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DE RUEHCG #0099/01 0741046
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O 141046Z MAR 08
FM AMCONSUL CHENNAI
TO RUEHC/SECSTATE WASHDC PRIORITY 1548
INFO RHEHNSC/NSC WASHDC IMMEDIATE
RUEHCG/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHKL/AMEMBASSY KUALA LUMPUR 0186
RUEHSW/AMEMBASSY BERN 0063
RUEHXQ/ALL EUROPEAN UNION POST COLLECTIVE
RUEBBEA/DEPT OF TRANS WASHDC
RHMCSUU/FAA NATIONAL HQ WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS CHENNAI 000099 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR SCA/INS 
STATE FOR EB/TRA VIKI LIMAYE-DAVIS 
PASS DOT STEVEN HATLEY 
PASS FAA THOMAS NASKOVIAK 
PASS TSA ARMEN SAHAGIAN 
PASS USTDA HENRY STEINGASS AND JASON NAGY 
PASS DOC ITA/MAC/OSA ART STERN AND KIT RUDD 
PASS USTR ADINA ADLER 
 
E.O. 12958: N/A 
TAGS: ECON EAIR ETRD EFIN PREL PGOV IN
 
SUBJECT: NEW AIRPORTS IN HYDERABAD AND BANGALORE WILL BRING 
WORLD-CLASS AIR TRAVEL TO SOUTH INDIA 
 
REF: NEW DELHI 756 
 
¶1. (SBU) Summary: The new airports slated to open in the next 
several weeks in both Hyderabad and Bangalore promise to bring 
world-class modernity and comfort to air travelers in South India. 
The opening of the new airports will also close the cities' current 
airports for commercial aviation, one of the key conditions in the 
contracts that the Indian government signed with the public-private 
partnerships that are building and will operate the new facilities. 
The closure of the old airports is causing some fuss among workers 
unwilling to relocate -- and some politicians attempting to pander 
to them -- but all the key players recognize the importance of 
honoring the governments' commitments.  Although both airports are 
located significant distances from their respective cities, we 
expect that travelers will not complain about the commute once they 
experience the facilities' world-class amenities.  End Summary. 
 
Old airport closures spark some protests . . . 
--------------------------------------------- - 
 
¶2. (U) Planned closures of the current airports in both Hyderabad 
and Bangalore have kicked off some protests, including a 
"non-cooperation" work stoppage that lasted two days.  Led mainly by 
employees from the Airport Authority of India (AAI) -- a government 
body which manages a range of services, from janitorial to 
fire-fighting and air-traffic control -- and joined by some media 
outlets and opportunistic politicians, these protests had little 
practical effect.  The "non-cooperation" ended on March 13, when 
Union Minister for Civil Aviation Praful Patel agreed to consult 
with the AAI on any future airport closures. 
 
¶3. (U) Some pundits and politicians have speculated publicly about 
the desirability of keeping the old airports open, in direct 
violation of the contracts signed with the private operators of the 
new airports.  (The Bangalore concession agreement, for example, 
prohibits any "new or existing airport" from operating within 150 km 
of the new airport.  This is similar to other concession agreements 
the GOI signed with private airport developers.)  Much of this 
speculation has come from AAI members and fairly low-level state 
politicians and not from either state- or Union-level government 
officials responsible for implementing or overseeing the projects. 
One notable exception involved comments from the parliamentary 
committee on transportation's leader, Sitaram Yechury (Communist 
Party-Marxist, or CPM), who called on March 5 for the government to 
renegotiate the contracts in both cities to allow the current 
airports to remain open for at least three months to allow 
negotiations over the airports' fate to continue.  Emphasizing its 
opposition to the government's plans, his party also stalled 
proceedings in the parliament on March 12 over the issue. 
 
 . . . But the GOI seems intent on honoring commitments 
--------------------------------------------- ---------- 
 
¶4. (U) Patel reiterated publicly on March 11, however, that the 
existing airports in Bangalore and Hyderabad would close to 
commercial aviation -- as required by the concession agreements -- 
when the new airports open.  (Comment:  Although he had made similar 
statements repeatedly over the past several months, some media 
outlets have attempted to paint him as being of two minds on whether 
or not to close the old airports.  End Comment.) 
 
