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PPP in India - Best practices and lessons from

GMR Airports
PUBLIC-PRIVATE PARTNERSHIP CONFERENCE
Lagos, Nigeria. November 13-15, 2011

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Agenda

• Introduction to GMR Group

• GMR Group Airport Sector : Case Study

• Our experience of PPP projects

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GMR Group’s vision is…

“GMR Group will be an Institution in

perpetuity that will build Entrepreneurial

Organizations, making a difference to

Society through creation of Value”

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From being a regional player in the 90s, GMR has today
emerged as India’s leading infrastructure company

3
GMR has a strong a diverse portfolio of assets
across different infrastructure sectors
Highways & Urban
Airports Energy Other businesses
Infrastructure

• Among top 5 private • One of the 1st private • One of the top 3 • International presence
airport developers companies in power private Highways - Coal mines in
globally generation in India companies in India Indonesia, South
Africa & gas based
• Serves nearly 30% of • 3 power plants & 15 • EPC business to power generation in
India’s passenger & projects under support other sectors Singapore
29% of Cargo traffic development
• Over 1680 lane kms • Delhi Daredevils
• 2 key airports in India • Total power of highways assets franchisee in Indian
at Delhi & Hyderabad generation capacity of Premier League
~9000 MW • Developing another 4
Cricket
• First Indian developer projects of over 2000
with international • One of the 1st Indian lane kms • Corporate Social
airports developers to venture Responsibility - GMR
into Solar power • 4 SEZ projects spread
Varalakshmi
• Sabiha Gocken generation over 15000 acres
Foundation
Airport, Istanbul &
Male’ International • One of the World’s • Integrated Aero-city
Airport, Maldives largest barge development in 1750
mounted power plant acres of land

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Agenda

• Introduction to GMR Group

• GMR Group Airport Sector – Case Study

• Our experience of PPP projects

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GMR Group : Indira Gandhi & Rajiv Gandhi
A Case Study

GMR Airports

Delhi International Hyderabad Sabiha Gokcen Male‟ International


Airport International Airport Airport, Istanbul Airport, Maldives

 World’s 5th largest private airport company

‒ Invested USD 4.2 Bn in 3 operating airports at Delhi, Hyderabad and Istanbul

‒ Proposed investment of over USD 500 Mn in Maldives

 Handles over 48 million passenger and over 700,000 MT of Air Cargo

 Airport capacity of 100 million passengers

 Handles nearly 30% of India’s passenger and 29% of Cargo traffic

 Hyderabad Airport ranked No. 1 consistently for last 2 years in terms of customer service quality by ACI in
its category. 6
Delhi International Airport (DEL)
“A global marvel”

Rated World‟s “4th Best Airport”


& “Most Improved Airport for Key features
Airport Service Quality (ASQ)”
in the 15 to 25 Mn. category • Concession Period : 30+30 yrs
• Only airport in India with 3 runways
• India‟s longest Runway : 4,430 mtrs
• High speed rail link to City Center
• Car park for 4,300 cars
• Terminal 3 – International Scale
‒ 168 check-in counters
‒ 92 walkalators, 31 escalators
‒ 30 security channels
‒ 78 Aero bridges
‒ 12 baggage reclaim belts
• Handled 20.6 mn Domestic and 9.3 mn
International passengers in FY‟11
• 5100 acres of land
• 250 Acres of Property Development
• „Gold‟ rating from LEED

The T3 terminal with an area spanning 502,000 sq mt. was built in a record time of 37 months
Hyderabad International Airport (HYD)
“First Greenfield PPP Airport of India”
• Concession Period : 30+30 yrs
• Land : 5495 Acres
• India‟s 2nd longest runway -4260 m
• 42 Aircraft parking stands
• 146 check-in counters and 46 immigration counters
• „Silver‟ rating from LEED
• New growth driver – Aero related SEZ
• Handled 5.8 mn Domestic and 1.9 mn International passengers in FY‟11
Sabiha Gokcen International Airport (SAW)
Istanbul, Turkey
“Sabiha Gökçen was declared winner in the its category
for highest traffic growth for last two years”

