Hyderabad airport stands out as the sole airport in India to undergo multiple expansions in its parking facilities, terminal spaces, runways, ground handling areas, and more within a short span. However, with the exponential rise in traffic and its esteemed reputation setting higher passenger expectations, India's 4th busiest airport is facing certain challenges which need to be examined.
Planning can optimize cost as is proved by Hyderabad International Airport. This is the India’s 4th busiest airport with 25 million passengers in financial year 2023-24. During the same period Delhi airport handled 73 million passengers, Mumbai airport handled 52 million passengers, and Bangalore airport handled 37 million passengers. Interestingly, Hyderabad airport was built with relatively lower capital cost than the other three said airports.
In fact, the first airport in Hyderabad was Begumpet Airport which was established by Nizam of Hyderabad in year 1930. It was among India’s first 6 airports, the others being Juhu in Mumbai, Safdarjung in Delhi, Dum Dum in Kolkata, Madras Airport, and HAL airport in Bangaluru. Begumpet airport enjoyed great admiration but was accessed mostly by the elite, politicians, high level government officials, and foreigners. For long, it had limited air passengers proved sufficient for about 50 years to handle its traffic volumes.
But, from year 1983 when Dr. N. T. Rama Rao became Chief Minister of the then undivided State of Andhra Pradesh, the airport started witnessing more passengers from across India and abroad. His drive to shift Telugu film industry from Chennai to Hyderabad further increased the air passengers at Hyderabad Begumpet Airport.
In due course, despite the change in the Chief Ministers, the air passengers continued to increase and as Begumpet did not have much space for expansion, Government of Andhra Pradesh realized the need for a new airport. In April 1995, the State requested Centre to give the 2,000 acres air force based Hakimpet Airport for developing an international airport with an investment up to Rs. 1,000 crs. In return, State offered to give away Begumpet Airport for Indian Air Force activities. But Centre refused to give Hakimpet Airport, rumoured as due to differences between political parties at State and the Centre. Centre observed that 1,000 acres is more than enough for an international airport. Weighing on connectivity, the State chose Shamshabad. But, before widely publicizing the airport project at the location, Government acquired about 4,500 acres of land spending about Rs. 135 crs, which was considered very high for the prevailing land prices at the time of acquisition.
After land acquisition, international competitive bidding was initiated in December 1999 in Public Private Partnership (PPP) model. Many openly criticized that the distantly located new airport will only serve the uber rich but not all. Even the businessmen and industry leaders were confounded about the plan of 5,500 acres for the proposed new Hyderabad airport, as Begumpet Airport had about 500 acres of which the complete land was hardly used.
State government conducted several road shows, showcased the potential of Hyderabad, proclaimed State support, and ensured timely responses to every communication from every prospective bidder and every media agency. Of the 7 initially received RFP responses, 2 were finalized for bids and GMR consortium was selected in year 2001. The initial capex was estimated at Rs. 3,000 crs and the successful bidder demanded 18.33% as the equity internal rate of return (IRR) on the regulatory asset base.
The JV was formed with shareholdings as GMR 63%, Malaysia Airports 11%, Govt of AP 13%, and Govt of India 13%. The land allotments, State support, etc were finalized in year 2003 as per the tender. The concession agreement was signed in December 2004. It received global appreciations for being comprehensive, formula driven, and well-structured and this PPP concession agreement became a case study at several global business schools and law colleges.
The concession is for 30 years from commercial operations date and extendable by another 30 years., i.e., up to year 2068. As per the terms, Centre will directly collect route navigation charges and terminal navigation landing charges from all the airlines. Charges of Airport should be as per Ministry of Civil Aviation regulations and Airport should pay 4% of gross revenue to the Centre. To the State, the Airport pays 2% of land cost as lease rent for 5,000 acres and escalating at 5% per annum from 8th year. The State is responsible for road access, water supply, and power supply. State committed to give Rs. 107 crs as interest free and non-refundable advance development fund grant, and interest free repayable loan of Rs. 315 crs. To support the financial viability, the concession agreement allowed the Airport to collect user development fee (UDF) as approved by the Govt of India.
