January 22, 2018 TnH Global

Airports Authority of India to raise funds to meet capital expenditure requirements

For the first time, Airports Authority of India (AAI) plans to raise funds through various means, including loans, to meet its capital expenditure needs in the next fiscal, a senior official said. The state-owned airports operator is preparing to develop more number of aerodromes in different parts of the country, including as part of the ambitious regional air connectivity scheme.

“AAI enjoys a very good credit rating and like any other organisation is planning to leverage debt and raise funds through loans, borrowings, debts…,” its Chairman Guruprasad Mohapatra.

He noted that efforts would also be made to raise funds by way of internal resources, budgetary support or grants from the central government to meet the capital expenditure requirements. However, he did not provide any estimate on the amount that is likely to be raised.

In 2016-17, AAI reported a 23 per cent jump in net profit to record Rs 3,115 crore. An official said capital expenditure is set to increase significantly from next financial year onwards as more projects are about to come. The capital expenditure is projected to be around Rs 4,100 crore for 2018-19 compared to Rs 2,500 crore for the current financial year, he added. According to him, AAI would start borrowing for the first time in 2018-19.

Among others, “airports/ terminal buildings” are likely to be ready at five places — Jharsuguda in Odisha, Tezu (Arunachal Pradesh), Calicut (Kerala), Gorakhpur (Uttar Pradesh) and Pakyong (Sikkim). Also, mega projects of new terminal buildings are to start at Guwahati, Leh, Patna, Trichy, Vijayawada, Jabalpur, Ahmedabad, Chennai, Srinagar, Pune, Lucknow, Mangalore, Dehradun and Jaipur, Mohapatra said.

The national airports operator also has a vital role in implementation of the regional connectivity scheme — UDAN (Ude Desh ka Aam Naagrik) — that seeks to connect unserved and under-served aerodromes. When asked about the impact of the scheme on AAI, Mohapatra said it would be a “win-win situation” in due course. Under the scheme, AAI is required to provide certain concessions to UDAN flights for a three-year period. These include exemption from paying landing and parking charges.

“This will impact AAI. However, as the operations increase, it will be a win-win situation for AAI as the RCS (Regional Connectivity Scheme) operations can transform the erstwhile non-operational/ underserved airports of AAI into profit making entities,” Mohapatra said.

He also noted that once the route develops over a period of time, then it would come out of the RCS ambit and “will definitely prove to be a source of revenue for AAI through collection of usual charges as at other airports”. A total of 128 routes connecting 70 airports were awarded in the first round of bidding under the RCS. In the second round, as many as 141 initial proposals have been received by the civil aviation ministry.