Airport operators bet on non-fare biz to beat blues

By Janaki Krishnan & Kaustav Roy

MUMBAI (Reuters) - India's private airport operators are betting on boosting the share of non-aeronautical revenues to beat slowing air traffic, officials said.

Non-aeronautical revenues are expected to rise over 50 percent of overall airport revenues by 2015, a joint study by Associated Chambers of Commerce and Industry in India and global consultancy firm KPMG, predicted.

Non-aeronautical retail activities would grow to an extent that other revenue sources for the Airports Authority of India would be from hospitality, office, trading concessions, public admission fees and miscellaneous activities, the report said.

The global average of non-aeronautical revenues is close to 50 percent of the total airport revenues, while it is around 20 percent in India, Manikkan Sangameswaram, Managing Director of Babcock & Brown, in India said. He was previously with ABN Amro, one of the airport privatisation advisors.

"I'll be very surprised if that proportion (of non-aeronautical revenues) did not go up," said Madan Menon, managing director (India), ABN Amro Bank.

In India airports are state-mandated monopolies where all charges are capped by the government, leaving little room for optimisation. Hence, non-aeronautical revenues is significant.

GMR Infrastructure Ltd, one of the developers of Delhi's Indira Gandhi International Airport and Hyderabad International Airport, is working with retail concessionaires such as HMS Host, Nuance and Plaza Premium to provide retail and food & beverages facilities in Hyderabad.

It also has a 7-year contract with Laqshya Media to manage advertising space at the airport and has got notification for two Special Economic Zones around Hyderabad airport.