¶5. (SBU) The heads of both existing airports also readily accept 
that their facilities will cease operating for commercial aviation 
when the new airports open.  Ashok Baweja, chairman of Hindustan 
Aeronautics Limited (HAL, which runs Bangalore's current airport), 
told us on March 12 that his airport would close to commercial 
aviation when the new airport opened.  "The government does not want 
to renege on its commitments," he said, adding that doing so "would 
look bad."  He added that the government might wish to revisit this 
issue sometime in the future, but that there was no question of 
 
doing so now.  Similarly, the head of AAI for Hyderabad's current 
airport, R.K. Singla, said that his airport would also close to 
commercial aviation when the city's new airport opened.  Both Baweja 
and Singla told us, however, that their airports will remain open 
for test flights, private aircraft, government flights, and 
emergencies. 
 
¶6. (SBU) Two former Karnataka (the state where Bangalore is located) 
Ministers for Industry both told us that the government must -- and 
will -- honor the concession agreement and close the HAL airport. 
One of them, a BJP member, was critical of the "flawed" concession 
agreement drawn up when a Congress Party-led coalition was in power 
in Karnataka, but emphasized that it "must be honored."  The other, 
now the national General Secretary for Mayawati's BSP party, also 
criticized the state government's handling of the preparations for 
opening the new airport but said that it was very important for the 
government to honor its commitments.  (Note:  Karnataka has been 
operating without an elected government since November 2007.  The 
state is currently administered by a governor appointed by the 
President and approved by the Union Cabinet.  None of the leadership 
of the state's three major parties -- Congress, BJP, or JD(S) -- has 
attempted to make the closure of the HAL airport a major issue. End 
note.) 
 
Hyderabad's new airport:  opening March 16 
------------------------------------------ 
 
¶7. (U) Hyderabad's new airport, Rajiv Gandhi International (RGI) 
will open on March 16.  The city's current airport, N.T. Rama 
International (NTR) will close to commercial flights the same day. 
The USD 6 billion project, a public-private partnership (PPP), 
brings together the GOI and state government of Andhra Pradesh with 
an Indian-Malaysian consortium led by GRM Infrastructure Ltd.  Both 
the GOI and Andhra Pradesh will hold 13 percent of the shares in the 
Hyderabad International Airport Limited company, while the private 
partners -- GMR and Malaysia Airport Holdings Berhard (MAHB) -- will 
hold 63 percent and 11 percent, respectively.  RGI plans to handle 7 
million passengers per year, and subsequent expansions will increase 
this capacity to 19 million.  The airport is also equipped to handle 
the biggest passenger plane in the skies, the Airbus 380.  The 
airport terminal is said to resemble the well-regarded terminal in 
Kuala Lumpur.  (More details on the specifics of the airport can be 
found at its website: 
http://www.newhyderabadairport.com/index.html ) 
 
¶8. (SBU) While the airport's amenities will be world-class, 
passengers will face some hassles in reaching the facility.  The 
airport is located approximately 25 km from the city, and the road 
network to the airport is not complete.  In particular, an 
expressway to the airport may require another year of construction 
to be fully operational.  A planned high-speed train/monorail 
connection to the city is an even more distant prospect.  GMR says 
50 buses will operate a shuttle service from the airport to four 
different points in the city for less than USD 3 per person.  Many 
passengers may opt for this choice, as driving to the airport may 
prove to be an onerous task.  Andhra Pradesh's Chief Minister even 
told the Ambassador on March 7 that the infrastructure required to 
properly connect transportation routes to the airport is three to 
four months away. 
 
Bangalore's new airport:  now opening May 11 
--------------------------------------------- - 
 
¶9. (SBU) Bangalore's new airport, more precisely known as Bengaluru 
International Airport Limited (BIAL) in deference to the city's name 
in the Kannada language spoken in Karnataka, was slated to open on 
March 30.  A government inspection of the facility's air traffic 
control (ATC) system, however, has led to a postponement.  AAI's 
regional director for South India told us that BIAL had failed to 
work properly with AAI as it recruited and trained its ATC staff, 
 
which led to the problem.  BIAL officials told us on March 14 that 
the facility will now open on May 11, a date widely reported in the 
media, as well. 
 
