Click to play videoMumbai: High crude prices have not just left airlines bleeding, but private airport operators are also bearing the brunt. Companies like GMR and GVK are now reducing their estimated airport revenues.
Chairman and MD, Raymonds, Gautam Hari Singhania - who was travelling by air on Wednesday - said, "I just came back from the airport and it's empty. It's quite scary."
And commuters are not the only ones who are scared. Also scared of empty airports are the companies that run them. For example, GVK, which runs the Mumbai Airport fears it will be well short of its revenue targets this year.
When GVK took charge of the airport in 2005, air traffic was expected to grow at 25-30 per cent every year, but in 2008 it has only grown 8 per cent. The reason is that higher fuel prices have forced airlines to increase airfares and that's meant fewer fliers.
Fewer travellers have caused airlines to reduce flight frequencies by between 15-20 per cent.
GVK's CFO, Issac George says, "Going by the budget we have prepared within the company, we should touch a revenue of Rs 1,000 crore. Now, that has got to be adjusted for any material reduction in traffic growth."
Worse hit are GMR and BIAL, which have just opened the new Hyderabad and Bangalore airports. For them their very first quarter of operations has been a complete washout. Fewer passengers means less revenues generated from non-aeronautical avenues like parking tickets, food & beverage and duty free sales.
Issac George says, "Now to the extent of the revenue share, we have we will have lower income due to lower passenger spending."
Also lowering estimates are analysts who had earlier predicted That the Mumbai airport would form nearly half of GVK's value. For GMR too, the estimate was that airport operations and related real estate development formed 48 per centof its net present value.
But now all that is expected to be revised downwards.
It's not just airlines that are praying for lower crude prices. The companies that run airports have been hit just as hard. They say that unless ticket prices come down soon and more people fly, their entire business model could be under threat.
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