GVK Plans Local and International Airport Growth

Its status as India’s commercial and entertainment capital means that Mumbai has long been associated with trade, innovation and the bold architectural design of its iconic buildings.  One such building is the Gateway of India, a huge stone archway built on the waterfront in central Mumbai in 1911, which has become an enduring image of the city and a key attraction visited by millions every year.

So, it is perhaps fitting that just over a century later year, it will be joined by a new gateway to India – the new showpiece Terminal 2 at Mumbai’s Chhatrapati Shivaji International Airport (CSIA), which is set to open later this year.  Dubbed ‘T2’, the refurbished facility will consist of four integrated levels covering more than 439,000sqm and boasting 21,000sqm of retail space.  The complex, together with new taxiways and aprons will ensure that the airport has the capacity to accommodate up to 40 million passengers annually.

Offering what has been billed as unrivalled levels of customer service and state-of-the-art facilities, T2 will handle the airport’s international operations and will be the first thing millions of international tourists experience as they arrive in India for the first time.  A huge exhibition area will showcase Indian art through the centuries, with touch screens for visitors to explain each piece and learn about its history and origin.

It is also the culmination of years of work by operating company GVK to modernise and expand CSIA’s facilities to ensure it can handle the ever-growing passenger numbers passing registered through the gateway, while also positioning it to become a leading international hub.

“I think the opening of Terminal 2 represents one of the most important milestones in the history not only of CSIA but also of Mumbai,” says Sanjay Reddy, chairman, GVK Power and Infrastructure Limited, parent of this year’s Routes Asia host, CSIA.  “T2 will make CSIA a gateway to both the city of Mumbai and the hinterland for millions of international passengers and, more importantly, we are setting new benchmarks in ways of operating; it will receive global recognition for its design and quality of service.”

Reddy, the son of GVK founder GV Krishna Reddy, has a diverse portfolio of business interests in areas such as energy, resources, airports and transportation, and he has helped to steer the group’s ever-expanding airport profile which now includes managing Chhatrapati Shivaji and Bengaluru international airports, and will soon include a terminal at Bali’s Denpasar Airport and a new greenfield airport at Yogyakarta, Indonesia.

Sanjay Reddy, vice chair, GVK Power and Infrastructure details why GVK became part of the Indian airport privatisation process and its plans for development in Mumbai and Bangalore.

Reddy says the T2 project was not without its challenges.  GVK planners were hampered by the airport’s position which is hemmed in by urban development making expansion difficult, while the weak financial outlook also caused concerns.

The new facility represents the cornerstone of GVK’s route development strategy, which seeks to attract new carriers from Europe, Asia, Russia and the CIS, and North America under the campaigning title “A hub in the making”.  With this in mind, T2 has been designed to handle large volumes of connecting passengers and to allow airlines to easily organise banks of arrivals and departures - two elements that are seen as crucial by GVK to make CSIA an enticing proposition for long-haul carriers.

While its ultra modern facilities will no doubt prove attractive to airlines, Mumbai’s importance as the beating heart of India’s financial, business and entertainment industries offers another compelling reason for them to come, according to Reddy. “I think airlines are going to be attracted to Mumbai because it is the commercial centre of India and ideally located for international routes; there is currently a good mix of different carriers, but we are targeting long-haul airlines connecting Europe and the US and emerging markets such as China, Africa and South America,” says Reddy.  “Routes Asia will provide a perfect opportunity to showcase the new terminal and promote it as an international gateway,” he adds.  Indeed, delegates will get the chance for an exclusive sneak peak tour of the facility during the event.

According to its route development action plan, GVK is seeking new services to Manila, Ho Chi Minh, Jakarta, Beijing, Guangzhou, Moscow and Tehran in the next one to two years, followed by services to Rome, Lisbon, Manchester and Seoul, among others, over the coming decade.  The airport’s efforts are already bearing fruit and it celebrated a new Air China service to Chengdu last year.

