NEW AIRPORTS IN HYDERABAD AND BANGALORE WILL BRING

UNCLAS CHENNAI 000099

SIPDIS

SENSITIVE

SIPDIS

STATE FOR SCA/INS
STATE FOR EB/TRA VIKI LIMAYE-DAVIS
PASS DOT STEVEN HATLEY
PASS FAA THOMAS NASKOVIAK
PASS TSA ARMEN SAHAGIAN
PASS USTDA HENRY STEINGASS AND JASON NAGY
PASS DOC ITA/MAC/OSA ART STERN AND KIT RUDD
PASS USTR ADINA ADLER

E.O. 12958: N/A
TAGS: ECON EAIR ETRD EFIN PREL PGOV IN

SUBJECT: NEW AIRPORTS IN HYDERABAD AND BANGALORE WILL BRING
WORLD-CLASS AIR TRAVEL TO SOUTH INDIA

REF: NEW DELHI 756


1. (SBU) Summary: The new airports slated to open in the next
several weeks in both Hyderabad and Bangalore promise to bring
world-class modernity and comfort to air travelers in South India.
The opening of the new airports will also close the cities' current
airports for commercial aviation, one of the key conditions in the
contracts that the Indian government signed with the public-private
partnerships that are building and will operate the new facilities.
The closure of the old airports is causing some fuss among workers
unwilling to relocate -- and some politicians attempting to pander
to them -- but all the key players recognize the importance of
honoring the governments' commitments. Although both airports are
located significant distances from their respective cities, we
expect that travelers will not complain about the commute once they
experience the facilities' world-class amenities. End Summary.

Old airport closures spark some protests . . .
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2. (U) Planned closures of the current airports in both Hyderabad
and Bangalore have kicked off some protests, including a
"non-cooperation" work stoppage that lasted two days. Led mainly by
employees from the Airport Authority of India (AAI) -- a government
body which manages a range of services, from janitorial to
fire-fighting and air-traffic control -- and joined by some media
outlets and opportunistic politicians, these protests had little
practical effect. The "non-cooperation" ended on March 13, when
Union Minister for Civil Aviation Praful Patel agreed to consult
with the AAI on any future airport closures.


3. (U) Some pundits and politicians have speculated publicly about
the desirability of keeping the old airports open, in direct
violation of the contracts signed with the private operators of the
new airports. (The Bangalore concession agreement, for example,
prohibits any "new or existing airport" from operating within 150 km
of the new airport. This is similar to other concession agreements
the GOI signed with private airport developers.) Much of this
speculation has come from AAI members and fairly low-level state
politicians and not from either state- or Union-level government
officials responsible for implementing or overseeing the projects.
One notable exception involved comments from the parliamentary
committee on transportation's leader, Sitaram Yechury (Communist
Party-Marxist, or CPM),who called on March 5 for the government to
renegotiate the contracts in both cities to allow the current
airports to remain open for at least three months to allow
negotiations over the airports' fate to continue. Emphasizing its
opposition to the government's plans, his party also stalled
proceedings in the parliament on March 12 over the issue.

. . . But the GOI seems intent on honoring commitments
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4. (U) Patel reiterated publicly on March 11, however, that the
existing airports in Bangalore and Hyderabad would close to
commercial aviation -- as required by the concession agreements --
when the new airports open. (Comment: Although he had made similar
statements repeatedly over the past several months, some media
outlets have attempted to paint him as being of two minds on whether
or not to close the old airports. End Comment.)


5. (SBU) The heads of both existing airports also readily accept
that their facilities will cease operating for commercial aviation
when the new airports open. Ashok Baweja, chairman of Hindustan
Aeronautics Limited (HAL, which runs Bangalore's current airport),
told us on March 12 that his airport would close to commercial
aviation when the new airport opened. "The government does not want
to renege on its commitments," he said, adding that doing so "would
look bad." He added that the government might wish to revisit this
issue sometime in the future, but that there was no question of

doing so now. Similarly, the head of AAI for Hyderabad's current
airport, R.K. Singla, said that his airport would also close to
commercial aviation when the city's new airport opened. Both Baweja
and Singla told us, however, that their airports will remain open
for test flights, private aircraft, government flights, and
emergencies.


6. (SBU) Two former Karnataka (the state where Bangalore is located)
Ministers for Industry both told us that the government must -- and
will -- honor the concession agreement and close the HAL airport.
One of them, a BJP member, was critical of the "flawed" concession
agreement drawn up when a Congress Party-led coalition was in power
in Karnataka, but emphasized that it "must be honored." The other,
now the national General Secretary for Mayawati's BSP party, also
criticized the state government's handling of the preparations for
opening the new airport but said that it was very important for the
government to honor its commitments. (Note: Karnataka has been
operating without an elected government since November 2007. The
state is currently administered by a governor appointed by the
President and approved by the Union Cabinet. None of the leadership
of the state's three major parties -- Congress, BJP, or JD(S) -- has
attempted to make the closure of the HAL airport a major issue. End
note.)

