Saturday, October 06, 2007

Pachyderms of the white variety....... (Part II)

As if we didn't have enough white elephants roaming around the State, here comes another one - in the shape of the proposed Kannur Airport. On the face of it, a fourth international airport to cater to the needs of the NRI-heavy North Malabar looks like a welcome proposal. It could avoid the long trips that the people of this region have to make to Calicut or Cochin Airports to catch flights to the promised land - the Gulf - be it for employment or to fulfill the sacred Haj. And with so many potential travellers in the region, there surely must be potential for a new airport.

At this rate, Kerala will be overrun with airports. They are already clamouring for one near Ambalapuzha. And the Union Govt.'s decision to lower the minimum separation between proposed airports and existing ones from 150 Km to 75 Km looks set to aid this proliferation. In this age of low cost carriers, let the common man fly. After all, there are airports in pretty much every town in the US and Europe and people more often fly than take a cab. Well and good. However, we are....ahem...atleast twenty years behind on the evolutionary curve of air travel than those regions, and even there, the budget carriers and legacy airlines alike are struggling to stay in the black. Too much competition, combined with the stratospheric cost of fuel these days is oft cited as the main reasons. And competition is bad not just for airlines, but for airports as well. Simply put, as more airports compete for the same base of passengers, the lesser the traffic each can garner. The three airports in Kerala already divide up the pie pretty well. To make matters even more interesting, neighbouring airports like Coimbatore and Mangalore are commencing international operations, luring away even more traffic. While in the case of short-haul and even longer duration domestic flights, increased competition may slightly expand the market by reducing fares, in the case of international flights this may not be the case. Kerala has perhaps the third highest foreign tourist influx in India, one of the highest NRI (non-gulf) populations and a burgeoning IT industry to boot. Despite all this, there is not even a single major non-Gulf based international airline (with the notable exception of Silk Air/SIA) flying out of Kerala. On the other hand, Amritsar (with a smaller airport and lesser traffic) now has direct connectivity to the US and UK. The reason, other than the Universal Brotherhood of Sardars, is that Amritsar manages to concentrate all the traffic of the State whereas in Kerala it is spread over three airports. Whereas regional and domestic flights can operate aircraft with capacities from 50 to 180, international flights typically use 250+ capacity aircraft like the Boeing B-777 or Airbus A-330 to achieve economies of scale. Hence, while the former can adjust to pick up smaller loads from multiple airports, the latter prefers to fill up at one airport. To take an example, even when there are 250 passenger per day from the three airports of Kerala to New York, no airline can afford to hop its aircraft across the three cities to pick up the entire demand. The result is that passengers from Kerala to and from the US or Europe are forced to hop via Dubai, Abu Dhabi, Colombo or Singapore. So while there is the convenience of an hour or two's saving in travel to the airport, one ends up spending up to a day more catching a connecting flight or flights. On the whole, a losing proposition.

The proposed Kannur Airport will eat into the traffic primarily of Calicut Airport, which even today has poor domestic and international connectivity compared to the State's other two airports. The basic point is that an extra airport does not generate totally new traffic, it will more likely tap into the traffic of existing airports in its vicinity. Thus, while Kannur Airport may generate a few of its users anew because of the convenience and lower fares, most of its traffic will be residents of Kannur and Kasargode districts who earlier used to use the Calicut Airport.

The State Govt. proposes to acquire 2000 acres for the project. Even if the proposed BOT model reduces the outflow from the State Treasury, it does mean a whammy for the Calicut airport. So, the sum total of things may be worse off than they are today. Two airports with poor connectivity in place one with a potential for good connectivity.

A better solution? Keep the three international airports as they are and develop commuter airports - say at Kannur, Kottayam and Pathanamthitta - which could have direct connectivity among themselves as well as feeder connections to the three main airport. The advantages - better international connectivity, lower overall travel times, lower development costs (for the commuter airports) and faster implementation. Instead of acquiring mammoth strips of land for the planned white elephant airports, the Govt. can better focus its efforts on acquiring the around 100 acres required for the drastically necessary expansion of the Trivandrum Int'l Airport and about 130 acres needed for the next phase of development of Calicut Airport.

So where's the rocket science in all this, the powers-that-be know all this, please quit yapping - you may say. And I would be damn happy if that were the case. Unfortunately, all that is in evidence is a runaway population of white pachyderms, even while the current Govt. loudly and frequently professes financial prudence. Perhaps part of the reason is that the most powerful and tortuous of the feudal provinces within the corridors of power - the Finance Department, is run by bureaucrats and accountants. With due apologies to both of the above, they may lack some of the abilities of true financial planners. A financial planner will recognise that there is often a strategic angle to a decision and not a purely financial criterion. So, the cheapest necessarily may not be the best. Having professional managers helps in this regard since they can examine all the contributory factors to and the resultant impacts of what may appear to be a purely cash-flow based go-no go decision. After all, it is very easy to be penny-wise and pound foolish (rupee wise and crores foolish, to put it in local terms). Add to this, the political motive - an IT Park or Airport (atleast the foundation stone of one) in your constituency is very strong resume point for the next election, especially so when there are only foundation stones to count and not live projects. So no matter whether a project is even remotely viable or actually suited to/required in that region, the decision is taken often on a purely political basis. Maybe that is why one tends to find tea research stations suspiciously located on the seashore and desalination plants located even more suspiciously on hill-tops.