¶10. (SBU) Like its counterpart in Hyderabad, BIAL is a PPP, with the 
state and national government each holding 13 percent of the shares 
and a consortium of Siemens, Larsen & Toubro, and Unique Zurich 
Airport, holding the rest.  BIAL officials told us that the facility 
was originally designed to handle a mere 3 million passengers per 
year, but the spectacular growth of the air-travel sector forced 
BIAL to re-engineer its original design to accommodate 10 million 
passengers per year, a target the facility may reach during its 
first year of operation.  BIAL plans additional expansions, 
including a second terminal, which will eventually increase the 
airport's capacity to 40 million passengers per year.  The airport 
will also host multiple hotels and a business/industrial park.  The 
first hotel, slated for completion in 2010, is billed as the first 
in India within walking distance of an airport terminal.  Two 
caterers and two ground-handling companies will compete to serve the 
airlines operating at BIAL, and the airport has the right to bring 
in a third if it deems it necessary to increase competition. 
 
¶11. (SBU) BIAL officials gave us a tour of the facility on March 11 
(sketches and other details are available at the airport's website: 
http://www.bialairport.com/index.htm).  Constuction of all the 
major facilities (check-in couters, escalators, security 
checkpoints, baggage arousels, and the like) is complete, but 
workersare still beavering away on many of the more cosmeic 
details.  The food courts and shops are also lttle more than empty 
spaces at present.  That sad, the facility is truly world-class, 
reminiscen of the design of European airports like Amsterdamor 
Frankfurt.  The airport also has a separate bilding for VIPs, which 
will greatly facilitate arivals and departures of high-level 
guests.  BIALofficials told us that 40 new buses will shuttle 
between the airport and various points in the city, including its 
major hotels. 
 
¶12. (SBU) One of the major complaints against the airport is its 
distance from the city (approximately 30 km), and its location to 
the city's north, while much of Bangalore's development has been 
towards the south.  Some AmCham members told us, for example, that a 
trip to the airport could take as long as four hours.  Fears of 
multi-hour road trips to catch short, regional flights prompted 
Deccan Aviation to announce its plans for a helicopter service to 
transport high-level executives to the new airport.  Such fears seem 
exaggerated, however.  We drove from the airport to the heart of the 
city in less than one hour during the middle of the day.  The road 
north from Bangalore is generally excellent (three lanes in both 
directions), although there is still some construction and the 
occasional random speed bump. 
 
¶13. (SBU) The exit from the highway to the airport road is, however, 
not yet functional.  Currently, the only functional road from the 
highway to the airport is a three-kilometer-long, dirt path.  BIAL 
officials told us that the south-bound exit ramp from the highway is 
operational, but it requires travelers from Bangalore to do a U-turn 
on the highway.  (We noticed, however, that construction work is 
still taking place even on that ramp.)  They said that the 
north-bound exit ramp will take several more months to complete. 
 
Comment 
------- 
 
¶14. (SBU) Barring intervention at the prime ministerial-level, it 
seems unlikely at this time that either of the old airports will 
remain open once the new airports begin operation.  Communists, 
union leaders, and opportunistic, populist politicians may continue 
to call for them to stay open, but no official in a position of real 
authority has yet called for the government to breach its contract 
with its private-sector partners.  Those in position of 
 
responsibility seem aware that doing so would cause serious problems 
for the government's credibility. 
 
¶15. (SBU) The quality of BIAL is a giant leap forward from the HAL 
airport, which resembles a crowded, run-down bus station.  (On a 
recent trip through HAL, we were unable to find the end of the line 
for the security checkpoint and had to ask an airline employee for 
assistance.  While sitting in what passes for a business 
lounge/restaurant, we also overheard a group of Britons ask an 
airline employee, "This is a restaurant?  Are you sure?") 
Hyderabad's new airport is a similar step up.  Both Bangalore and 
Hyderabad want to be considered top-tier cities in India, worthy of 
world renown.  At a minimum, it seems clear that these two South 
India cities will soon be able to lay claim to having the best 
airports in the country, even if reaching them remains a chore. 
 
HOPPER