34% capex cut to hit KIA expansion plans

Bengaluru: One metro station and several other key infrastructure plans at Kempegowda International Airport (KIA) are set to be impacted due to a sharp reduction in capital expenditure of the Bangalore International Airport Ltd (BIAL). The Airports Economic Regulatory Authority (AERA) has slashed BIAL’s capital expenditure for 2027-31 from Rs 20,920 crore to Rs 13,742 crore, cutting the admissible amount by Rs 7,178 crore, or about 35%. The move has forced the airport operator to rework the pace and funding of its expansion, including major planned connectivity projects like the Eastern Connectivity Tunnel, the KIA West Metro Station and the North Boundary Road.AERA, the regulator under the Union Civil Aviation Ministry, has excluded or substantially reduced several projects after determining whether their benefits justified passing the costs on to airport users.BIAL had proposed Rs 2,772 crore for the Eastern Connectivity Tunnel, a 2.8-km-long tunnel within the airport campus, planned as an alternative access from the eastern side to ease dependence on the existing western approach and help decongest Hebbal.Bengaluru Airport’s new ‘Care by BLR’ plan: Bags picked up at home, chauffeur to KIA’However, AERA valued the project at Rs 1,600 crore and allowed only 30%, or Rs 480 crore, as admissible expenditure for recovery through regulated airport charges.The tunnel is particularly significant because a part of it passes beneath the airport’s cross-field taxiway. BIAL has argued that completing this portion alongside airfield expansion would avoid the need to disrupt an operational taxiway later. The proposed eastern access is also expected to provide an alternative route for traffic from areas such as Whitefield and Bengaluru East.The Rs 143-crore KIA West Metro Station has been excluded altogether, as AERA held that it would not primarily benefit air passengers, but would cater substantially to airport employees and commercial, cargo and support establishments within the airport campus.BIAL, however, argued that “if the KIA West Metro Station is not constructed, such users would board and alight the Airport Terminal Metro Station, substantially increasing traffic and congestion around the terminal forecourt area”.The biggest project to receive approval is the second phase of Terminal 2. BIAL had proposed Rs 7,480 crore, while AERA approved Rs 6,030 crore. The cost of the T2 Phase 2 apron, which will accommodate additional aircraft parking, has been cut from Rs 906.87 crore to Rs 760 crore. The T1 upgrade has been reduced from Rs 1,129.95 crore to Rs 893.22 crore.The West Cross Field Taxiway project has also been scaled down from Rs 1,567.33 crore to Rs 1,225.30 crore.”Instead of allowing operators to recover the cost of approved projects from users upfront over the five-year control period, AERA’s revised approach links recovery for certain investments to the point at which the asset is completed and put into use,” a well-placed source told DH.AERA has approved a baseline yield of Rs 390.42 per passenger for Bengaluru airport, against BIAL’s proposed Rs 1,129.23.BIAL said most of the 34 projects it proposed have been cleared, although their approved values have been revised.”We have deferred some of the projects to a later period with a clear plan of managing operations without impeding our ability to grow and meet demand for air travel. AERA’s decision to not allow the full cost of the Eastern Connectivity Tunnel and other projects like KIA West Metro Station and North Boundary Road are seen as important challenges rather than permanent roadblocks. While some of these projects will be deferred to the next control period, we will continue to explore alternate funding mechanisms or concession structures as potential solutions,” said a spokesperson.Expenditure deduction BIAL’s capital expenditure plan for 2027-31: Rs 20,920 cr Approved by AERA: Rs 13,742 cr Capex slash: Rs 7,178 cr 2) Proposed cost of Eastern Connectivity Tunnel: Rs 2,772 cr Approved by AERA: Rs 1,600 cr 3) Proposed cost of T2 Phase 2 expansion: Rs 7,480 cr Approved by AERA: Rs 6,030 cr 4) Proposed cost of T1 upgrade: Rs 1,129.95 cr Approved by AERA: Rs 893.22 cr Excluded projects Rs 143 cr: KIA West Metro Station Rs 171.46 cr: North Boundary Road

Source: Deccan Herald