The Albert Brunner Interview

I am deeply convinced that we could become a regional hub for the southern part of India,” says Mr Albert Brunner, Chief Executive Officer, Bangalore International Airport Ltd, of the new airport in Bangalore that will begin handling flights in March 2008. He feels that Bangalore is at an advantage when compared with Hyderabad, where too a new airport will be inaugurated at least a month before Bangalore’s goes on stream, mainly because of Bangalore’s larger domestic market and its greater commercial importance vis-À-vis Hyderabad. In an interview at the Devanahalli airport, now under construction, Mr Brunner, a civil engineer by profession with a postgraduate training in business administration, discusses the airport’s progress and its prospects. Mr Brunner has been in the airport business for the last 15 years and was a key player in the planning and realisation of Zurich Airport’s fifth expansion programme. Bangalore International Airport Ltd has been formed by Siemens of Germany, Unique Zurich Airport, Larsen & Toubro Ltd, Karnataka Government and the Airports Authority of India. Excerpts from the The Hindu interview What stage is the airport at? Going around the place, it looks like it is still a long way off. You should have come one year ago. Then you would believe that we can actually do it. We started construction in July 2005 and we are obliged to open it within 33 months after start of construction. We have had an unprecedented growth in civil aviation and when we finally started construction, we realised that our airport would be simply too small. Then we had to increase the scope by approximately 40 per cent without postponing airport opening date by even one day. How will the airport compare with others in the region? Especially Hyderabad, which will also open a new airport almost simultaneously. Bangalore, like Hyderabad, has a huge advantage. We will have two runways which are parallel and we have huge area of land. Whenever the need arises we can expand the airport. We have a huge demand growth that it is difficult to match. Whatever we do, we always feel we are behind demand. I have never heard of such huge growth rates worldwide. In Bangalore, we have had 50 per cent increase in passengers in one year. In Europe they are happy if they have a 5 per cent increase. In terms of size and facilities here, how will it compare with the best in the world. For instance, you mentioned Zurich airport… Let me answer the question you asked me before, how does it compare with the other airports in India. Our goal was never to be the biggest one. We cannot compete with Bombay and Delhi. Delhi is the capital and Bombay is the commercial capital. It would not be realistic. I do also not believe that Bangalore can become a big international hub. Why? Because the big hubs in Asia are Singapore, Hong Kong and Bangkok. Although India would have been geographically a better location, it has missed the opportunity. I am convinced Bangalore could become a regional hub for the southern part of India. There is a need for a regional hub and I am pretty sure that once we have a nice airport, more international airlines will fly into Bangalore. From here we can distribute (passengers) within southern India. Hyderabad also believes it can position itself as a regional hub… We have more domestic demand than Hyderabad because Bangalore is bigger and, in terms of commercial issues, it is more important than Hyderabad. What is the distance between Hyderabad and Bangalore? Four-five hundred km. Within 500 km in Europe, there are at least three-four air hubs, big ones. There is enough room for two big hubs here in the southern part of India. If you look at Zurich, within 500 km, we have Frankfurt, Munich, Milan; Paris is 600 km, all huge airports. And the population there is even less than in India. You can’t compete with Hyderabad in terms of landing fees and things like that, can you? It is in our hands. We can decide the landing fees and the passenger fees. But we have to submit it to the Government of India for approval. It will not be a big difference between Hyderabad and Bangalore, because Hyderabad has about the same level or even higher investments than we have but they have fewer passengers. They cannot be cheaper unless they cross-subsidise with other incomes, which is not good corporate governance. You have made the point repeatedly that Bangalore has a larger domestic market than Hyderabad. Does the success of a greenfield airport depend mainly on this? It definitely helps if you have a strong home market. I know airports in the US that do not… Denver is a good example. It was supposed to be a hub, but doesn’t have a strong home market. It hasn’t really succeeded as a strong hub. If you have a strong home market, and if you have a home carrier at this location, definitely there’s a huge advantage. In our case, we try to attract Kingfisher. Kingfisher is quite dedicated to Bangalore. We also try to attract Jet Airways. If we have these two