COCHIN INTERNATIONAL AIRPORT LIMITED

Cochin International Airport (CIAL) is the first Greenfield airport setup in the public private partnership model in civil aviation infrastructure sector in India. Cochin International Airport has the state-of-the-art facilities and traditionally designed architecture unique to Kerala, and has been constructed to enable any type of wide-bodied aircraft to land or take off with the least of hassles. The Airport is strategically located with easy access to all three National Highways passing through Kerala (NH 47, NH 17 and NH 49). The main Railway line from Kanyakumari to Delhi is adjacent to the airport and it is situated between Alwaye and Angamaly Railway Stations. The Cochin Sea Port, one of the biggest in the country is also situated close by. The Cochin Airport serves as a vital link in International trade, travel and tourism. The Airport has been planned in phases on a modular basis to suit future requirements and also to minimize the initial investments so as to generate revenue at the earliest possible time.

OVERVIEW
The take off of CIAL as a project, was never an easy task. AAI, the authority vested with the construction and operation of airports in India, expressed their inability in building an airport in Kochi. Kochi, at the centre of Kerala was having a Naval runway with a runway length of 4500 ft was inadequate to provide facilities for big aircrafts. This was the very reason why there was proposal to expand the length of runway. But the meeting held in Delhi under the Chairmanship of the then Union Civil Aviation Minister Shri Madhava Rao Scindia, after seeing the mammoth financial expense and the difficulties, suggested to have another Airport purely for the operation of Civil Aircraft. This was the seed for todays CIAL. The initial hindrance was the selection of suitable land and the team headed by Shri VJ Kurian, IAS selected couple of places and this was the time when Aluva Tahsildar Mr. Raman

Nair proposed Nedumbassery for the consideration. It was the destiny for Nedumbassery and the study found Nedumbassery is the most suitable place for an Airport. Then came the shocking news that Central Govt was not having fund for the creation of new airport. Shri. VJ Kurian, IAS, Special Officer for the Airport decided to float shares and to collect money from the State Govt, PSUs and also from the general public. With equity participation from the Government of Kerala, Industrialists, NRIs, Financial Institutions, Airport Service Providers and the Public, the Cochin International Airport Limited thus came into being as a model enterprise with the first International Airport in India outside the ambit of the Government of India, the first of its kind in the history of civil aviation in India. The first aircraft by Air India commenced its international operation on 10th June 1999 to Damam. The Air India Jumbo Jet Boeing 747 touched down for the first time in Kerala on 21 June 1999. Domestic flight started on 01st July 1999. Today, 16 International Airlines and 9 Domestic Airlines are operating from CIAL.

HIGHLIGHTS OF CIAL
The main aim of Cochin International Airport Limited (CIAL) is to position itself as a pioneer in Aviation Infrastructure and generate sustainable & profitable revenue streams by establishing a strategic hub in Southern India Strategic airport in Southern India providing international connectivity to the Middle East Well networked with Hub Airport through Mumbai to provide connectivity to Europe and America Already initiated efforts to enhance connectivity through Chennai, Colombo to Far East Focus on development of aviation infrastructure including Aircraft Maintenance Centre & Training Academy and Airlines Focus on land development to enhance city side infrastructure and to generate non-aero revenues Proposed Land Use Plan Aviation Activities: o Aviation Maintenance Centre o Aviation Training Academy Business Activities: o Industrial Park catering to IT, ITES, Biotechnology, Gem and Jewellery, and other knowledge based & specialized industries o Integrated Logistics Centre

o Educational Institutions o Specialty Hospital First-of-its-kind airport developed under the PPP model, where Airport users (mainly NRI investors) joined hands with the Government of Kerala and the airport service providers to build an International Airport Spread over 1300 acres - 800 acres utilized for Airport Facilities and 500 acres is planned for Aviation and City Infrastructure Wide Investor base - 11,000 individual investors from 30 countries Developed at a total cost of around Rs.2,830 million Present employee strength of CIAL is around 515

Airport type Owner

Public Cochin International Airport Society Limited Government of Kerala Private Investors NRIs Air India AAI Public shareholders

Operator Serves Location Hub for Statistics (Apr '11 - Mar '12)

Cochin International Airport Limited Kochi Nedumbassery, Kerala, India Air India Express Blue Dart Aviation Passenger movements 4,717,650 Aircraft movements 40,181 Cargo tonnage 42,706

