport issue in Bangalore and Hyderabad noted that “profit maximization seems to be the most primary motive”. People at the airport, are terrified of speaking in public, lest the offend the leadership of BIAL, and invite their immediate wrath and terrible retribution. The truth is being suppressed.

When it commenced operations way back in July 1981, like all other airports globally, Changi airport derived 60% of its revenue from aeronautical operations like passenger fees, landing and parking fees etc. 40% was from non-aeronautical like duty free shopping, etc. Today, Changi is following the global trend, and deriving 60% from non aeronautical sources, thus reducing passenger and airline fees to the 2nd lowest in the region. BIAL has dedicated over 300 acres towards an "aerotropolis", but is delaying the construction so that it can earn its revenues from us, airport users and airlines, first, and then "maximise profits" by earning more from the aerotrolpolis.

I have been monitoring the Bangalore aviation scene for over 15 years now, with a close focus on air cargo. The average citizen of Bangalore, has very little appreciation on the vital role of air cargo in our daily lives. From fruits to flowers, from car parts to computers to cell phones, over 50% of Bangalore's GDP is transported by air -- Rs. 50,000 Crore or US$10 Billion. The Indian Customs authorities collect almost Rs. 3,000 Crore per year in customs duties, despite the fact that Bangalore is the technological hub of India, with many importers enjoying "duty exempt" status. Globally, less than 6% of a product's cost is spent on logistics. In India it is over 15%. Given rampant inflation today, who amongst us would not like to see a reduction of 9% in our expenses ?

BIAL management has conveniently, completely "overlooked" the air cargo operations of Bengaluru International Airport. BIAL was to commence operations with two warehouses and a measly 300,000 tonnes per year capacity. Even this target is not achieved. One warehouse is up, the other is not. More importantly, there are no provisions for the Customs officers, and some last minute "accommodations" are being made. A Customs authority already stretched thin on manpower is now forced to operate from HAL airport in parallel to BIAL. There is no cargo village for Customs and Cargo agents' offices, and it will be 1.5~2 years before any permanent establishment is created. By comparison, Changi airport has 4 Cargo Agents "Megaplexes" which have a capacity of 3 million tonnes per year, and 180,000 tonnes in courier/express cargo. Even the small Penang airport, that I am writing this blog from, has a capacity of 360,000 tons. Right next to the airport is the Bayan Lepas semiconductor complex, home to all the major IC manufacturers. Shut Penang airport down, and world production of electronic goods will grind to a halt.

Industry in Bangalore is being denied the Freedom of flexibility and competition, and ultimately it is we Bangaloreans who will suffer as our city's economy is slowly strangled. Will Prime Minister Dr. Manmohan Singh's statement "If Bangalore fails, India fails" come true ?

Consumers in Bangalore should take initiative and highlight the anti-competitive situation in the aviation sector, to the Competition Commission in India. While at it, we should force the quick adoption of the Airports Regulatory Authority Bill, drafted back in September 2007, which calls for the creating of a competitive regulatory authority.

In The Times of India, Bangalore, on Tuesday, March 25, 2007, page 22 featured an article by Mr. Albert Brunner, CEO of BIAL.

The editors of the paper issued a challenge at the end of the article to counter the arguments of Mr. Brunner.

Accepting the challenge, I put forth my arguments to debunk certain myths created by BIAL and sent it in to the editors on March 26, 2008.

For some reason, the editors, who published Mr. Brunner's viewpoint immediately, have not yet published my arguments, more than 1 week after submission. I find it hard to believe that The Times of India is promoting a one-sided view ?

Depending on which stake holder of the the Bengaluru International Airport Limited (BIAL) consortium you listen to, the capacity of the new BIA airport is 9 million passengers (as per Airports Authority of India) to 12 million passengers (Mr. Albert Brunner).

However, no one has claimed a capacity of over 12 million passengers. At best, we are informed, that the terminal has a modular design and can be expanded as and when required.

We know from news reports, and BIAL's own reports, that 448 flights per day are planned for the summer schedule (effective March 31, 2008), up from the current 320~330 flights at the HAL airport. This represents a growth of 35.75% on airport opening day. We also know from current AAI records that the 330 flights per day at HAL airport is resulting in 10.5 million passengers per year. Simple extrapolation shows that the 448 flights will result in 14.25 million passengers from the airport opening day itself.

So my question to Mr. Brunner and all the stakeholders of BIAL (Siemens, L&T, Zurich Airport, AAI and KSIIDC) is where do you plan to put the additional 2.25 million passengers ? Surely BIAL does not have any means of expanding a terminal overnight.

Bangalore airport delay: Carriers' expansion plans hit air pocket
Anirban Chowdhury / New Delhi March 31, 2008

http://www.business-standard.com/common/news_article.php?leftnm=3&subLeft=1&chklogin=N&autono=318466&tab=r

The one-month delay in the opening of the new greenfield airport in Bangalore may affect the expansion plans of over a dozen-odd international as well as domestic and cargo carriers who were planning to introduce additional flights from the city.