airlines based here, then we have really achieved something. You have started discussions with these airlines? Yes, a long time ago. Both of them are interested now in building up a maintenance base in Bangalore. Which is the first step of establishing a base. How would you go about wooing foreign airlines? For them, it will be a choice between two new airports — Bangalore and Hyderabad? Again, there are two criteria. One is the home market. How many people actually have to fly to Hyderabad or Bangalore. The second is how fast can they be distributed, those who do not have to fly into this city, how fast and how well can they be connected and distributed to their destinations. The network plays a significant role. If airlines like Jet or Kingfisher decide to have a base here, would it help in that? That is exactly the point. If they have a base here, international airlines fly in, and domestic airlines distribute them. Could you elaborate on the expanded scope of work? Bear in mind that an airport is never designed according to an annual figure. It is always designed according to peak hour (traffic). And, if you make certain facilities according to a certain peak hour and you manage to distribute the traffic over the 24 hours, then you can handle more passengers per year with the same infrastructure. The peak hour (traffic) has increased from roughly 1,950 to 2,700 passengers, which leads to a capacity of approximately 11.5 million. What are the changes you had to make to take care of the additional peak hour traffic? We increased the size of the terminal building by approximately 30 per cent. I wish we had made it bigger. But we could not postpone the airport opening date. Then we added a lot of aircraft parking stands — from 13 to 42. We completed the taxiway system. We added rapid exits from the runway in order to increase its capacity. How long do you think it will take care of the requirements? Not very long. We are well aware that due to the strong growth rate we have to expand immediately. We have a huge home market. Bangalore is a city of 7 million people. In Switzerland, altogether we have 7 million people and we have three airports. The Zurich airport has almost 20 million passengers. In the next three years, we will increase the size of the terminal, and that of the apron to have more aircraft stands. Then we will expand the apron area and add an additional taxiway. After that, we will have to go for a second runway, taxiways and additional apron and terminal building. What we have now should be enough till roughly 2011. We go into the next expansion immediately after airport opening date, which should cover the requirement till 2013-14 and then from 2014, we will need the second runway. Typically, for an airport like this, what percentage of income would come from passengers and landing fees and what percentage from other avenues? It depends very much on the country. In Western Europe, the profitable airports get roughly 50 per cent of their revenues from non-aeronautical side and 50 per cent from aeronautical activities. In America, a higher portion comes from aeronautical revenues. The state-owned airports in southern Europe normally don’t have a high portion of non-aeronauticals (revenues). In our case, we will start at a modest level of 10 per cent from non-aeronautical. It is our goal to increase this. If you provide nice shops, it is not only good for you as an airport operator, it not only brings you more revenue, it is also more interesting for the passengers. The shops should be arranged in such a way that they do not hinder good passenger flow. Passengers should continuously be tempted on their way to the aircraft but never hindered. There is a debate whether the HAL airport should continue to be in operation once this airport starts functioning. Is there a case for two airports in a city? It doesn’t make sense to build a new airport outside the city and keep the old one (within the city) open. Building a new airport so far away from the city is a reasonable approach, because the city will grow. Think of the transfer if somebody arrives in the HAL airport. How would he be brought to our airport. It takes at least one and a half hours, which is too long for a transfer. We cannot compete on tariffs. This discussion happens all round the world. Once a new airport is almost ready, people realise that they have to travel more to the new one and the pressure is always there to keep the old one. That happened in Munich, it happened in Canada. You simply have to resist it… What’s important is to have a good connection to the new airport. I think there are also a lot of transfer passengers on low-cost airlines and, to a certain extent, having an airport in the city from the point of view of the passengers is attractive. Why should you give the most prominent place to those passengers who pay the least? If at all, you should give it to a first-class carrier and not to a low-cost carrier. Also, noise is not yet an issue here. In Europe and America it is.