Modernizing Mumbai's airport may cost a further 350-400 crore in addition to the earlier estimated 9,800 crore, two officials familiar with the matter said.
“The increase is likely to be because of road construction, a new air traffic control (ATC) tower, which has to be relocated, and work on the Mithi river, which the state government wants,“ a government official said, requesting anonymity.
This could mean passengers paying more for travel as a significant part of such costs at airports have been passed on to them as development charges in the past two years.
The latest escalation in costs would be the third for the airport since it was privatized in 2006. The facility is operated by Mumbai International Airport Pvt. Ltd (Mial), a GVK Infra- structure and Power Ltd-led consortium.
It's not clear if there will be any more cost increases owing to the modernization, said the official cited above. The development was confirmed by a second government official.
Mial denied there would be any escalation. “The project cost, as of now, is 9,800 crore,“ said a Mial spokesperson. “If there is a change, we will report it to the board.“
The cost increase has come to light following an aviation ministry directive that asked private airport operators to report any escalation immediately.
The order was issued to avoid surprise cost escalations such as that for Delhi International Airport Ltd (DIAL), that jumped from an estimated 5,800 crore project cost to 12,700 crore in March last year.
Soon after that, DIAL sought an extension of the passenger levy beyond 1 March 2012, the current date till which the airport regulator has allowed it to charge such fees.
Passengers are being charged to help the developer recover 1,827 crore, or 20% of the earlier project estimate of 8,975 crore. They have to pay 200 for local travel and 1,300 for fly- ing overseas.
Passengers are paying 1,543 crore of the Mumbai airport's modernization cost by shelling out an airport development fee on fares since 2009. The airport charges 100 per domestic passenger and 600 for international travel.
“Escalations are for many reasons,“ said Amrit Pandurangi, senior director at consulting firm Deloitte Touche Tohmatsu Pvt. Ltd. “At least in the road projects the cost overruns are much less for private players compared with government projects. It's difficult to make comparisons in the airport sector because there are not enough examples.“ The expansion programme is scheduled to end in 2012.
Meanwhile, the Navi Mumbai airport project, which has just received environmental clearance, is set for a 2016 start, according to the Maharashtra state government. The new facility is being set up as the current Mumbai airport can't be expanded beyond a 40 million annual passenger capacity. The airport has had a freeze on new flight slots since last year.
Aviation Ministry: Located at Rajiv Gandhi Bhavan at the Safdarjung Airport in New Delhi, the Ministry of Civil Aviation is responsible for formulation of national policies and programs for the development and regulation of the Civil Aviation sector in the country. It is responsible for the administration of the Aircraft Act, 1934, Aircraft Rules, 1937 and various other legislations pertaining to the aviation sector in the country. This Ministry exercises administrative control over attached and autonomous organizations like the Directorate General of Civil Aviation, Bureau of Civil Aviation Security and Indira Gandhi Rashtriya Udan Academy and affiliated Public Sector Undertakings like National Aviation Company of India Limited, Airports Authority of India and Pawan Hans Helicopters Limited. The Commission of Railway Safety, which is responsible for safety in rail travel and operations in terms of the provisions of the Railways Act, 1989 also comes under the administrative control of this Ministry.
“The increase is likely to be because of road construction, a new air traffic control (ATC) tower, which has to be relocated, and work on the Mithi river, which the state government wants,“ a government official said, requesting anonymity.
This could mean passengers paying more for travel as a significant part of such costs at airports have been passed on to them as development charges in the past two years.
The latest escalation in costs would be the third for the airport since it was privatized in 2006. The facility is operated by Mumbai International Airport Pvt. Ltd (Mial), a GVK Infra- structure and Power Ltd-led consortium.
It's not clear if there will be any more cost increases owing to the modernization, said the official cited above. The development was confirmed by a second government official.
Mial denied there would be any escalation. “The project cost, as of now, is 9,800 crore,“ said a Mial spokesperson. “If there is a change, we will report it to the board.“
The cost increase has come to light following an aviation ministry directive that asked private airport operators to report any escalation immediately.
The order was issued to avoid surprise cost escalations such as that for Delhi International Airport Ltd (DIAL), that jumped from an estimated 5,800 crore project cost to 12,700 crore in March last year.
Soon after that, DIAL sought an extension of the passenger levy beyond 1 March 2012, the current date till which the airport regulator has allowed it to charge such fees.
Passengers are being charged to help the developer recover 1,827 crore, or 20% of the earlier project estimate of 8,975 crore. They have to pay 200 for local travel and 1,300 for fly- ing overseas.
Passengers are paying 1,543 crore of the Mumbai airport's modernization cost by shelling out an airport development fee on fares since 2009. The airport charges 100 per domestic passenger and 600 for international travel.
“Escalations are for many reasons,“ said Amrit Pandurangi, senior director at consulting firm Deloitte Touche Tohmatsu Pvt. Ltd. “At least in the road projects the cost overruns are much less for private players compared with government projects. It's difficult to make comparisons in the airport sector because there are not enough examples.“ The expansion programme is scheduled to end in 2012.
Meanwhile, the Navi Mumbai airport project, which has just received environmental clearance, is set for a 2016 start, according to the Maharashtra state government. The new facility is being set up as the current Mumbai airport can't be expanded beyond a 40 million annual passenger capacity. The airport has had a freeze on new flight slots since last year.
Aviation Ministry: Located at Rajiv Gandhi Bhavan at the Safdarjung Airport in New Delhi, the Ministry of Civil Aviation is responsible for formulation of national policies and programs for the development and regulation of the Civil Aviation sector in the country. It is responsible for the administration of the Aircraft Act, 1934, Aircraft Rules, 1937 and various other legislations pertaining to the aviation sector in the country. This Ministry exercises administrative control over attached and autonomous organizations like the Directorate General of Civil Aviation, Bureau of Civil Aviation Security and Indira Gandhi Rashtriya Udan Academy and affiliated Public Sector Undertakings like National Aviation Company of India Limited, Airports Authority of India and Pawan Hans Helicopters Limited. The Commission of Railway Safety, which is responsible for safety in rail travel and operations in terms of the provisions of the Railways Act, 1989 also comes under the administrative control of this Ministry.
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