Add to this the profit motive - the under-the-table profit of course - and we have a winning cauldron of skulduggery which prevents logical reasoning ever seeing the light of day except in very, very rare circumstances. Considering that a worthy in the Finance Dept. was recently given a dressing down by the CM for notching up a long list of objections to the Vizhinjam deep-water port project apparently to protect the interests of someone near and dear who owns a resort in the vicinity of the port site, one cannot discount the profit motive at all. In fact, it may be the strongest one of all.

Okay, we have seen some of the symptoms and causes of white-elephantiosis govermentus, is there a possible cure? No quick fix, I must admit - unless we adopt the Chinese (shoot everybody and don't ask questions later) model of dealing with financial incompetence. But for starters, one can ensure professional financial planners are called in for major projects. Independent viability assessments - perhaps involving that taboo C word, consultants - will also help. Will there be enough commuters to ever make Metro Rail break even or investors to occupy the oodles of space at "Smart" City if it ever does make it off the drawing board? A bit of prudent analysis will go a long way in answering at least the basic viability question, if not the nitty-gritties - like will a project even in 15 years or 18 years? Setup a citizen oversight committee to examine major proposals as well as random samples of more mundane decisions. And NOT pack this committee with retired Finance Secretaries and Accountant Generals, but more proactive, perhaps younger, souls. Those who understand that Excel-based modeling is mathematical analysis and not a fashion parade for plus-sized women, would be a big help, for starters!

Let's not hold our breaths over this. Maybe it will take the complete and utter bankruptcy of the State by its herd of white elephants for someone to realise that we should all have been smarter. Let's hope it doesn't need to get to such dire straits before we realise that truth - that we need to be smarter!


  1. Ajay, I think the European connection thing will soon be moot. The aim should be to have a one-stop connection to large cities of Europe, and also to most large cities of the U.S.
    As for one stop connection to most of Europe, both COK and TRV have that, on the likes of Emirates, Qatar and Etihaad. For the U.S., there is one stop connection to New York (EK and EY) and to Washington (QR and KU+UA). Hopefully, there will be more non-stops from the Middle Eastern hubs to U.S. which would actually remove the need for a EU carrier to fly to Kerala.
    As for having more airports in Kerala, we will be better served with better rail/road infrastructure. Most places in Kerala are within 150 kms of an international airport. This distance should be travellable in 2 hours, which should be sufficient. Even if you had airports in Pathanamthitta and Kannur, it would still take 2 hours connecting to flights and stuff.
    Common Sense and Kerala politicians dont mix. Being against toll roads is the stupidest idea.

  2. This is a wonderful blog. I really appreciate your insight on the matter. I would advice you start writing columns, on some national daily or may be some dailies in kerala. If people are sensitive and sensible enough this would open their eyes. Finally I should thank you, because your efforts like this make us realize that we are citizens of the city with amazing potential...
    Sincere regards,
    Seshan K.

  3. Ajay,

    Again appreciation on your efforts in this stand-out blog. I dont think a direct connection to Europe or USA is far away from our 2 principal airports. Its only a matter of time before Lufthansa arrives in the state as they are already having services to all other 5 airports. Jet Airways have Brussels as a European base and we can expect them to take off from TIA & COK without Mumbai transit. And the national carrier Indian has already proposed direct connections from Trivandrum to LAX and JFK, but it hasn't materialised yet.

    Considering the state's leap in IT industry, Tourism and on the ever incresing no of NRI Keralites in Europe and USA, Im sure foreign airlines will find the state attractive for connections. By telling that we cannot turn a blind eye towards the state of our international airports and the time needed for a check in and check out. Please think of the chaos in our airport when a Boeing 737 or an Airbus A320 lands. Will our airport be able to handle the huge no of passengers in a 747, let alone if we get that much numbers for travel? And now bigger and heavier aircrafts like the A380 and Boeing 787 Dreamliner are coming into service and our existing airports almost certainly cant handle them.So the no of airports is not the only factor keeping the Int'l Airlines out of Kerala, but also the infrastructure of the Airports.

    It will be sad if a Keralite is forced to travel to Bangalore, Mumbai or Hyderabad for a direct BA, Air France, Lufthansa or Quantas flight because it is our state which is having the maximum no of citizens abroad and its high time that we equip our Airports for the big names.


Thanks for your comment, I will take a look at it and put it up at the earliest.