Kannur International Airport snippets

The Leela group that runs the eponymous chain of luxury hotels and lender Infrastructure Leasing and Financial Services Ltd (IL&FS) are close to becoming the biggest shareholders in a new airport to be built in Kannur, a town in north Kerala that is also the hometown of the hotel company's founder C.P. Krishnan Nair. He had first proposed an airport project in Kannur nearly 20 years ago. The Kannur airport project ran into bad weather because of government regulations that prohibit a second airport coming up within 150km of an existing one. Kannur is less than 150km away from Kozhikode and Mangalore, two cities with airports. This rule has now been waived for the private sector Kannur airport project.

V. Thulasidas, special officer and director of Kannur International Airport Ltd (Kial), the company formed by the Kerala government for the construction of the airport, said the board of directors of the airport company is yet to take a final decision. He did not divulge any details. “However, the foundation stone for the airport would be laid on 17 December in the presence of Kerala chief minister and Union civil aviation minister (Praful Patel). The preliminary work for the airport will start following that,“ Thulasidas said.

Hotel Leelaventure Ltd's vice-chairman and managing director Vivek Nair confirmed the development, adding the funding is being tied up.

The equity is being raised by his company and debt by co- promoter IL&FS, he said. “We are planning to build the airport in 30 months from 17 December. This will give a fillip to the tourism industry in the north Kerala. Already, six resorts are coming up in this area,“ he said.

Nair also said a dedicated rail line, to be built by the Indian Railways and Kial, is planned to connect Kannur with Bekal, a popular tourist town in north Kerala. The journey from Kannur to Bekal will take 50 minutes instead of three- and-a-half hours from the Mangalore airport.

“This airport is unlikely to affect other airports in Kerala or the New Mangalore airport, as the plan by Kannur airport is to develop the tourism belt in north Kerala, which is untapped. However, the passenger growth estimated in this airport is not attractive and, therefore, tourism-linked promotions are critical for the airport's success,“ said an aviation industry consultant on the condition of anonymity.

Nair of Leelaventure said that upfront development costs will be low--an estimated `850 crore--though the airport would expand passenger capacity in the future.

The final cost of the project Source: Companies and the capital structure of the company has not yet been finalized. IL&FS is working on a detailed project report, said Nair.

“Initially, the airport would be able to handle jumbo jet Boeing 747. In a later stage, it would be able to handle Airbus 380,“ he added.

Apart from Leela group and IL&FS, with a combined stake of 32%, other private companies that would have a stake include Mumbai-based Mennen Group, that runs several financial services firms and Mennen Aviation and Hos- pitality Ltd. It will own 16%.

Kerala Industrial Infrastructure Development Corporation, a state-run agency, will own 26% of Kannur airport in lieu of part of a value of land acquired for the project.

Kerala State Industrial Development Corporation and other state-run public sector units will own 3%, while state- run oil marketing companies Hindustan Petroleum Co. Ltd (HPCL) and Indian Oil Corp.
Ltd (IOCL) will own 1%. The Airports Authority of India and Changi Airport Services Pte Ltd of Singapore will hold 15% in the project.