The construction was commenced in December 2005 and operations commenced in March 2008 with most modern amenities superior to all other Indian Airports. The State Government extended utmost possible support and fulfilled its financial and infra commitments for the project. GMR group demonstrated its abilities, financial strengths, and its commitments in developing the Airport as a marvellous project. The Airport earned several credits including the 1st greenfield airport in India to be developed in PPP mode, only major airport in the world to be commissioned in 31 months, connected to 90 destinations, silver rating as a green building, solar power connected, facility to recycle 40% water, facility to use 100 days water every year from rainwater harvesting, etc. The other credits include first integrated and centralized Airport Operations Control Centre, first Indian airport with e-boarding facility, first to offer express check-in facility, first in implementing face recognition trails, first to have 100% automatic tray retrieval system, first in India to introduce internet based smart trolley, etc.
The 75 years old Begumpet Airport handled 0.85 MPPA at its peak. But new Hyderabad Airport was designed for initial phase 12 million passengers per annum (MPPA) and expandable up to 40 MPPA by year 2050 and for ultimate cargo capacity of 150,000 tons. However, the Airport completed first expansion for 34 MPPA and has already attracted 21 MPPA and 148,000 tons of annual cargo. The ultimate capacity expansion target for Hyderabad airport is said to be 100 MPPA.
The new Hyderabad Airport played an important role in helping the growth of the information technology (IT) sector, financial sector, and real estate in Hyderabad. Further, the pharma sector expanded in Hyderabad due to the globally connected airport. Presently, 70% plus cargo from this Airport is pharma exports. One of the government studies stated that this airport contributes Rs. 167,000 crs to national gross domestic product (GDP). At present, Hyderabad Airport is contributing close to 850,000 employment opportunities.
This India’s largest and functionally full-service airport was ranked several times as world’s number one in airport service quality, passenger capacity, best green airport, best energy conservation, etc. The Airport has also earned several unparallel appreciations such as highest operational efficiency and punctuality, more amenities, many self-check in ticket counters, etc.
This India's largest and fully functional airport has repeatedly secured the top spot globally for its airport service quality, passenger capacity, eco-friendliness, and energy conservation
Due to its international charm and connectivity, although it would not be an apple-to-apple comparison, Hyderabad airport is sometimes compared with Changi Airport of Singapore and Incheon airport in Seol, South Korea.
Changi airport has 5 terminals and ultramodern designs, gardens, art installations, and amenities such as movie theatres, swimming pool, rooftop gardens, and expedient security clearance mechanism. Incheon airport also has two terminals which are very spacious with modern architecture, gardens, and cultural museum.
Hyderabad airport has two terminals which are integrated and connected. Unlike Changi airport and Incheon airport, Hyderabad airport is not connected with metro or express train. However, Hyderabad ranks next to Changi airport and Incheon airport in terms of space, cleanliness, and amenities and Hyderabad airport ranks better among all the Indian airports on these parameters.
Hyderabad airport is the only airport in India to see several expansions within short time in its parkings, terminal spaces, runways, ground handling spaces, etc. Still, due to the exponential increase in the traffic and high reputation creating higher expectations for the passengers, this India’s 4th busiest Airport is facing certain challenges which need to be examined.
As an impressive project, this airport demands immediate actions to advance its facilities, with a specific focus on enhancing check-in counters, baggage handling, WiFi connectivity, and cleanliness
There is a need to enhance ground support services, improve passenger service quality, manage crowd movement, increase the number of check-in counters and security check-in bays, expedite baggage reclaim, prioritize travellators for gate access and amenities over shops, implement people movers, enhance cleanliness, streamline navigation and clearances for vehicles in arrivals and departures, and facilitate quick entry through departure gates. While Hyderabad airport has received awards for its staff service, there is still room for improvement in staff service quality. Battery-operated buggies, which are beneficial for the elderly, disabled, children, and pregnant women, could be designated to specific bays rather than being scattered. Moreover, the airport's rain resilience needs improvement, as heavy rains cause disturbances at arrivals and affect restaurants and shops located externally.
Being a marvellous project, this airport requires prompt actions to further enhance its facilities, particularly focusing on improving check-in counters, baggage handling, WiFi connectivity, and cleanliness. These improvements will not only help Hyderabad airport maintain its current ranking but also elevate its status not just within India but on a global scale.
About the author:
Dr. KISHORE NUTHALAPATI is an Economist, and is the CFO of BEKEM Infra Projects Pvt Ltd, Hyderabad, India. The views expressed are his own and do not reflect those of any organization with which he is or has been associated.
