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 . . . -------------- - ¶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 -------------- -------------- ¶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 -------------- ¶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 -------------- - ¶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