Paving the way for development of the first-ever 'greenfield airport' in the country, the government on Monday signed a concession agreement with Bangalore International Airport Company Ltd for it to come up at Devanahalli in Karnataka over the next 33 months.
The airport would be constructed through private-public partnership, with the joint venture company comprising Karnataka State Investment and Industries Development Corporation and Airports Authority of India as well as a consortium of Siemens (Germany), Unique Zurich (Switzerland) and Larsen and Toubro (India).
While KSIIDC and AAI would hold 26 per cent equity in the joint venture firm BIAL, the private consortium would hold the remaining 74 per cent. The total project cost of building the plush airport is estimated to be Rs 1,300 crore (Rs 13 billion).
The concession agreement was signed in New Delhi by civil aviation secretary Ajay Prasad, BIAL chief W Bischoff and Karnataka's additional chief secretary S Krishnakumar in the presence of Civil Aviation Minister Praful Patel, Chief Minister Dharam Singh and his Deputy Siddaramaiah.
Observing that it was "not a happy sight" for foreign travellers to land at Indian airports, Patel said the modernistion and restructuring of Delhi and Mumbai airports would be given the "highest priority" as also the development of infrastructure at other airports in the country.
The new Bangalore airport would be constructed on a build, own, operate and transfer basis. The old Bangalore airport, operated by the Indian Air Force and the Hindustan Aeronautics Ltd, would be closed down to civilian traffic after completion of the new airport, as per a recent decision of the Union Cabinet.
The airport would accommodate a minimum of 20 aircraft of different types and have an ultimate capacity of catering to 40 million passengers, with the initial phase planned for a capacity of five million.
The civil aviation minister appealed to all state governments to reduce sales tax on aviation turbine fuel, which is 30 per cent in Karnataka.
"The high cost of ATF is largely due to the state sales tax. I urge all state governments to loosen a little bit on the sales tax in order to gain a high volume of air traffic and income," he said.
Patel said another greenfield airport would shortly come up at Hyderabad and give "tough competition" to the proposed airport at Devanahalli. "Such a competition will usher in a new era in airport development as also the civil aviation sector in the country."
Speaking on the occasion, Chief Minister Dharam Singh said with the signing of the agreement, over 10 years of efforts by the state government had fructified. "It marks a new development in India's infrastructure by combining private sector expertise and state capacity."
The Karnataka government has provided Rs 350 crore (Rs 3.50 billion) soft loan to BIAL and would provide budgetary support of Rs 400 crore (Rs 4 billion).