It is hard to believe that a couple of decades ago, when the Cochin International Airport project was envisioned, it started off with a contribution of just Rs.20,000 by an individual. A successful testimony to the value of PPP projects, CIAL today stands tall amongst Indian airports registering a cool Rs.141 crore in profits in FY2015.

Interview By Sisir Pradhan | May 2016 Issue | The Dollar Business

Some Indian states roll out red carpets to investors, while others literally don't allow businesses to cut through the red tape! Kerala was once one of the most difficult places to establish a business in India. If one has ever ventured into a business in the state, he would remember that it was hard to ignore the ubiquitous presence of trade unions. There was a much-publicised incident of nokku kooli (the infamous informal labour norm in Kerala) when Kochouseph Chittilappilly, Managing Director, V-Guard Industries, himself got on a truck and unloaded cartons.

A Star Is Born

Under such a highly unionised environment, how Cochin International Airport Limited (CIAL; India’s first airport to be built under public-private partnership – PPP – model), managed to see the light of the day, is a story that needs to be told. In fact, CIAL’s financial performance could make any corporate house in the country envious – there were reports that even Reliance Industries Ltd., and the likes, have shown interest in buying a stake in it. In FY2014-15, CIAL reported Rs.141.36 crore as profit after tax (PAT), a growth of 16% over FY2013-14, with the company’s Board of Directors having recommended a dividend of 21%.

Cochin International Airport (CIA) serves Cochin, a city also regarded as the business capital of Kerala. People in the region have strong business ties with the Gulf region, and Kerala's growth can also be linked to the economic boom in UAE and other GCC countries. Since, in the past, industrial development in Kerala has not kept up with industrial progress in other regions in the country, the state heavily depends on earnings from tourism and foreign currency remittances by Keralites living in different parts of the world. This dependence, however, came in handy when a healthy mix of renowned businessmen such as Yusuff Ali M. A. (MD – Lulu Group, UAE), V. J. Kurian (the present MD of CIAL) and other influential individuals came together to ensure that the CIAL project breaks-even way before average industry timespan.

Airport officials claim the facility to be a people's project, which is true in its own right – CIA is a true testimony to the Malayali enterprise. Many will find it hard to believe, but 16 years ago, when the project was envisioned, it started off with a contribution of just Rs.20,000 by an NRI from Germany named Jose Maliekkal. Later, Yusuff Ali M. A., who made a fortune from the boom in real estate sector in UAE, invested Rs.10 lakh in the airport project and raised more funds by establishing the Cochin International Development Forum in UAE. C. V. Jacob, Chairman of Synthite Group, also contributed Rs.25 lakh. In fact, the airport project was realised due to investment collaboration of about 10,000 NRIs, locals, the central and the state governments. That's something special.

Ever since it started commercial operations in June 1999, it has registered a significant growth in passenger traffic. Its cargo operations, which were initiated only a year later, had maintained a steady growth even during the global financial crisis of 2008, growing at a rate of 23.8% (international and domestic) in FY2009. In fact, in the first eight years of operations, the airport recorded a cumulative annual growth rate (CAGR) of about 20%, and thereafter an average of 12%, with annual passenger traffic reaching about 6.45 million in FY2015. Revenues touched Rs.423 crore that year. What's more? CIAL has been paying dividends to shareholders continuously since FY2004!

When CIAL launched its new international terminal (T3) in February 2016, it once again exhibited its unique ability to finish the project in record time (24 months), that too at much lower cost as compared to its peers. Even the airport architecture that resembles a traditional Kerala temple gives a rather rustic appeal and is different from other contemporary airports that are made of Glass.


ULD (Unit Load Devices) containers being loaded into an Emirates flight at Cochin Airport with the help of a self-propelled pallet loader. 

Although all infrastructure needs are taken care of by the airport administration, sadly there are startling trade hurdles that have remained ignored for a long time. There are quite a few examples. First, while CIAL is located at Nedumbassery, about 40-km from the major trade centre in Ernakulam, most of the dedicated buses that ply between the city and the airport start from Fort Kochi, which is located towards the south-west of Cochin and is many kilometres away from Ernakulam. Also, there is no online or offline mechanism to know the actual pickup location and timing of buses in major trade routes like Ernakulam, due to which traders end up paying hefty charges for taxis which are again controlled by trade unions. Second, perishable goods like agricultural products form a majority of the cargo handled at the airport, and the lack of adequate and appropriate storage facilities at the cargo terminal is a big problem. Third, at present, consignments containing fresh harvests are dispatched as per availability of cargo space on aircraft. Because these need to be sent at the earliest, on several occasions delays result in losses for exporters. Issues there are aplenty, and which need to be addressed at the earliest for CIAL to attain a world class stature.

