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Chennai Airport southern India’s most profitable hub in FY2009

14-Dec-2010

India’s Minister of Civil Aviation Praful Patel announced Chennai Airport was the most profitable airport among the 19 in the South of India under the Airports Authority India in FY2009 ended 31-Mar-2009. The airport reported a profit of USD87.1 million in FY2009 (based on the conversion rate of USD1 = INR45.83), which was 11.1% less than FY2008 but 30.3% more than FY2007.

Calicut Airport was the only other AAI airport in the south to report a profit of USD4.5 million, 80.1% more than FY2008 and 10.3% more than FY2007. Results for other airports in the region for FY2009 include:

  • Cudappah Airport: (USD90,377), compared with a loss of USD31,595 in the previous corresponding period;
  • Hyderabad Airport: (USD12.0 million), compared with a profit of USD33.6 million in p-c-p;
  • Rajamundry Airport: (USD320,642), compared with a loss of USD140,716 in p-c-p;
  • Tirupati Airport: (USD1.9 million), compared with a loss of USD1.4 million in p-c-p;
  • Vijayawada Airport: (USD1.0 million), compared with a loss of USD700,415 in p-c-p;
  • Vizag Airport: (USD1.6 million), compared with a loss of USD1.8 million in p-c-p;
  • Bangalore Airport: (USD2.7 million), compared with a profit of USD45.9 million in p-c-p;
  • Belgaum Airport: (USD1.3 million), compared with a loss of USD2.0 million in p-c-p;
  • Hubli Airport: (USD605,935), compared with a loss of USD420,991 in p-c-p;
  • Mangalore Airport: (USD2.8 million), compared with a loss of USD1.0 million in p-c-p;
  • Thiruvananthapuram Airport: (USD1.9 million), compared with a loss of USD7.9 million in p-c-p;
  • Pondicherry Airport: (USD32,490), compared with a loss of USD182,653 in p-c-p;
  • Coimbatore Airport: (USD10,866), compared with a loss of USD2.1 million in p-c-p;
  • Madurai Airport: (USD2.6 million), compared with a loss of USD1.0 million in p-c-p;
  • Salem Airport: (USD195,811), compared with a loss of USD95,549 in p-c-p;
  • Tiruchirapalli Airport: (USD3.5 million), compared with a loss of USD1.3 million in p-c-p;
  • Tuticorin Airport: (USD461,815), compared with a loss of USD186,341 in p-c-p;
  • Vellore Airport: (USD40,999), compared with a loss of USD23,587 in p-c-p.

Modernisation project delayed

AAI is now working to modernise Chennai Airport. However, works on the expansion project have slowed over the past month, which has resulted in delays in finalising the commissioning date of the airport’s new terminals. The INR18 billion (USD400 million) project was scheduled to be completed by Sep-2011 but is likely to be delayed by a few months. Work on the project commenced in Oct-2008.

Passenger numbers at Chennai Airport have been growing at a rate of 12% p/a, with the airport handling 10.5 million passengers last year. The airport expects to handle 11.9 million passengers for FY2010-11 and 27.6 million passengers p/a by 2020. In AAI’s most recent traffic report, Chennai Airport reported a 15.1% year-on-year rise in passenger numbers. The growth included a 14.8% rise in international passenger numbers and 15.3% rise in domestic passenger numbers.

As a result of the growing traffic, the airport is constructing a new 65,000sqm international terminal and 74,500sqm domestic terminal. The project also includes extension of the airport’s second runway, new and upgraded taxiways, additional parking bays, the construction of a flyover connecting the domestic and international terminals and a multi-level car park. Construction of the flyover and car park are yet to commence. The new terminals and facilities will be located adjacent to the airport’s existing terminal.

Construction has been delayed for various reasons, including an issue of land compensation with the Indian army. The army has since agreed to vacate the land at the airport required for construction of the new international terminal. In exchange, the State Government will provide about 70 acres that have been identified in Manamallai village. The State Government will reportedly pay for the acquisition of the land.

Construction of the domestic terminal has also slowed, as AAI is yet to approve some of the materials to be used in its construction. On completion, the domestic terminal will have the capacity to handle 10 million passengers p/a. At present, around 48% of work at the terminal has been completed.

Extension of the airport’s second runway has also stalled, with the State Government requesting AAI bear the expenses for rehabilitating displaced persons on a three-acre plot in the Kolappakkam area.

As a result of the delays, construction costs have escalated, with AAI having now requested the Public Investment Board clear the INR2.1 billion (USD46.7 million) cost over-run of the Chennai Airport expansion project.

Air Passengers' Association of India National President D Sudhakara Reddy has criticised the delays, stating it “will take its toll on passengers, airlines and tourism”. In particular, Mr Reddy is concerned the delays will result in airlines putting plans to expand to/from the airport on hold.

