GMR gets LoA for Bhogapuram airport in India

GMR Airports Ltd has received Letter of Award (LoA) for the development and operations of Bhogapuram Airport in Andhra Pradesh. The project involves design, build, finance, construction, development, up-gradation, modernization, operation and maintenance of Greenfield International Airport at Bhogapuram for the period of 40 years, extendable by additional 20 years through international competitive bidding process, with GMR airports limited having RoFR (Right of First Refusal) if GMRs bid is within 10% of competition bid by value.

Bhogapuram is a Greenfield international airport which will be built near Bhogapuram village on the border of Visakhapatnam and Vizianagaram districts of Andhra Pradesh. The airport will be around 55 kilometers from the existing airport at Visakhapatnam and 25 kilometers from Vizianagaram.

Bhogapuram is located within half an hour from the eastern coast with potential for developing the hospitality sector. Vizianagaram district is home to India’s largest ferromanganese plant and is a popular textile and jute market. The sea shore from Vizianagaram to Visakhapatnam is used for making salt and has a lot of fish farms. The major catchment area for the airport is Visakhapatnam district which is one of the top 50 districts in the country by population. It is a commercial and education centre for the state and largest city in Andhra Pradesh post the bifurcation of the state. Vizag as it is popularly known as fisheries, commerce, shipping, railway and military to support its traffic.

Current airport at Vizag is operated by the Indian Navy and has a civil enclave. Until recently the airport had watch hour restricts and wasn’t allowed to operate 24×7. While the airport has since been open round the clock, limitations on expansion, preference to military flying, possibility of flooding due to the airport being in low lying area continue to challenge civil operators.

GMR has said that the airport handled 4400 tons of cargo in 2019 and 2.78 million passengers with the airport having a CAGR of 21% over the last 5 years. The data released by Airports Authority of India (AAI) shows the split between Domestic and International as below.

Vizag pax traffic

While Vizag is promising for the GMR group, it is used to obtaining considerable revenues from duty free at Delhi and Hyderabad. However, that won’t be the case with Bhogapuram unless bilateral restrictions are eased. Currently Vizag features in the list of open skies for South East Asian countries. AirAsia operated to Kuala Lumpur and Scoot took over the Silk Air route to Singapore, before aviation came to a grounding halt last month.

The GMR group has a large Airport portfolio which includes India’s busiest Indira Gandhi International Airport in New Delhi, Hyderabad’s Rajiv Gandhi International Airport, Mactan Cebu International Airport in partnership with Megawide in Philippines. Mopa airport at Goa, Heraklion Airport at Crete in Greece in partnership with GEK Terna. Bhogapuram adds to the list. The GMR-Megawide consortium has won the Clark International Airport’s EPC project, the second project in Philippines. The Group recently signed concession agreement to commission, operationalize and maintain the Civilian Enclave at the Bidar Airport in North Karnataka. The group operated Delhi and Hyderabad airport. Group ADP – the French group which also operated Paris CDG recently acquired equity in GMR’s airport business.

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