Chennai to have another airport for TOFL’s first project. Taking Off to the Future Pvt Ltd (TOFL) has plans to evolve private airports, both greenfield, and brownfield with the Centre forcing hard for infrastructure creation. A SEBI approved funding of 10,000 crores, has also been raised for airport specific projects.
Gigi George, the Managing Director of TOFL has confirmed that sovereign funding has also shown interest in investing around 30% in the AIF. Further, he added that the deal is expected to generate an annual gross internal rate of return (IRR) of 20% on investments.
George has also tried to develop an airport in Aranmula in Kerala and thus this is not completely a new venture for him.
The Aranmula failure
Due to objections from the local people, the Aranmula project failed. But this failure has only helped George in learning as to how to work for private airport development which has a very bright future. His positive attitude is supported by a strong air traffic growth of 15-20% in the last five years. This growth is expected to continue in the years to come.
In the last 10 years, the passengers traveling both domestic and international has increased by over five times to 344 million. With an annual growth rate of nearly 11 percent, the country will require airport development worth $100 billion in the next 10 years, said George.
George has created a team for airport development which consists of Larsen & Toubro (for construction), Netherlands Airport Consultants BV (planning, design and engineering), Shardul Amarchand Mangaldas (legal), Star Global Aero Solutions (consultancy) and RITES Ltd (consultancy).
The Unified Team
According to George, this team will work on all the airport projects together. In the south of Chennai, TOFL is eager to develop a greenfield project that would cost approximately 4,500 crores.
The Airports Authority of India is sure that within the next 10 years the existing Chennai airport will reach its saturation point with the increasing air traffic and thus is looking forward to a greenfield project in the outskirts of the city.
Approximately 1,500 acres of land has been acquired by TOFL, located 52 km from the current Chennai airport, for the project. The location is perfect for developing an international airport-cum-aerotropolis/integrated township on nearly 3,500 acres of land. George has also confirmed that TOFL is waiting for the clearance from the State government but AAI has shown interest.
Key Problems
According to the industry experts, the prime challenge lies in identifying the land bank and then acquiring various grants of regulatory approvals that have an administrative and political bearing.
This entire process takes very long and the developers are also expected to have heavy moneybags. If a dedicated sector fund for airport development is created then the entire process becomes much easier. However, according to B Govindarajan, Chief Operating officer, Tirwin Management Services, the success of these funds is only dependent on the fact that the duration between drawing plans and launching operations is kept to the minimum by the investors