Despite Mr Reddy’s comments, a number of airlines have been expanding operations to/from Chennai this year.

Chennai Airport route changes: 2010-11

Airline

Origin

Destination

Frequency

Date effective

Aircraft

New

Total

Air India

Chennai

Kozhikode

4

4

29-Jan-10

A320

Jet Airways Konnect

Hyderabad

Chennai-Port Blair

5

5

28-Mar-10

B737-800

AirAsia

Penang

Chennai

7

7

28-Apr-10

A320

Air India

Delhi

Chennai

7

7

15-May-10

A321

AirAsia

Kuala Lumpur

Chennai

7

7

17-May-10

A320

SilkAir

Singapore

Chennai

7

7

14-Jun-10

A319/

A320

Air India

Chennai

Agatti

6

6

24-Sep-10

ATR

SpiceJet

Chennai

Madurai

14

14

27-Sep-10

n/a

SpiceJet

Chennai

Colombo

7

7

09-Oct-10

n/a

Air Seychelles

Mahe

Chennai-Singapore

1

1

15-Nov-10

B767-200

IndiGo

Chennai

Coimbatore

7

7

30-Nov-10

n/a

SriLankan Airlines

Colombo

Chennai

1

15

01-Dec-10

n/a

Kingfisher Airlines

Delhi

Chennai

7

14

15-Dec-10

n/a

AirAsia

Kuala Lumpur

Chennai

4

11

21-Jan-11

A320

SpiceJet in particular has plans to expand from Chennai, while its Board of Directors approved plans to relocate the carrier's registered office from Delhi to Chennai. The move comes after Chennai-based Sun TV Network Ltd chief Kalanithi Maran and his company KAL Airways raised their direct holding in SpiceJet to 38.66% through the purchase of an additional 7.68% stake, or 31.08 million shares, for INR146.8 crore (USD32.9 million).

The LCC launched one of its first international routes from Chennai in Oct-2010, with daily Colombo service. It also launched twice daily Madurai service at the end of Sep-2010. At present, SpiceJet has the third largest capacity share at Chennai Airport, with 13%, behind Jet Airways and Air India.

Chennai Airport capacity share  (% of seats) by carrier*

Foreign carriers have also been expanding to Chennai. Air Seychelles launched weekly Mahe-Chennai service on 15-Nov-2010. The carrier has been looking to expand in India, launching a codeshare agreement with Air India at the start of Nov-2010. AirAsia meanwhile plans to increase Kuala Lumpur-Chennai frequency in Jan-2011 to 11 times weekly.

With the success of international operations to/from Chennai, other carriers are now looking to expand. Thai AirAsia CEO Tassapon Bijleveld stated the LCC is considering launching service to Chennai in 2011 after launching services from Bangkok to Kolkata and Delhi in Dec-2010.

Turkish Airlines is also reportedly looking at launching services to destinations in southern India, including Chennai. THY operates seven times weekly services to Mumbai and Delhi, which exhausts its rights of 14-weekly services. The Turkish Government has stated it hopes to increase rights in the next bilateral air traffic talks.

In other construction news, Chennai Airport’s new Mono-pulse Secondary Surveillance Radar (MSSR) is meanwhile progressing. The USD1.2 million radar will be ready for operation by the third week of Dec-2010 and is expected to reduce air traffic controller’s workload.

AAI looking to construct greenfield airport to cater for growing traffic

In addition to the expanded airport, AAI plans to submit a report to the Tamil Nadu Government calling for the construction of a greenfield airport at Sriperumbudur, near Chennai. AAI plans to advise the government that the airport can either be developed by the authority or by the private sector. If it is decided the airport be constructed by AAI, it will most likely be operated by AAI for the first six to eight years, after which the authority may consider a strategic partner.

AAI believes the current Chennai Airport has structural limitations, which mean the airport can only expand so much to cater for growing traffic. Tamil Nadu Government had previously planned to acquire land for an airport in Sriperumbudur, but opposition parties have criticised the plans as farmland would need to be acquired.

Chennai Metro Rail project underway

Also in Chennai, the city’s Metro Rail project is under way. The Metro Rail will link Chennai Airport to various stations in the city. However, there have been concerns the alignment of the rail corridor near the airport will constrain take-offs from the Guindy end of the main runway. Metro Rail's alignment, which reportedly impinges 9m into the airport complex, would reportedly affect taxiway Juliet that aircraft use to reach the 25-end of the main runway for take-off.

There were also concerns over the height of the elevated rail track near the airport. AAI had objected to the elevated track near the approach path of the runway stating it would cause obstruction to the approach funnel and transition surfaces of the runway and the overhead traction would pose serious safety concerns. Portions of the Metro Rail corridor between Officers Training Academy at St Thomas Mount and Meenambakkam will now be partly sunk below ground so that the height would match that of the compound wall of the airport.


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