labels: tata group, aviation
Tata-Changi JV for airport developmentnews
Rex Mathew
22 February 2007

After many false starts and failed attempts in recent years, the Tata Group is increasing its involvement in the aviation sector aggressively. Following the recent acquisition of a minority stake in low-cost domestic carrier Spicejet, the group is now all set to enter the airport development business. In the new initiative, the Tata Group has tied up with the best in the business – Singapore's Changi Airport International, which operates one of the largest and most efficient airports in the world.

An agreement has been signed between the Tata Group and Changi to form the JV in which Tata Realty would hold 51 per cent while Changi would hold the rest. Investment plans by the partners have not been disclosed yet.

The JV is planning to bid for the Chennai and Kolkata modernisation plans. The government has already firmed up plans for the modernisation programmes for these two airports which would be on the lines of the development plans for Delhi and Mumbai airports concluded last year. A formal announcement is expected soon after receiving formal approval of the cabinet.

The smooth completion of the bidding process for Delhi and Mumbai airports has strengthened the government's case for private participation in airport development. Protests and opposition against airport privatisation by the employees of Airports Authority of India (AAI) and the Left parties, which supported them, have died down.

The consortiums, which won the bids, have already brought about considerable improvement in operations at these airports. Development master plans for both airports have been unveiled and work is expected to start soon.

However, the Left parties still have considerable reservations about accepting private airport developers at their own backyard. Hence, they are opposing the involvement of private developers in the modernisation of Kolkata airport and are insisting that the work should be carried out by AAI alone.

The DMK alliance which rules Tamil Nadu does not have such ideological reservations, though it tends to agree with the Left parties on many other issues, and are all for involving private developers to develop the Chennai airport.

The Tata-Changi JV may also bid for the modernisation programme of 35 small airports across the country. The government had recently announced a master plan to develop regional airports to improve the aviation infrastructure.

The plan, which is estimated to cost more than Rs 4,200 crore, is also conceived as a public-private partnership (PPP) initiative. Interested private developers may be asked to bid for blocks of three or four airports, which would be a mix of lucrative and remote locations, to prevent cherry picking.

Another major airport development venture, which the Tata-Changi JV may consider is the proposed new airport at Navi Mumbai. The new airport is proposed as the second international airport for Mumbai as the existing Mumbai airport cannot be expanded much because of space constraints.

Bids for this airport also may be invited shortly and the airport is expected to be operational by 2013. The new airport is expected to reach a peak capacity of handling 40 million passengers annually by 2030.

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Tata-Changi JV for airport development