India's technology hub to get new airport

By S. Srinivasan
Associated Press

BANGALORE, India — Lenders and shareholders have signed a funding agreement for a new international airport to be built in Bangalore, India's information technology hub, following numerous delays.

The airport will be ready in April 2008 and will be able to handle more than 5 million passengers a year, said Albert Brunner, chief executive officer of Bangalore International Airport Ltd.

"We have to take the task before us seriously, because we have to complete the project within 33 months and meet rapidly increasing demand," he said.

The airport will cost $324 million, 23.1 percent of which will come from shareholders and the rest from lenders, he said.

Bangalore, the capital of southern Karnataka state, is the hub of India's software and back-office outsourcing industry, accounting for a third of the country's $17.2 billion in export revenues from the sector.

The airport project, originally conceived in 1991, suffered from a series of delays and consequent cost increases due to bureaucratic wrangling.

The new airport will replace an existing facility that is cramped and unable to handle additional flights.

Among equity share holders, 40 percent of the airport will be owned by Siemens Project Ventures, 17 percent each by Zurich International Airport and Indian construction giant Larsen and Toubro, while the Indian government and the government of southern Karnataka state will hold 13 percent each.

Only 16 million air tickets are sold in India each year, despite a population of more than 1 billion. However, demand for air travel is increasing by 25 percent annually with the arrival of low-cost carriers.