“Received Best Airport Marketing Award in European region”

 First overseas project for GMR Group and any Indian airport developer
 Takeover in May‟08 for a concession period of 20 years
 Total capital expenditure (phase 1) est. at Euro 451 Mn.
 Expansion from 5 Mn. passenger capacity to 25 Mn.
 Up-gradation of infrastructure to enhance Pax comfort & services
 New terminal inaugurated on 31st Oct. 2009
 Aprons 45 + 11 (Cargo) parking capacity.
Male’ International Airport (MLE)
Maldives

 Won the bid in June 2010


 Concession period of 25 + 10 years
 COD (New Terminal) : July 2014
 Total capital expenditure est. at USD 373 Mn.
 Expansion from 2.6 Mn. passenger capacity to 5.2 Mn.
 Up-gradation of infrastructure to enhance pax comfort and services
A Journey – GMR Airports

India’s first
Greenfield airport One of the biggest
commissioned DEL awarded most
improved airport in terminals in the world ; T3
the world for service at DEL is commissioned
HYD ranked 1st for quality in record time
service quality
globally in 5-15mn
category

2008 2009 2010 2011

20 mn terminal SAW one of


commissioned in the fastest
GMR becomes record time of 18 growing Successful bid and
first Indian months @ SAW airports in the take over of Male’
company
.
with an world airport by GMR
airport
. outside
India
.
. 11
GMR has pioneered multiple facets of airport
development – with many firsts

A Aerotropolis Development

B Commercial Development

C Hub Development

D Customer Service

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GMR has pioneered the concept of Aerotropolis in India

Aerotropolis schematic

Business Park

Aerotrain
Industrial
Park
Hotel and
Entertainment
District
Integrated
New planned development to
airport to create a new
sustain air traffic „global city‟

Hotel
growth Bonded

Hotel

Shopping Arcades
Terminal/

Shopping Arcades
Residential Warehouse
Residential
District

Business Offices
Business Offices

Terminal/
Aerolanes

Research/
Technology Logistics Park Distribution
Park Air Cargo and Center
Flow-Thru Free Trade Zone
and
E-Fulfillment
Well planned Facilities Industrial Park
Aerotrain

infrastructure to de-
bottleneck old CBD and
create new CBD

Concept designed by Prof. John Kasarda 13


And is developing an Aerotropolis at our airports

ILLUSTRATIVE

Leather Contract
park Packaging
FTWZ Golf
Research Course
Facilities
Amusement
Multi-Specialty Logisport Park
Hospital Destination
Retail
Healthport Funport
Training
Arena Hotel
Institutes
Aerotr
opolis
WTC / IFC Supporting
Commercial Retail
Office Eduport
Space District
B-School/Intl
Hotels Manuf School
Park
Sports
Time- Facility
Serviced sensitive Training
Apts manufac Academy
turing
Other
Theme Anchor
Developments

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GMR has pioneered multiple facets of airport
development – with many firsts

A Aerotropolis Development

B Commercial Development

C Hub Development

D Customer Service

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Besides successful operations, we have taken up
participation in multiple commercial streams …

Delhi Hyderabad Istanbul Male‟


Duty Free
Fuel farm
Cargo
*
F&B
*
Advertising
Car Park
Hotel
Security
MRO
IT
Aviation Services
Transportation

GMR is one of the few select airport developers with such broad and deep commercial
expertise and experience
* Under implementation 16
… to bring a turn-around in commercial performance,
while maintaining best-in-class service quality

Hyderabad Airport – many first of its kind


Delhi Airport – comparable to global benchmark
concepts in Inida
Commercial Best airport Cargo Airport
revenue globally in its traffic globally in its
increase in category rated growth in category rated
4 years by ACI 3 years by ACI

~150,000 sq.m. of commercial space ~30,000 sq.m. of commercial space


~600,000 MT of Cargo handled ~80,000 MT of Cargo handled

Istanbul Airport – comparable to similar


Male‟ Airport – plans for major overhaul
European airports

Commercial revenue Plans to more than double the retail space


increase in 2 years to ~15,000 sq.m.

