Coming soon: No-frills airports

BANGALORE: India’s bleeding no-frills airlines may finally have something to look forward to: airports that charge them lower fees so that their business model has a better chance of succeeding.

Consortia working on revamping and modernising airports at the two metros - Delhi and Mumbai, which between them handle 60% of the country’s air passengers - are planning to include low-cost terminals in their master plans, which should be ready by October.

While the GMR-Fraport consortium is looking at converting the existing two terminals at Delhi airport into no-frills terminals after the new airport is ready by 2010, the GVK-Airport Company of South Africa is considering the option in Mumbai, but space constraints seem to be coming in the way.

“We are looking at various terminal configurations. Our main focus, at present, is the brand new airport at Sahar. But the new terminal there will not be enough to handle traffic. That is the reason we are not definite about a dedicated low-cost terminal. A clear picture will emerge in some time,” said a GVK Group spokesperson.

The GMR group is not plagued by any such doubts. “We expect to complete the construction of the new airport by 2010. After that we will definitely be able to use the existing terminals as low-cost terminals, which will provide only basic infrastructure to the airlines.

By then the budget airline industry would also have matured,” revealed GMR group chief financial officer (CFO) Madhu Terdal.

At present, budget carriers like Air Deccan and SpiceJet are competing with full-service airlines like Jet and Indian on fares with very little cost differential, which is making them bleed profusely.

A low-cost terminal will give them a chance to become profitable.

The high passenger growth registered by low-cost airlines has prompted airports around the world to develop low-cost terminals. These terminals, which are specifically designed to suit the business models of budget airlines, have no frills like travellators, escalators and aerobridges. This shortens the turnaround time, which enables LCCs (low-cost carriers) to increase their aircraft utilisation.

SpiceJet Ltd chairman and CEO Siddanta Sharma says if the plan for such a terminal comes through, their airport charges would be much lower than full service carriers. At some of the airports, the charges for no-frill terminals is half that of the terminals used by full-service airlines.

“Currently, we are paying the same charges (passenger service fees of Rs 225) as full-service carriers. Also, the airport earns more from us because we have higher passenger volumes. It’s a good move by GMR because it will be very beneficial to the low-cost aviation sector,” says Sharma.

He says that since his airline has an interline agreement with some of the full-service carriers, passengers would not have any trouble rushing to the other airport for changing a plane.