Siddaramaiah govt formally extends Bengaluru airport's lease period to 2068

Bengaluru: Karnataka has formally consented to extend the concession agreement with Bangalore International Airport Ltd (BIAL) by 30 years after 2038. 

Officials said the state government had issued a notification in this regard at the request of the BIAL, which operates the Kempegowda International Airport (KIA), the third-busiest in India, on the city’s northern outskirts.

A senior official in the Infrastructure Development Department said the government had issued an order in October 2020 to extend the lease but a gazette notification hadn’t been passed. “We have published it as required by the law,” the official said.

Although BIAL’s concession agreement expires only in 2038, it stated that the lease extension was essential from the lender’s perspective to have a clear term period available beyond the project loan repayment period for borrowings. The airport operator also cited the significant investments being made for the airport’s expansion and related infrastructure. 

Accordingly, the concession period has been extended from May 2038 to May 2068. The land lease agreement has also been revised by 30 years by increasing the site cost to a maximum of Rs 302.15 crore from the present Rs 211.78 crore. 

Silent on HAL airport

When the state Cabinet consented to extend the concession agreement by 30 years in October 2020, it added a clause that BIAL would be allowed to operate the HAL airport for civilian use. However, the notification issued on April 3 does not mention such a condition. 

The option to run the HAL airport was given to BIAL as it could exempt itself from the 150-km clause over running a second airport within Bengaluru, the then deputy chief minister CN Ashwath Narayan had said. 

Sources in the government said the plan to reopen the HAL airport for the general public was dropped because Hindustan Aeronautics Limited (HAL) authorities weren’t interested.

“BIAL was interested. A study was done but HAL showed the red signal. The proposal has been dropped,” a senior official in the government said.