AAI seeks to increase revenues from cargo business

NEW DELHI: Seeking to work as a commercial enterprise, the Airports Authority of India (AAI) is mulling a multi-pronged strategy to bolster revenues from cargo business and tap the commercial potential of its assets.

AAI, which is facing a changed business scenario especially with more number of airports being run under public-private partnerships, would focus on maximising "non-aeronautical revenues".

After privatisation of Delhi, Mumbai, Hyderabad and Bengaluru airports, the government is in the process of handing over the management and operations four more airports -- Chennai, Kolkata, Jaipur and Ahmedabad -- to private players.

Though the Guwahati and Lucknow airports were also to be privatised, the government has decided not to do so as they were no takers for them.

AAI's new Chairman R K Srivastava, who took charge on January 2, has in his message to employees also laid emphasis on "measures for expenditure control" wherever possible.

While working towards developing and improving the services at the airports for the passengers, the organisation needs to make concerted efforts for augmenting the business potential in the cargo business which hitherto has not been exploited to its full potential, Srivastava said.

"The AAI needs to work out a new strategy to capture and develop its share of the market in the cargo sector. In order to make the airports self-sustaining commercial enterprise, the new global trend has been to maximise the non-aeronautical revenue," he said.

AAI owns and maintains 125 airports comprising 68 operational airports and 26 Civil Enclaves.

Globally, many airport operators have increased their share of non-traffic revenues by as much as 50 per cent.

"Each of us needs to take measures for expenditure control, wherever possible, to make effort for introduction of technology driven system particularly in the security apparatus," the message said.

Srivastava said that there is also ample scope of leveraging the funds, capacity and managerial experience of the private sector and technology from the market for future expansion programme of AAI.

Underlining the need for augmenting revenues, the AAI chief said available assets within the organisation and those at the terminal and city-side areas of airports should be exploited commercially.

"With the changing time and emerging global trends, the AAI is now expected to work as a commercial enterprise. While doing this, it has to keep the overall welfare of the passengers paramount in the mind.

"It calls for a paradigm shift in the approach to address the requirement and demands of various stakeholders in the aviation sector," the AAI chief said.

According to him, AAI needs to be vigilant towards the changing trends, expectations and demands of various end users and service providers, including passengers, airline operators and cargo handlers.

The state-run airports' operator saw its revenue increase by around 15 per cent to Rs 7,948.47 crore last fiscal. In the year ago period, the same stood at Rs 6,317.28 crore.

In the last financial year (ended March 2014), its net profit climbed over 8 per cent over the same period a year ago.