Saturday, November 15, 2008

Rajiv Gandhi International Airport - Redux

Visited Hyderabad after a long time. While the facilities at the new airport remain excellent and the structure can be on par with global airports, the transaction cost is going to screw customers significantly over the coming quarters.

First, the shuttle service has moved from 100 to 150 into the city (maybe the earlier rates were teaser rates), roads are definitely better but really 50% escalation in 6 months? The user development fee (UDF) of 375 that one pays on entry to domestic airlines will increase the transaction cost some more.

When the passenger growth was going up up & away, this was not a problem. But a cost structure of an additional 500 bucks/head might make most families to choose trains instead.

Train time: To station: 0.5 hour, hyd-mumbai: 14.5 hrs, mumbai local travel: 1 hr: Total 16 hrs

Flight (assuming someone is flying strip down airlines (for lack of better terminology): To airport :2 hrs, check in hyd check out mumbai: 3 hrs, mumbai local travel 1 hr: Total 6 hrs

So, even though there is a clear 10 hr saving, for a decent size family (4) burden could be too much. Maybe some thought needs to go from the GMR guys to ensure that the UDF is not a simple number. Else they will end up hurting more during these troubled times.

How much did the udf have to contribute to the viability of the project? Whats the experience been globally? Need to look those up.

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