Airports Authority plans to raise 1,700cr

NEW DELHI: The country's largest airport operator, Airports Authority of India (AAI), plans to raise Rs 1,700 crore through a mix of bonds and bank loans over the next two years in order to fund upgradation of 35 nonmetro airports.

The AAI plans to borrow Rs 900 crore in 2011 and Rs 800 crore in 2012 in order to fund the upgradation of the remaining about 10 non metro airports. It raised about Rs 550 crore last year through bank loans, but was not granted the permission to issue bonds by the finance ministry.

"If that permission is not granted, we could look at debentures too. There is a possibility we might turn to the World Bank for our funding requirements," AAI Chairman V P Agarwal said.

Development work at most of these facilities is expected to be completed by the year-end . "Apart from these, total capacity of about 30 million will also be added to Kolkata and Chennai airports by the end of this year," Agarwal said.

The Authority is upgrading these airports at a total investment of Rs 6,400 crore. Last year, out of its total expenditure of Rs 2,700 crore, AAI spent Rs 1,200 crore on facelifting of the non-metro airports.Some of the airports which have already been upgraded are Amritsar, Jaipur, Trivandrum , Udaipur and Varanasi . Industry analysts are very upbeat about development of these 35 non metro airports as they think that with the rise in purchasing power, the propensity to fly is increasing greatly in tier II cities.

According to travel solutions conglomerate Bird Group ED Ankur Bhatia, alternate airports in big centres like Delhi and Mumbai and development of small airports is a must, since 300 million people can afford these services but due to insufficient infrastructure , the industry caters to only 50 million at present. "As the 35 nonmetro airports get upgraded , there will be another wave of growth and you will see traffic spread out to these centres over the next 5 years," Ernst and Young Partner (Infrstaucture Practise) Kapil Arora said.