GMR team storms Turkey airport

Offers to pay licence fee of $2.7 billion over 20 years

BANGALORE: Piping global airport majors Fraport (Germany), Venice Airport (Italy), TAV (Turkey) and Chicago Airport (USA), the consortium of GMR Infrastructure Limited, Limak Insaat Sanavi and Malaysia Airports Holdings won the bid for Istanbul’s second airport - Sabiha Gokcen International Airport (SGA) - on Tuesday after offering to pay a licence fee of Rs 10,900 crore ($2.7 billion) to the Turkish government over 20 years.

The clinching point for the deal, says GMR Group chief financial officer (CFO) Madhu Terdal, was the Indian infrastructure company’s capability to handle rapidly growing traffic at the airport.

“We are seeing a similar kind of growth at the Delhi and Hyderabad airports as SGA. Turkey is seen as the China of Europe with an 8% growth in its gross domestic product (GDP). This airport, which was started five years back, has been growing at 50% over the last two years,” said Terdal.

“Its passenger traffic has grown from two lakh to 3.5 million in the last five years. This situation is very similar to the airports we are developing in India, so we can apply our learning to this project,” Terdal said.

A strong local partner (Limak) and topping the $2.6 billion (Rs 10,500 crore ) licence fee offering of highest bidder also swayed the bid in the consortium’s favour.

“Limak is a Turkish construction company, which has successfully completed projects in roads, highways, dams, hydroelectric power stations, industrial buildings, ports and airports. We also topped the highest bidder’s offer of $2.6 billion),” said Terdal.

This is GMR Infrastructure’s first airport project outside India, but the company is looking at more such opportunities, particularly in Europe.

“We now have 8-9 years of experience in airport business, which sufficiently qualifies us to seek business abroad,” says Terdal.

The Bangalore-based infrastructure company is expecting revenues from airport business to overtake earnings from other business — power, ports, roads, etc - by 2010.

Terdal said last year’s (2006) earnings of SGA were Rs 484 crore (€88 million), which is growing at an annual rate of 50%.

For the SGA airport, GMR holds an equal stake of 40% along with Turkish construction firm Limak. Malaysia Airport Holding has 20% share.

The new terminal, which will be built in 30 months, will upgrade the present passenger handling capacity of the airport from 3.5 million to 10 million.