Changi, Tata in airport venture
Business Standard — February 22, 2007

After an aborted tie-up with the Bharti group last year, Singapore's Changi Airport International (CAI) is floating a joint venture company with Tata Realty & Infrastructure, a subsidiary of the Tata group, to pursue airport modernisation projects in India. The two partners have signed a memorandum of understanding (MoU) to set a joint venture company in which Tata Realty will hold a majority 51 per cent stake and CAI 49 per cent, to invest in, develop and manage Indian airports.

The scope of the venture could include bidding for the impending modernisation and operations of the Chennai and Kolkata airports, India's third and fifth busiest airports respectively, which the government wants to develop as alternative hubs to Mumbai and Delhi. The venture could also extend to investments in some of the 35 smaller airports, as well as the proposed Rs 4,235-crore Navi Mumbai airport project. Though confirming the development, Dinesh Chandiok, chief executive officer, Tata Realty & Infrastructure, declined to give details, saying, "As and when we finalise details, we will announce them."

Chow Kok Fong, chief executive officer of CAI, said, "When we decided that we wanted to make a serious bid for these projects, it was clear to us that we needed a partner with an organisational culture and business values to which we can easily relate. Tata fulfills all these." Sources say the Tatas had been approached for a foray into airport modernisation by many other suitors, including British Airport Authority, which runs Heathrow airport. For the Tatas, this is the second recent foray in aviation, the first being an abortive tie-up with Singapore Airlines to bid for Air-India, when it was proposed to be privatised. It holds equity in budget carrier SpiceJet.

CAI, which is wholly owned by the Civil Aviation Authority of Singapore, had earlier teamed up with telecom giant Bharti for the Mumbai airport modernisation project but later pulled out citing lack of confidence in meeting tender conditions. Besides the Tata group, CAI is exploring the option of teaming up with hotel major Leela Group to develop Kannur airport in north Kerala. While Changi runs the Singapore airport, experts say it has limited experience in running airports in other parts of the globe.

Also, Singapore government-owned companies in the aviation space have had a patchy record in India. Apart from the aborted Singapore Airlines-Tata group tie-up, a proposed ground-handling joint venture involving Singapore Technology Engineering and Singapore Airport Terminal Services and Indian Airlines also came to nothing. Regarding Chennai and Kolkata airports, the government is expected to make a formal announcement of a privatisation programme. Chennai handled 6.77 million passengers and Kolkata 4.4 million in 2006.

The Navi Mumbai airport is expected to absorb 10 million passengers a year in 2013, its first year of operation, and 40 million passengers a year by 2030. Though it had withdrawn from the Mumbai airport project, CAI has teamed up with GVK Group, the present developers of the Mumbai airport, to implement a 100-day improvement programme and assist them in reviewing their master plan.