Cap on building cost for airports will impact future projects
Airport economic regulator AERA’s move to cap the cost of building an airport at Rs 65,000 per square metre is set to impact the plans of new airports like the one coming up in Navi Mumbai and expansion of existing civil aviation setups in the country.
At Mumbai airport, T2, the integrated terminal building, alone cost Rs 5,500 crore to build – out of the total project cost of Rs 12,500 crore. A rough calculation shows that the cost incurred on each square foot is upward of Rs 1lakh.
Navi Mumbai airport apart, the decision by the Airports Economic Regulatory Authority (AERA) is also likely to affect the Mopa airport in Goa and expansion of the Bangalore airport.
Air Passengers Association of India (APAI) president Sudhakara Reddy, who attended the AERA stakeholders meeting earlier this month, told Mirror that the ceiling on capital cost would put an end to the open loot of public money by private developers.
“Even if you provide gold plating it is a lot of money,” Reddy said pointing to costs incurred on developing Mumbai and Delhi airports. According to the APAI, airport developers spend only on paper and recovering the money under the guise of airport development fee and user development fee.
In its order, the regulator said the figure was based on the analysis of various factors and costs submitted by operators. AERA officials explained that they took into account the construction cost of Cochin airport’s new international terminal, which was assessed at Rs 53,789 per square metre.
Another official, who didn’t wish to be named, said that there cannot be any comparison between the airports built by the Airports Authority of India and private developers. “It is unfair and unrealistic of AERA to impose such conditions.” The regulator, which is reviewing inputs from all sides, is yet to decide on suggestions to appoint consultants to conduct a study of the best airports and arrive at cost estimates for a proposed project.
At Mumbai airport, T2, the integrated terminal building, alone cost Rs 5,500 crore to build – out of the total project cost of Rs 12,500 crore. A rough calculation shows that the cost incurred on each square foot is upward of Rs 1lakh.
Navi Mumbai airport apart, the decision by the Airports Economic Regulatory Authority (AERA) is also likely to affect the Mopa airport in Goa and expansion of the Bangalore airport.
The Karnataka government has already taken up the issue with the regulator, while the City and Industrial Development Corporation Ltd, which is handling the Navi Mumbai international airport project, is studying the issue, said sources.
Air Passengers Association of India (APAI) president Sudhakara Reddy, who attended the AERA stakeholders meeting earlier this month, told Mirror that the ceiling on capital cost would put an end to the open loot of public money by private developers.
“Even if you provide gold plating it is a lot of money,” Reddy said pointing to costs incurred on developing Mumbai and Delhi airports. According to the APAI, airport developers spend only on paper and recovering the money under the guise of airport development fee and user development fee.
In its order, the regulator said the figure was based on the analysis of various factors and costs submitted by operators. AERA officials explained that they took into account the construction cost of Cochin airport’s new international terminal, which was assessed at Rs 53,789 per square metre.
Another official, who didn’t wish to be named, said that there cannot be any comparison between the airports built by the Airports Authority of India and private developers. “It is unfair and unrealistic of AERA to impose such conditions.” The regulator, which is reviewing inputs from all sides, is yet to decide on suggestions to appoint consultants to conduct a study of the best airports and arrive at cost estimates for a proposed project.
