Kempegowda Airport to get $2.2 bn investment for infra
Kempegowda International Airport (KIA) will see an investment of $2.2 billion to develop infrastructure that can handle about 90 million passengers by 2034.
Indian born Canadian businessman Prem Watsa whose Fairfax India Holdings Corporation has a 54% in the Bengaluru International Airport Ltd (BIAL), said in a letter to shareholders that there are plans to expand the airport.
The airport has three potential revenue sources—aero revenue, non aero revenue, and real estate monetisation.
Aero revenue is the revenue generated by providing services such as landing, parking and other services charged as user development fees (UDF) to airlines and passengers.
The aero tariffs, which are fixed by the Airport Economic Regulatory Authority (AERA), are set for five year periods, which are also known as control periods.
With regard to real estate monetisation, Watsa told the media that BIAL has approximately 460 acres of land adjoining the airport, which can be developed.
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Watsa said a 100% owned special purpose vehicle (SPV) subsidiary of BIAL was incorporated to carry on the real estate activities of BIAL. This entity—Bengaluru Airport City Limited (BACL), is now capitalised and staffed and is expected to be self funded.
Plans to develop the first 176 acres of land have been initiated, and several deals are being negotiated. Infrastructure planning and detailed design for the development of BIAL has been completed, said Watsa.
Following the principles of a smart city, BACL will focus on four asset classes—business parks, dining and entertainment village (RDE), retail, hospitality, and convention and exhibition centres.