India-based conglomerate GVK is ready to invest USD $500 million as part of its commitment to develop a new international airport in Yogyakarta. Karthi Gajendran, President of Airport Development at GVK, said the company sees great potential in the construction of a new airport in Temon (Kulo Progo) near the coastal line in the Indonesian province of Yogyakarta. GVK will create a joint venture with Indonesian state-owned airport operator Angkasa Pura I later this year to develop the new airport.
GVK is convinced the new airport in Yogyakarta will be a lucrative investment as air traffic and air passenger growth in Indonesia is high, particularly provided Indonesia's economic growth will be back above +5 percent year-on-year levels. Gajendran said the new international airport in Yogyakarta is designed to handle 20 million air passengers per year. The new airport will replace the existing Adisucipto (or Adisutjipto) International Airport in Yogyakarta due to capacity problems and limited availability of land around the airport.
Currently, GVK is planning to discuss the duration of the concession with the Indonesian government. Gajendran said in India concessions for airport operators can go up to 60 years. However, he does not know the duration for airport concessions in Indonesia yet. He added that GVK is ready to comply with existing regulations.
GVK is a leading conglomerate in India with diversified interests across a number of sectors including energy, resources, airports, transportation, hospitality and life sciences. One of its successful projects is the Chhatrapati Shivaji International Airport in Bangalore (India).
Angkasa Pura I has already been preparing plans for the new international airport since several years. It announced that the new Kulon Progo airport will be the first Indonesian airport that will be constructed without financial aid from the government.
In line with Indonesian Law No. 1/2009 on Aviation, foreign investors cannot own a majority stake in an Indonesian airport. However, management of an Indonesian airport can be majority-owned by foreigners. GVK and Angkasa Pura I already teamed up for the modernization and expansion of Ngurah Rai International Airport on Bali (completed in 2013). Here GVK holds a 65 percent stake as airport operator (not airport owner).