Smooth Take-Off: Fourth international airport opens in Kerala

Fourth international airport opens in Kerala

The commissioning of Kannur airport has made Kerala the only state in the country to have four international airports. The inaugural flight to Abu Dhabi was flagged off on December 9, 2018. Developed on a public-private partnership (PPP) basis, the airport is expected to handle 1.47 million international passengers and 0.14 million domestic passengers annually. Notably, Kannur is the second airport in which the state government has a stake. It is also the second greenfield airport in Kerala. The airport is envisaged to be carbon neutral and focus completely on green energy use.

Project genesis

In 2017-18, the Cochin, Calicut and Thiruvananthapuram airports handled about 17.7 million passengers per annum, recording a two-fold increase in traffic since 2010-11. This feverish growth in traffic called for the development of an additional airport in the state. Based on the demand for air connectivity from the north Malabar region, the Kerala government conceived the development of the Kannur international airport at Mattannur in Kannur district of the region. Besides being the fourth international airport, it is the second greenfield airport in the state after Calicut airport to be built on a PPP basis. First proposed in 1997, the airport faced several hurdles in obtaining clearances and acquisition of land. In December 2008, the central government approved its development on a PPP basis and appointed the Kerala Industrial Infrastructure Development Corporation (KINFRA) as the nodal agency. Later, in October 2009, a special purpose vehicle – Kannur International Airport Limited (KIAL) – was incorporated for its execution. After almost three years, the project secured environmental clearance in July 2013.

The airport was planned to be developed in two phases and the foundation stone was laid in December 2010. To begin with, bids for Phase I of the project were invited and it was awarded to Larsen & Toubro (L&T) in November 2013. The works, worth Rs 7 billion, involved taking up the entire airfield works such as the development of a runway for operating code 4E aircraft, a taxiway, a runway basic strip and an apron, as well as other ancillary works. Thereafter, in June 2014, the contract for city-side works (worth Rs 4.98 billion) as part of Phase II of the project was also awarded to L&T. The scope of work comprised the development of an integrated terminal building, air traffic control tower, and other electrical and mechanical works.

Work under Phase I of the project commenced in February 2014 and it took over four years to complete the entire construction work, which was completed recently in September 2018. Subsequently, two airlines – IndiGo and Air India – conducted trial runs for flight operations from the airport. At present, a number of flights operate at the airport and works related to the development of an international air cargo complex and landscaping works are under way. Also, the state government is in the process of acquiring land to expand the existing runway length from 3,050 metres to 4,000 metres as part of the airport expansion plan.

What is in store?

The airport, spread across 2,133 acres of land in Moorkhan Parambu area of Kannur, has several world-class features which will ensure a seamless travelling experience. For instance, an integrated terminal building, built on 96,000 square metres, is capable of handling 2,000 passengers at a time. Besides, it is equipped with numerous self-check-in machines, self-baggage drop-in systems, 24 regular check-in counters, 32 immigration counters, baggage handling machines, security facilities (such as an in-line x-ray system) and aircraft parking bays capable of accommodating 20 planes at a given point of time. The airport also houses an international air cargo complex which will have a 60,758 tonnes per annum cargo handling capacity. Work on the complex is currently under way and is likely to be completed by 2020. The Central Industrial Security Force is providing security cover at the airport.

Financial closure

The project has been financed through a mix of equity and debt. Of the total investment of Rs 18.92 billion required for the project, Rs 10 billion was raised as equity and the remaining Rs 8.92 billion through banks. With respect to equity contributions, 35 per cent of the investment (Rs 3.5 billion) was provided by the Kerala government and 10 per cent (Rs 1 billion) was invested by the Airports Authority of India. Various public sector undertakings also invested funds in the airport and hold a 25 per cent stake in it. Bharat Petroleum Corporation Limited (BPCL) invested funds amounting to Rs 1.7 billion and an additional sum of Rs 468 million by forming a separate joint venture company with KIAL to manage the fuel farm business at the airport. The remaining 30 per cent equity was provided by cooperatives, banks and individual shareholders. To acquire 785.45 acres of land for the airport, the Union Bank of India provided Rs 3.1 billion to KINFRA as equity.

In July 2015, a joint term loan agreement was signed with a consortium of three banks – Canara Bank (Rs 6.92 billion), South Indian Bank (Rs 1.1 billion) and Federal bank (Rs 900 million) – with Canara Bank as the lead partner.

With respect to the tariff structure, the airport is based on the hybrid till model wherein 30 per cent of the non-aeronautical revenue is used to cross-subsidise the aggregate revenue requirement.

Airlines show interest

In August 2018, the Ministry of Civil Aviation had given in-principle approval to six domestic carriers for providing flight services from the airport. These are Air India, Air India Express, Jet Airways, GoAir, SpiceJet and IndiGo.

Air India Express, a subsidiary of Air India, is the first airline to start flight operations from the airport with an inaugural flight to Abu Dhabi on December 9, 2018. “As per the 2019 summer schedule, about 70 air traffic movements per day will be handled at the airport. Air India Express currently operates flights to Abu Dhabi, Sharjah, Doha and Riyadh, and is planning to start services to Muscat, Kuwait and Bahrain from March 31, 2019,” says V. Thulasidas, managing director, KIAL.

Other domestic carriers such as GoAir and IndiGo are also operating flights to Bengaluru, Chennai, Hyderabad, Mumbai, Goa, Hubli and Thiruvananthapuram. Other carriers such as SpiceJet and Jet Airways are currently awaiting a licence from the Directorate General of Civil Aviation to operate flights from the Kannur airport. Besides, the state government has also permitted international carriers to provide connectivity from the airport. Already, 11 international carriers including Emirates, Fly Dubai and Air Arabia have been approved to offer services from the airport, though operations are yet to commence.

“A financial consultant will be appointed in next two months to advise on land monetisation for both aeronautical and non-aeronautical projects. The bids for this have already been invited,” says Thulasidas.

Enhancing connectivity

Kerala witnesses high-density passenger traffic from several corners of the globe. Its international airports are the key means of transporting Kerala’s passengers to and from the Gulf countries. The newly operationalised airport will not only serve traffic from the Gulf, but from Kannur and Kasaragod districts of Kerala besides serving flyers from areas such as Kodagu district in the neighbouring state of Karnataka. The upcoming cargo complex at the airport will also boost trading activities in the region.

Manpreet Kaur