Tuesday, March 5, 2013

R-ADPL: The report card!

One year back, Reliance ADPL came out victorious on its new turf of airports development by winning the bid to develop 5 airports in Maharashtra. B&E meets Reliance’s top executives to get the mid term progress report by Swati Sharma

First the quick recap. After Delhi and Mumbai airports were given an attempted world-class makeover, Airports Authority of India (AAI) had planned to put to use surplus land in 35 non-metro airports with an estimated cost of `8 billion. The process of bids had been initiated by AAI amid speculations and criticism coupled with constant scrutiny. There were resonant protests from the Planning & Revenue Department and the Finance Department about the land price being undervalued; even the lease being given for 95 years was contested (government land cannot be generally given on lease for more than 30 years). Reliance Airport Developers Pvt. Ltd (RADPL), a subsidy of Reliance Infrastructure, became the top bidder among 8 shortlisted companies which had the most potential. After a whole lot of dramatic legal play about the privatisation of airports and taking uncountable bids and long-drawn court cases which ended last year, RADPL bagged the bid for the development of 5 small airports in Maharashtra, namely in Baramati, Nanded, Latur, Osmanabad and Yavatmal. The massive land of 601 hectares was acquired at `630 million on a 95-year lease through a competitive privatisation process undertaken by the Maharashtra Industrial Development Corporation (MIDC), which still remains the principal owner of these airports. Some of these airports had not been used for almost 20 years. The government had already spent `3.39 billion between the years 1995-2007 to develop the five airports, out of which only two operated regular flights. Given that kind of support investment by the government, RADPL seemed to have a great start. One year down, B&E caught up with RADPL top management to find out the progress in the past year, the strategic map charted and the specific challenges of the coming future.

Surprisingly – and positively – RADPL’s development plans involve not only target marketing for each airport, but also support infrastructure development beyond the airport. For example, Reliance plans to develop Baramati as a general aviation hub for corporate jets for an investment of `1 billion in the next three years including a maintenance, repair and overhaul (MRO) facility which will further serve as an alternative to deal with the problems of land and air space congestion in bigger airports like Mumbai. This also includes setting up a four star hotel in Baramati. In Yavatmal Airport, which was set up in 1993, there will be a nucleus for big industrial houses with the facilities of recycling aero parts. At Nanded and Latur, the most active airports, passenger numbers have shot up from almost zero to 3,200 per month and 32 commercial flights per month after the takeover. Nanded is now connected to Delhi, Mumbai, Nagpur and Latur with Go Air even starting Airbus A320 flights on the Delhi-Nanded-Mumbai route with day and night operations. Vidya Basarkod, Business Head and CEO, RADPL tells B&E, “We believe that regional airports are the future of the aviation industry; the concept will surely catch up in the years to come and we are doing our best. A lot has to be done still.” Apart from the airport infrastructure development, RADPL has also set up a Flight Training Academy in Osmanabad by Blu-Ray Aviation to be started in October, 2010 and a contract has been signed for another academy in Nanded.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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