While the opening of the new airport has got delayed, the existing airport has refused to allow any additional flights due to capacity constraints.

According to executives at Bengaluru International Airport Ltd (BIAL) - the operator of the Bangalore international airport - the delay will force the carriers to operate new flights after one month of the summer season is over, leading to potential loss of revenue.

The main carriers that are expected to be hit are Air Mauritius, Tiger Airways, Oman Air, Dragon Air, Thai Airways, domestic carriers like Kingfisher and Simplifly Deccan, and cargo carriers QuikJet and Jett8.

According to estimates, nearly 100 additional planned weekly flights (domestic and international) may also be hit.

The new airport will commence operations from May 11. "We have said that due to capacity constraints at the existing airport, no new flights can be operated from here. We will, therefore, continue to handle the same number of flights as we did in the winter months," said an AAI (Airports Authority of India) official.

"From the point of view of the airport and these airlines, there is definitely a loss of revenue. The planned flights would have led to an increase in the number of flights by 30 per cent," said a BIAL executive.

"More than the domestic carriers, the decision will hit the plans of international airlines, which have to plan their summer schedules well in advance in accordance with their global network," said an industry expert.

Four international airlines -Air Mauritius, Tiger Airways, Oman Air and Dragon Air - were planning to start their first Bangalore flights from the new airport. According to BIAL figures, airlines like Emirates, Thai Airways and Malaysian Airlines, which already operate from Bangalore, had also sought permission to start new flights.

"Dragon Air was supposed to start its maiden Bangalore-Hong Kong flight from May 1 but we had to defer it to May 24 due to the delay at the old airport," said Tom Wright, general manager (India), Cathay Pacific, which owns Dragon Air.

Domestic airlines Kingfisher and Simplifly Deccan had also applied for new slots for their domestic and international flights. Domestic airlines had requested for a 25 per cent increase in slots from around 1,084 flights a week to around 1,355 flights. Cargo airlines like Quikjet and Jett8 were also looking at starting flights from Bangalore.

"Our international flights from Bangalore to San Francisco and Hong Kong will not be hampered since we are starting from August, but we will have to re-adjust our new domestic flights out of Bangalore," said Hitesh Patel, vice-president, Kingfisher Airlines.

Kingfisher's plan to start a Bangalore-Nagpur-Indore flight this summer will have to be deferred, according to sources.

"We were going to deploy six aircraft in Bangalore but we have only been able to deploy five. But since we are going ahead with our increase in flights with these five aircraft, this will put a pressure on our fleet," said a Simplifly Deccan executive.

Airport opening hits air pocket
30 Mar 2008, 0517 hrs IST, Anshul Dhamija, TNN

BANGALORE: Polls could be the spoiler this time. As the Bengaluru International Airport at Devanahalli dresses itself up for the revised inauguration date of May 11, uncertainty hangs threateningly low. With assembly elections likely to be held in May, the code of conduct for political parties could kick in anytime soon, either delaying the airport inauguration or stripping the event of its pomp.

According to top civil aviation ministry officials, under the electoral code of conduct, BIA would be allowed to have an informal opening minus the gala function. This clearly forbids any politician from participating in the inauguration. Top Karnataka government officials confirmed this. Senior BIAL officials told STOI the assessment of whether there's to be a function or not will be based on the "collective decision" taken by BIAL and the civil aviation ministry.

Now comes the question: will the Rs 2,500-crore greenfield airport open on May 11? Not likely. The airport may take off only after the elections are over. A delay of two months is no big surprise.

The run-up to the opening of Hyderabad airport, which shared a symbiotic construction relationship with the Bangalore one, saw a lot of fanfare. A similar gala event in Bangalore is, therefore, only to be expected. Both BIA and Hyderabad airport are the first mega greenfield international airports developed under public-private partnership. Sources said all eyes are now on the whip that will be issued from New Delhi. Sources close to top BIAL officials said the senior management of the new airport has resigned to the fact that the opening date depends entirely on political compulsions and pressures.

STOI had earlier reported that the Centre's directive of asking the BIA to choose an opening date post May 10 would directly coincide with assembly poll calendar. Any further postponement would give the governor's cabinet, which's holding the administrative reins in the power vacuum that prevails now, ample time to finetune the infrastructure apparatus.

Poor connectivity and high costs that people would have to endure with the opening of the new airport seem to have put political parties, especially the Congress, on the backfoot. Sources said the Congress high command is cued into the developments and is in touch with the civil aviation minister.

Even in Hyderabad, a political game was played out in the airport opening. The scheduled opening date - April 16 - was pushed to April 22 expecting Parliament to go into recess. With this, the government steered clear of Left or the opposition barbs.