The Bhogapuram Airport Conundrum
Visakhapatnam is an essential city in Andhra Pradesh. But the current Visakhapatnam Airport is owned by the Navy and has restrictions against further development. So, in 2015, the government proposed to develop a Greenfield airport at Bhogapuram, which is 40 km from Visakhapatnam. The state government has also allocated 2000+ acres of land for its construction.
Bids were invited and in August 2017, AAI (Airports Authority of India) outbid GMR and 6 other bidders. It won by bidding a revenue share of 30.2% compared to GMR’s 21.6%. Moreover, phase one of the construction began immediately as the deadline was December 2020.
In January 2018, the Andhra Pradesh government suddenly canceled the project stating ‘project scope’ as the reason. They called for a fresh set of bids with a changed revenue model and regulations. In February 2019, GMR won the contract by bidding INR 303 per passenger compared to AAI’s INR 202. But 800 crores were already exhausted by APADCL on behalf of AAI.
A significant amount of tax payer’s money was wasted by the authorities. To put it in perspective, it would take another 13 years to recover the 800 crores from the revenue of the new airport. After 2 biddings, the future of Bhogapuram Airport is still unknown. Its functioning is dependent on the closure of the current airport as they are just 40 km apart. But AAI is not inclined to shut it due to their investments in the old airport and viability of the new one (Due to the pandemic).
The question remains! Is it reasonable to spend the rest of the budget in constructing the new airport or wise to stick to the current one?