~40,000 sq.m. of commercial space Introducing many unique concepts

~20,000 MT of Cargo handled ~50,000 MT of Cargo handled

GMR manages nearly 2.5 million sq.ft. of Commercial Area across 4 airports
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GMR has pioneered multiple facets of airport
development – with many firsts

A Aerotropolis Development

B Commercial Development

C Hub Development

D Customer Service

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GMR is creating a hub at DIAL and has led
regional traffic development at its airports

Anchor airline partnership


Delhi
DEL

Developing a hub product India‟s Hub


Connectivity initiatives
Hyderabad

Develop regional routes


HYD,

Airline incentives Regional Hub

Support infrastructure

Airline incentive program


Istanbul
SAW,

The fastest
Tourism development agenda
growing airport
Route development

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This has been a result of our pro-active and
partnership mindset

• We undertake a detailed and scientific approach to analyze the traffic


Route development potential
Development
Analysis • This involves analyzing the existing and potential growth traffic along different
domestic and international routes

• GMR has a strong and experienced Airline Marketing Team which works
Dedicated Airline
exclusively with the government and airlines on traffic and route development
Marketing Team
• The continuous focus and dialogue with Airlines ensures a win-win partnership

• GMR works closely with The Civil Aviation Authority, Government & Airlines to
Partnership gain alignment regarding traffic development
Approach • This ensures a holistic and efficient approach towards adding new routes and
enhancing traffic at our airports

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GMR has pioneered multiple facets of airport
development – with many firsts

A Aerotropolis Development

B Commercial Development

C Hub Development

D Customer Service

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Managing service levels in a high growth
scenario needs a focused team and culture

Needs focused
High traffic growth comes with its challenges
intervention
Queues Dedicated team to
monitor Service Quality

Delays
Training on Service
Orientation

Operational SOPs to
maintain service levels
Baggage handling

Service Quality as part


of airport culture

Stakeholder Alignment

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GMR has emerged as a global leader in
Airport Service Quality

4.51
ASQ score
HYD, Hyderabad

4.44
4.4

in 5-15mn pax
category globally

2008 2009 2010

5 4.61 4.70
4.28 4.28 4.34 #12
3.88
4
DEL, Delhi

3.36
3.06
2.87 Global ASQ
3
ranking
#101
2 in 25-40mn pax
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
08 08 08 08 09 09 09 09 10 10 10 10
category globally

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Agenda

• Introduction to GMR Group

• GMR Group Airport Sector Case Study

• Our experience of PPP projects

24
Across its airport assets, GMR Group has witnessed
different private participation models

GMR Airports

Delhi Hyderabad Male‟


Sabiha Gokcen
International International International
Airport, Istanbul
Airport Airport Airport Maldives

Joint Shareholding Joint Shareholding Complete Complete


with Govt. Agency with Govt. Agency Privatization of privatization
Landside

Brownfield Greenfield Brownfield Brownfield


expansion and development development development
modernization

BOT concession for BOT concession for BOT Concession 20 BOT concession for
30+30 years 30+30 years years (only for 25 + 10 years
Terminal)

In all these projects, Government has decided to keep the Air Navigation & ATC,
airport security as well as immigration out of private developer‟s scope
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As a result of such a diverse portfolio, our experience
and challenges have been unique at each airport