Hyderabad's new airport: opening March 16
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7. (U) Hyderabad's new airport, Rajiv Gandhi International (RGI)
will open on March 16. The city's current airport, N.T. Rama
International (NTR) will close to commercial flights the same day.
The USD 6 billion project, a public-private partnership (PPP),
brings together the GOI and state government of Andhra Pradesh with
an Indian-Malaysian consortium led by GRM Infrastructure Ltd. Both
the GOI and Andhra Pradesh will hold 13 percent of the shares in the
Hyderabad International Airport Limited company, while the private
partners -- GMR and Malaysia Airport Holdings Berhard (MAHB) -- will
hold 63 percent and 11 percent, respectively. RGI plans to handle 7
million passengers per year, and subsequent expansions will increase
this capacity to 19 million. The airport is also equipped to handle
the biggest passenger plane in the skies, the Airbus 380. The
airport terminal is said to resemble the well-regarded terminal in
Kuala Lumpur. (More details on the specifics of the airport can be
found at its website:
http://www.newhyderabadairport.com/index.html )


8. (SBU) While the airport's amenities will be world-class,
passengers will face some hassles in reaching the facility. The
airport is located approximately 25 km from the city, and the road
network to the airport is not complete. In particular, an
expressway to the airport may require another year of construction
to be fully operational. A planned high-speed train/monorail
connection to the city is an even more distant prospect. GMR says
50 buses will operate a shuttle service from the airport to four
different points in the city for less than USD 3 per person. Many
passengers may opt for this choice, as driving to the airport may
prove to be an onerous task. Andhra Pradesh's Chief Minister even
told the Ambassador on March 7 that the infrastructure required to
properly connect transportation routes to the airport is three to
four months away.

Bangalore's new airport: now opening May 11
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9. (SBU) Bangalore's new airport, more precisely known as Bengaluru
International Airport Limited (BIAL) in deference to the city's name
in the Kannada language spoken in Karnataka, was slated to open on
March 30. A government inspection of the facility's air traffic
control (ATC) system, however, has led to a postponement. AAI's
regional director for South India told us that BIAL had failed to
work properly with AAI as it recruited and trained its ATC staff,

which led to the problem. BIAL officials told us on March 14 that
the facility will now open on May 11, a date widely reported in the
media, as well.


10. (SBU) Like its counterpart in Hyderabad, BIAL is a PPP, with the
state and national government each holding 13 percent of the shares
and a consortium of Siemens, Larsen & Toubro, and Unique Zurich
Airport, holding the rest. BIAL officials told us that the facility
was originally designed to handle a mere 3 million passengers per
year, but the spectacular growth of the air-travel sector forced
BIAL to re-engineer its original design to accommodate 10 million
passengers per year, a target the facility may reach during its
first year of operation. BIAL plans additional expansions,
including a second terminal, which will eventually increase the
airport's capacity to 40 million passengers per year. The airport
will also host multiple hotels and a business/industrial park. The
first hotel, slated for completion in 2010, is billed as the first
in India within walking distance of an airport terminal. Two
caterers and two ground-handling companies will compete to serve the
airlines operating at BIAL, and the airport has the right to bring
in a third if it deems it necessary to increase competition.


11. (SBU) BIAL officials gave us a tour of the facility on March 11
(sketches and other details are available at the airport's website:
http://www.bialairport.com/index.htm). Constuction of all the
major facilities (check-in couters, escalators, security
checkpoints, baggage arousels, and the like) is complete, but
workersare still beavering away on many of the more cosmeic
details. The food courts and shops are also lttle more than empty
spaces at present. That sad, the facility is truly world-class,
reminiscen of the design of European airports like Amsterdamor
Frankfurt. The airport also has a separate bilding for VIPs, which
will greatly facilitate arivals and departures of high-level
guests. BIALofficials told us that 40 new buses will shuttle
between the airport and various points in the city, including its
major hotels.


12. (SBU) One of the major complaints against the airport is its
distance from the city (approximately 30 km),and its location to
the city's north, while much of Bangalore's development has been
towards the south. Some AmCham members told us, for example, that a
trip to the airport could take as long as four hours. Fears of
multi-hour road trips to catch short, regional flights prompted
Deccan Aviation to announce its plans for a helicopter service to
transport high-level executives to the new airport. Such fears seem
exaggerated, however. We drove from the airport to the heart of the
city in less than one hour during the middle of the day. The road
north from Bangalore is generally excellent (three lanes in both
directions),although there is still some construction and the
occasional random speed bump.


13. (SBU) The exit from the highway to the airport road is, however,
not yet functional. Currently, the only functional road from the
highway to the airport is a three-kilometer-long, dirt path. BIAL
officials told us that the south-bound exit ramp from the highway is
operational, but it requires travelers from Bangalore to do a U-turn
on the highway. (We noticed, however, that construction work is
still taking place even on that ramp.) They said that the
north-bound exit ramp will take several more months to complete.

Comment
--------------


14. (SBU) Barring intervention at the prime ministerial-level, it
seems unlikely at this time that either of the old airports will
remain open once the new airports begin operation. Communists,
union leaders, and opportunistic, populist politicians may continue
to call for them to stay open, but no official in a position of real
authority has yet called for the government to breach its contract
with its private-sector partners. Those in position of

responsibility seem aware that doing so would cause serious problems
for the government's credibility.


15. (SBU) The quality of BIAL is a giant leap forward from the HAL
airport, which resembles a crowded, run-down bus station. (On a
recent trip through HAL, we were unable to find the end of the line
for the security checkpoint and had to ask an airline employee for
assistance. While sitting in what passes for a business
lounge/restaurant, we also overheard a group of Britons ask an
airline employee, "This is a restaurant? Are you sure?")
Hyderabad's new airport is a similar step up. Both Bangalore and
Hyderabad want to be considered top-tier cities in India, worthy of
world renown. At a minimum, it seems clear that these two South
India cities will soon be able to lay claim to having the best
airports in the country, even if reaching them remains a chore.

HOPPER