The new Terminal 2 represents the culmination of the GVK brief to improve the customer experience and capacity of CSIA.  When it was awarded the contract to operate CSIA in 2006, the airport was congested, its facilities were in a bad state and it had a reputation among passengers for delays and lengthy queues.  Proof of what has been achieved since can be found in the host of awards for customer service, safety (including the prestigious Golden Peacock National Quality Award for 2012 from India’s Institute of Directors) and the 2011 ACI ASQ award in the 25–40 million passenger category.

For Reddy, the awards are a nice recognition of what has been at the core of GVK’s business philosophy for decades.   “As far as customer service is concerned, I believe it is of paramount importance. Our family business began in the hospitality sector and we have hotels as well as airports; as a family, we very much believe in hospitality as the core of our business,” he says.

But Mumbai was only the beginning of GVK’s airport ambitions, and just three years after taking over Mumbai, the company formed the major part of a consortium that was awarded the contract to manage Bangalore’s newly opened Bengaluru International Airport.

With scope to expand CSIA limited by its location, the Indian government has given the go-ahead for a new international airport to be built on the outskirts of the city.  Named Navi Mumbai International Airport will be managed by a private company on a similar model to CSIA, but does Reddy see it as a potential threat? Not at all, he says, as Navi is intended to be primarily a domestic airport.

“It is not going to be a threat at all because the new airport is being built to handle domestic services and will not replace the existing one which, perhaps uniquely, is being rebuilt to better serve international traffic.  Typically, an existing airport is destroyed or turned into a secondary airport by the construction of a new airport, but this is definitely not the case in Mumbai.”  Reddy also points out that GVK can itself bid to run Navi Mumbai, and if this contract was forthcoming, states that “we would develop it as a complementary airport to CSIA and not compete against it for traffic”.

Bengaluru’s traffic grew rapidly after its completion and, once again, the Indian government’s brief was that the private operator should expand the facility and improve services, as befitting an airport that serves the home of the country’s burgeoning IT capital which has been described as the Silicon Valley of India.  A year after taking over Bengaluru, operating company Bangalore International Airport Ltd (BIAL) unveiled an ambitious expansion programme, including the expansion of the existing Terminal 1 to cater for 36 million passengers.

Work began in August 2011 at a cost of $221 million and involves the extension of the terminal in both directions, with improvements including better access to seating, amenities and commercial facilities, and smoother check-in and departure processing. The project is expected to be completed by the summer of 2013.

“When we decided to expand Bengaluru, our priority first and foremost was to improve the passenger facility and expand the terminal because there was a dire need for more capacity as it was handling more than 12 million passengers.  With the completion of this work, the facilities will be able to handle between 18–20 million,” explains Reddy.  Passengers will also experience “a next generation of facilities and amenities” beams Reddy.

Meanwhile, BIAL is pursuing a route development strategy that centres on making Bengaluru the gateway to southern India.  In 2011, the airport attracted six new international airlines, including Etihad, Tiger, Cathay Pacific and Bangkok Airways.  According to Reddy, BIAL sees IndiGo and Jet Airways as partners that can help to develop the airport’s regional network further.

In November 2012, GVK took a step in a new direction with the signing of a contract with the Airports Authority of Indonesia (Angkasa Pura Airports) to manage non-aeronautical commercial operations at Bali’s Ngurah Rai ‘Denpasar’ International Airport under a five-year operations and management contract.  Ngurah Rai is Indonesia’s second busiest airport after the capital’s Jakarta International Airport, and is severley congested, leading to the need for an overhaul of its facilities.  Also, GVK has signed a memorandum of understanding with the Indonesian government to develop an international greenfield airport in Yogyakarta in central Java.

Reddy is excited about the prospects of both projects: “The government is very keen on the [Yogyakarta] project. There is a lot of potential as a tourism attraction but currently transport is severely limited.”  With GVK’s long track record of managing and modernising overcrowded airports into award-winning facilities, it should have little trouble.

This story was modified from an original feature that appeared in the latest issue of Routes News.

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