Bidding Development Construction Commissioning Operations

•Different style and •Government has a •Robust and detailed •Airlines shifting •Turn-around at DEL
motive of bidding key role during planning required
development
•Testing & trials of •Service quality
•Greenfield •Local & on-ground equipment & facilities delivery at HYD
development at •High level of understanding
GHIAL flexibility and
innovation in Male’ •Readiness of •Attracting traffic in a
and limited in DIAL •Contracting strategy stakeholders like competitive situation
•Revenue share at & construction concessionaires – SAW
DIAL methodology are
•Fast-track of key for project cost
agreement required & time •Coordination with •Streamline
•Open auction at ISG govt. agencies – operations to meet
Security, ATC etc. global practices and
•Debt and other •Coordination with standards – MLE
•Complex financial innovative project govt. agencies for
bid at Male’ funding methods clearances •Connectivity to airport
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Agenda

• Introduction to GMR Group

• GMR Group Airport Sector Case Study

• Our experience of PPP projects

– Successful PPP project: Delhi airport

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Lifeline of Delhi International Airport Project

Delhi Overtakes Mumbai


as the busiest airport in
India FY 2011
Start of New Dom.
Terminal Ops
April 2009
Upgrade of Intl. Terminal 3
Terminal Complete Commissioning
Jun 2008 July 2010
Takeover of
Operations 3rd Runway
Award of Ops begin
May 2006
Contract Nov 2008
Issue of Jan 2006 Foundation Intl. Terminal
Supreme renovation –
RFP stone &
Court causing
April 2005 Financial
Clearance
closure for passenger
Sep 2006 inconvenience
T3
AAI approves Feb 2007 2008
Baseline
modernization
proposal Court Case on
June 2003 the Bid Decision
Feb 2006

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Project development at Delhi International Airport:
Innovative financing to meet high service quality requirements

2 key agreements signed with government which


increased our commitments
Financing Mechanism
Operations, Maintenance & Development
+ Project Cost
Agreement (OMDA) with AAI, State Support
Agreement (SSA) with GoI - Funding Means

• 30 years concession; + 30 year option Equity/internal accruals


• Retention of all 2400 staff for 3 years
• Mandatory capital expenditure program by Mar ‘10 Property development deposits
(Refundable)
• Capacity of 46Mn pax & 1.5Mn MT cargo by 2025
• Specified processing time – check-in, baggage, .. Rupee term Loan
• Hybrid till – 30% non-aero revenue to subsidize aero ECB
Gap
• Right of First Refusal for second airport in NCR
- Airport Development Fee
• Encumbrance free land for development

High service quality meant higher project cost, which DIAL financed through innovation
– sources such as ECBs, refundable deposits, land lease deposits,.. were unprecedented
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Project Commissioning at Delhi International Airport:
Phased delivery to meet expectations, demand & commitments

New Runway operations – November 2008


• Capable of handling A 380 handling - Eased congestion and capacity

T1 D commissioned in April 2009


• De-congestion of domestic traffic and increase in ASQ rating

Commencement of commercial operations from T3 - July 2010


• Delivery as per the schedule without obstructing regular operations of the airport
Capacity, Floor Const.
Airport
mppa sqm months
• Key success factors in commissioning
London
‒ Stakeholder management 28 353,000 72
Heathrow T5
‒ Best in class service providers Madrid 42 757,000 70
‒ Training of entire airport community Bangkok 45 563,000 60
‒ Coordinated efforts for identification Kuala Lumpur 25 479,000 54
of the gaps & Risk mitigation Beijing 43 900,000 52
Delhi T3 34 502,000 37

Shifting of airport operations to T3 in phases planned to support connectivity


initiatives – Alternate road to T3 (Northern Access road), Airport Metro, slip roads etc
Source: Jacobs Benchmarking study, 2009 30
Long term master planning:
Taking a flexible and modular approach – Current phase

T1
Runway, 10/28

T2

T3
Cross Taxiways

Twin Taxiways

Runway, 11/29

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Long term master planning:
Taking a flexible and modular approach – Saturation phase

Runway, 1

Runway, 2

CBD
T4

T3 T5

Runway, 4

Runway, 3

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Thank you

Sharad Sachdeva, GM – Business Development


sharad.sachdeva@gmrgroup.in

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