The economic feasibility of the proposed greenfield international airport at Aranmula in Pathanathitta district has come in for sharp scrutiny as it falls within 100 km of the two international airports at Kochi and Thiruvananthapuram and the possibility of the new airport not generating enough business to sustain itself.

Rajya Sabha member K. N. Balagopal pointed out that most of the airports in the country, barring a few in the metros and the ones like Kochi and Thiruvananthapuram, were making losses and the proposed one at Aranmula would be no exception. He felt that the project could make profits only through real estate development and not through airport operations.

He questioned the claim that the airport could make profit catering to pilgrims to Sabarimala and air travellers to Pathanamthitta. He said operations involving the Boeing kind of aircraft would require over 6,000-foot airstrips, which were clearly ruled out in this case.

P.T. Nandakumar, chief executive officer of the KGS Group of Companies in Kerala, which is promoting the airport at an estimated investment of Rs. 2,000 crore, told The Hindu on Thursday that Ernst & Young had done the feasibility report for the project. He did not divulge the details.

He said since there was no public investment involved in the project, there was no need to make the details public. The traffic projections and the economic model of the airport had been worked out, he said.

However, a senior official of the Airports Authority of India said the Aranmula airport might not be a feasible project to a large extent given the current conditions.

The official said the three airports in the State had not reached their saturation levels and air traffic growth in the State was not good enough to warrant another airport now. With little economic activities in the State, the “viability of the project is a distant dream”, he said. He pointed out that better road connectivity could solve the problem for Kerala. The two international airports in the State are located within roughly 100 km of the proposed airport.

The State government will have sweat equity of 10 per cent, valued at approximately Rs. 130 crore, in the company promoting the project with a debt-equity ratio of 2:1 (Rs. 1,300 crore of debt and Rs. 700 crore of capital and promoters’ contribution).

Details on the KGS group website claimed that the proposed airport would generate 1,500 direct employment and 6,000 indirect employment.

The airport project has also been conceived with a view to tapping the pilgrim population of around 60 million (as per 2011 figures) that visit Sabarimala every year as well as the large number of emigrants from the influence area of the proposed airport. Tourism potential in the districts nearest to the site is also expected to attract passengers to fly through the proposed airport.

The KGS group claimed that majority of the NRI and NRK passengers from Thiruvananthapuram and Kochi airports originated within 50 km radius of the Aranmula airport site.

It said that air traffic in Kerala had multiplied five times over eight years — increasing from two million to 10 million. The promoters of the airport also take heart from the figures for the share of Kerala in the country’s air traffic. Though Kerala has only 2.75 per cent of the Indian population, the international aircraft movement in Kerala is 15.28 per cent of the overall international aircraft movement in the country as in 20112-12.

An aviation industry insider said the Aranmula airport promoters had worked out a business model centred on budget travellers. So the cost of building the airport would be less than building an airport for luxury or business travellers.

A senior official familiar with airports operations said returns from infrastructure projects like an airport could not be calculated just as it is done in other industries. Infrastructure projects have substantial longevity and returns will depend on the quantum of initial investments yielding profits over a long period of time. The official also said statistics on airports-population ratio in the developed world showed that Kerala could have 10 airports.

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