Tamil Nadu govt dials Fairfax-backed Bangalore International Airport to set up Hosur airport

Also, read: Tamil Nadu CM Stalin announces international airport in Hosur

When contacted, Sandeep Nanduri, managing director of the Tamil Nadu Industrial Development Corporation (TIDCO), confirmed that they had a discussion with BIAL but refused to divulge further details.

"We had a meeting with BIAL and are also aware that they have contractual agreement stipulating that there should be no new airport within the 150-kilometer radius till 2033. So we will be exploring all options to operate Hosur airport before that. We have multiple options, but we have not settled on one." said Nanduri.

BIAL did not respond to queries from Moneycontrol.

Canadian billionaire Prem Watsa's Fairfax Group holds a majority stake, 64%, in BIAL, which operates Bengaluru's Kempegowda International Airport (KIA), while Siemens Project Ventures holds 10%. The remaining 26% is held by the Karnataka State Industrial & Infrastructure Development Corporation Limited (13%) and the Airports Authority of India (13%).

The main challenge for the proposed Hosur airport is that BIAL has a concession agreement with the Union Ministry of Civil Aviation from July 5, 2004, which restricts new airports within a 150 km radius, until the Kempegowda International Airport's 25th anniversary, which is in May 2033. Hosur falls within this radius. The Kempegowda International Airport commenced operations on May 24, 2008.

"It's a win-win situation for both. If BIAL comes on board, we can expedite the airport setup process. Otherwise, we will have to wait until 2033 to begin operations at Hosur airport. At the same time, BIAL's revenue will also remain unaffected," one the people cited said.

Nanduri said that setting up a new airport is a time-consuming process involving land identification, land acquisition, and clearances. "The government has announced that a new airport will be developed. We also need to work out other details such as whether it should be a government or PPP project, and who should be our partners. It's still in the preliminary stage." said Nanduri

Taneja Aerospace and Aviation Limited (TAAL), which owns and operates an aerodrome at Thali in Hosur, was not able to commence commercial operations due to the concession agreement. It takes 30 minutes by road to reach Hosur from Bengaluru’s Electronics City, while it takes almost two hours to reach Kempegowda International Airport.

BIAL keen on a second Bengaluru airport

Separately, the Karnataka government has also began scouting for land for a second airport in Bengaluru, which is likely to be built on Tumakuru Road.

As per sources, BIAL is also keen on a second Bengaluru airport. "We are interested in both Hosur airport and the proposed second Bengaluru airport. But both are still in the nascent stages and it's still a long way to go," a BIAL official said.

Also, read: A second airport for Bengaluru on the cards, Karnataka scouts for land

Last week, state Infrastructure Development Department (IDD) Minister MB Patil said: "I have directed the authorities to submit a feasibility report for the new airport. KIA, the third busiest in India after Delhi and Mumbai, managed 37.5 million passengers and over 4 lakh tonnes of cargo last year. This highlights the necessity for a second airport to accommodate future growth."

He said there is a need for a second airport to develop an industrial ecosystem beyond Bengaluru. “When KIA airport in Devanahalli was established, the contract terms stipulated that no other airport could be constructed within a 150-kilometer radius until 2033. With nine years remaining under this agreement, there is a need to start preparations now. The current airport is projected to reach its peak passenger handling capacity by 2033 and its maximum cargo handling capacity by 2040,” said Patil.

In fact, there has been a long-standing demand to reopen the city's old Hindustan Aeronautics Limited (HAL) airport, which was closed in 2008 when KIA began operations in Devanahalli, around 40 km away from the Central Business District. Currently, the HAL airport is used exclusively for military, chartered, and VIP flights.

While BIAL had expressed interest in taking over and operating HAL airport, this did not materialise due to disagreements over revenue sharing between stakeholders.

BIAL’s current focus is on refurbishing KIA’s Terminal 1 which will commence by August 2024 and then the phase two work on Terminal 2.  However,  construction of Terminal 3 is expected in the late 2020s or early 2030s. The addition will increase the airport's capacity to around 90-100 million passengers annually.

Also, read: Bengaluru airport likely to get automated people mover for seamless transfers between terminals

BIAL Chief Operating Officer Satyaki Raghunath had earlier stated that the capacity of KIA would be exhausted by the early 2030s with only two runways. "We will run out of capacity by the early 2030s because we currently only have two runways, and the aviation market in Bengaluru needs to expand beyond this limitation. Therefore, we must explore additional space, whether it is along Tumakuru Road, Mysuru Road, or Hosur Road," he had said in November 2023.

In 2001,BIAL was established to build, own, and operate Bengaluru airport for a 60-year concession period. The company has been granted exclusive rights for the development, design, financing, construction, commissioning, maintenance, operation, and management of the airport through a public-private partnership model.

The airport commenced operations on May 24, 2008, 33 months after the start of construction. On December 1, 2023, KIA crossed 300 million passengers since its opening. It is the country’s third busiest airport after Delhi and Mumbai.

Also, read: Airport at Tamil Nadu's Hosur to benefit Bengaluru's tech hub Electronics City and nearby areas