SUMMERY
The case study discusses about the complete overview about CIAL from its establishment to the present position. It discusses the problems faced by CIAL and the strategies followed by each management and also the future plans of cochin international Airport Limited (CIAL).This airport is the first Greenfield joint sector airport in India, built with public private partnership. The CIAL project was initiated when the Indian airports were owned and managed by the government of India, through AAI. It took one year for the GOI to declare CIAL as an international airport. At the concept stage, they made some assumptions, some were still holding good, but some were failed. Some of the issues related to land acquisition were yet to be resolved by giving employment and take care of people around the place where the construction are done. Interest burden on the company from the loan funds was an area of concern. Cochin is the commercial city of Kerala and is an epicenter of international trade movements. Air passengers to Kerala were tourists and expatriate Keralites and their families, mainly from the Middle East. Kerala had three functional airports within 600 kms. The Indian navy owned airport was located in Willingdon Island, an artificial island located in the center of the city of Cochin. The prospect of employment and better earnings resulted in large scale migration of people from Kerala to different countries, including the Middle East. The prospect of employment and better earnings resulted in large scale migration of people from Kerala to different countries, including the Middle East. Consequently, the demand for air connections from Kerala also increased. Through news papers and forums like Cochin Chamber of Commerce, appeals were made to NAAI, GOI, and GOK on many occasions and GOK took up the demand with the MOCA and GOI for necessary approvals. Apart from financial issues there were social and technical issues to be resolved. As a response although the MOCA and GOI convened the meetings to discuss about the expansion ns, the meetings failed to reach any concrete conclusion. Other than this there were issues on funding for the new project, about the status of land for the project etc. The project was closed for a time being and after some time a society, Kochi International Airport Society, was formed in July 1993, and GOK appointed Mr.Kurien as the special officer for the Airport project. Since the initial plan to raise finance failed, CIAL was constituted as a public limited company under the companies act, 1956. The land acquisition process was completed with the active participation of political leaders, administration and the judiciary. From the inception till inauguration Mr. Kurien saw three CMs, two state governments led by different political collations and

five ministers of civil aviation in the GOI. On March 2001, CIAL was the first and the largest initiative of public-private partnership in civil aviation infrastructure in India. The inauguration of CIAL was on May 25, 1999 by K.R Narayanan, in a glittering function attended by the political and social leaders of Kerala, prominent NRI investors and thousands of people. The state and the media praised the MD, Mr.Kurien, who was seen as an inseparable from the project. Before inauguration, CIAL had put in place a spacious car park, visitors gallery and a prepaid taxi system managed through a co operative society. Other airport services were also ready. Kerala police managed the security inside the terminal, a private agency was hired for managing the parking area. The national policy about non-GOI managed commercial airports was ambiguous and it led to conflicts between CIAL and central agencies. There was delay in getting the status of international airport. CIAL had high expectations on revenue generation from cargo operations. The cargo operations failed to reach the expected levels. Though the airport was designed to operate as an international airport, GOI did not accord that status at the time of inauguration. I took twelve months to declare CIAL as an international airport. Though the competitions from Calicut and Trivandrum continued, CIAL was able to obtain the monopoly of the charted flights carrying pilgrims from Kerala for performing the Haj ceremony. On the land acquisition front, CIAL continued to face hurdles. CIAL was under a liquidity crunch due to the interest burden from loans taken from banks and FIs, particularly HUDCO. There was a change of CEO in the second year. MD of CIAL was transferred by the GOK. He was replaced by MR. Babu Rajeev, an IAS officer. CIAL followed tariff structure adopted by AAI for availing landing charges. CIAL also faced difficulty in collecting the landing charges from PSU airline companies.GOI unilaterally handed over the responsibility of airport security in select airports to a paramilitary force, central industry security force. The demand of CIAL for an international airport status materialized after one year from the inauguration. In August 2000, GOI declared CIAL as an international airport. CIAL was able to convince FIPB that the airport was an infrastructure facility and not just a part of the aviation sector.AAI expected to earn Rs 6000 m from this period. AAI had equity stake in both new airport projects in Bangalore and Hyderabad. CIAL board decided to reduce the government stake to 26% from 51% and allow other investor.GOI permitted some foreign airlines to operate from CIAL. The promise given to employees to maintain parity with AAI scales was yet to be fulfilled. Under new

government there is a frame of comparison was with the employees of AAI, central government and PSUs operating in the airport. The initial employment and establishment costs for the airport was minimized by posting Mr.Kurien as the special officer of KIAS and simultaneously gave him the responsibility of an MD of another state government undertaking. When CIAL was incorporated as a public limited company, the special officer was made the MD. Other people management systems were independently developed over time. The airport was envisaged as a lean organization. All regular positions were filled through public advertisements, followed by screening tests and interviews. The selection system followed by CIAL focused on maintaining fairness and recognizing merit. No much attention was given to human resource development and performance management of the employees. The MD and top management encouraged an open door policy with employees and at times balance potential threats with appropriate counter measures. The successor, Mr.Babu Rajeev also continued the same open door policy to employees, even though their managerial style varied. There were two registered unions for the permanent staff in CIAL. The trade union dynamics among indirect laborers were more complex. CIAL had the distinction of losing even one day due to work stoppage on the account of labor trouble and the presence of multiple trade unions among the construction employees. CIAL was a board managed company. The board had been active in providing strategic direction and also got involved in operational issues. The position of the chairperson, board of directors of CIAL was held by the CM of Kerala. The majority shareholders numbering around 10,000 had also demanded representation on the board. Various political leaders and parties had at different points of time, helped CIAL by lobbing for its interest with the government and mobilizing public opinion. Expansion plans of CIAL were held back, since HUDCO refused additional funding and instead demanded payment of outstanding. CIAL was facing severe financial constraint. It had to meet the accumulated liabilities as soon as possible.