Multimodal Connect

Vegetables, fruits and cut flowers originating from different parts of Kerala, Tamil Nadu and even the Coorg region in Karnataka are some of the major types of cargo handled at the airport. Apart from fruits and vegetables, one can also find all sorts of spices that make the Indian food popular across the globe, stacked up in big quantities ready for air shipment. If a lentil-based stew is served to you on your visit to the Gulf region, chances are high that the ingredients flew out of CIA. According to airport officials, people from Kerala and neighbouring states, who live in the Gulf countries, look to compensate their longing for homeland through food. Hence, fruits and vegetables produced in Kerala and its surrounding areas are in great demand overseas. Alongside, local farmers receive a much better value of their produce from overseas markets as compared to the domestic market – and it becomes hard to ignore the wealth that local farmers have amassed by exporting their produce from CIAL.

CIA is also one of the rare airports in the country which boasts of a multi-modal transportation system with access to three National Highways (NH 47, NH 17 and NH 49). For instance, the Cochin harbour and the International Container Transshipment Terminal (ICTT) are at Vallarpadam and the Delhi to Kanyakumari main railway line is located adjacent to the airport. This connectivity contributed to the growth of both passenger and cargo traffic at the airport. However, the heavy movement of container trailers, which serve ICTT at Vallarpadam, has led to congestion on roads that connect Cochin and nearby commercial regions to the airport.

Speaking of issues hindering growth, Antony Thomas, Vice-Chairman, Kerala Chamberof Commerce and Industry (KCCI) and Director, Kottaram Group of Companies, says that non-availability of direct flights from CIA to Europe and US, and a lack of industrialisation in the state are obstacles that stop CIA from growing faster. Further, cargo carrying trucks have to constantly deal with the congestion at the commercial check post at Walayar on the Kerala and Tamil Nadu border and this is a major obstacle that is impeding the smooth flow of perishable cargo to the airport from nearby states. Since the revenue of airport depends heavily on perishable cargoes like flowers, fruits, and other farm products, the congestion at state border is costing CIA heavily.  

Savings Zone

Interestingly, the convenience fee charged to passengers and freight forwarders at CIA is much lower than what is charged by other airports across the country. When we quizzed V. J. Kurian, MD of CIAL, on how the airport is able to offer services at such low costs, despite recently investing a big amount in constructing a new international terminal (T-3), he said that CIA has got the expertise to complete complex projects in a time-bound manner and at a much lower cost. "While the 5.4 million sq. ft. Terminal 3 at Indira Gandhi International Airport in New Delhi was completed in 2008 for about Rs.13,000 crore, the new 1.5 million sq. ft. Terminal 3 at Cochin International Airport was constructed for just Rs.1,000 crore," Kurian tells The Dollar Business adding that, "CIAL was conscious of the fact that they did not want to pass on the burden of construction cost to the users." The decision has paid off well.

Due to its low tariff, the airport is more economical as compared to other international airports and as such is fast gaining popularity among exporters and importers in the region. But then, there are other reasons too!

Easing The Flow

The airport largely handles perishable cargo for which it has a temperature-controlled warehouse and has introduced a risk management system (RMS) for quick clearance of cargo. The cargo handling facility offers 24x7 cargo operations and IATA-compliant e-freight operations for paperless transactions.

The airport is also equipped to handle heavy and odd-size cargo – its terminal has a Pack House for small scale exporters for completing the ready-for-carriage conditions. CIA has also been identified as a transhipment hub for courier cargo movement by various airlines that fly between India and the Middle East. Adding to its advantage, the Department of Customs has stationed an Air Cargo Unit at the cargo terminal for faster clearance of consignments. The airport also serves as an international transshipment hub for nearby airports – Calicut and Trivandrum. In fact, due to the strategic and economic importance of the airport, 20 airlines have opened cargo offices at CIA.

CIA also has a dedicated facility to house officials of various intermediary and statutory bodies like Plant Quarantine, Postal Mail Transit Office, bankers and IATA/CHA agents.
When it comes CIA's future plans, the airport authorities are looking to tap the growth in cargo segment, particularly in marine products segment. There are also plans to develop new air cargo terminals for exclusive handling of export products as well as transhipment cargo to the tune of 1 lakh MMT per annum. Other development plans include an air cargo village with facilities such as Pack House, Regulatory Agents Building, Gems & Jewellery Park, Cut Flowers & Ornamental Fish storage and handling units, and an Air Freight Station.

Flying High

Ever since the Open Skies policy was introduced in India, the country’s civil aviation industry while having grown manifold, has also hit air pockets. Mismanagement and a lack of professionalism is a norm at many airports in the country. But then, there is no doubt that CIA has good future prospects. With commissioning of T3, the airport has already carved out for itself a glorious chapter in the country’s aviation history while keeping its value propositions and interest of its stakeholders on top priority. Even its proposed new air cargo terminals hold big promises for India's air cargo industry.

Seems just a matter of time before the airport begins its ascent to newer highs. Optimistic? Yes, we are.