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Indian airports:A story of unreal advances

 

The clamour can’t be ignored. Somebody needs to stitch together a central plan to salvage what’s left of India’s airport modernisation plans. And fast. Steven Philip Warner
STEVEN PHILIP WARNER | Issue Dated: March 17, 2013, New Delhi
Tags : AAI | IGI airport | FY2018 | FDI | Aviation sector |
 

India’s aviation sector will need additional airports, given that passenger footfall is set to rise to 269 million by 2017 (360 million domestic and 90 million international) and 450 million by 2020 from the current 162 million (2011-12; as per CAPA). At present, work is on at over 35 airports (both greenfield and brownfield projects). Expectations are that over Rs.30 billion will be invested in Indian airports over the next decade, which is good news. Bad part is: delays have left taxpayers in metros like Kolkata, Mumbai, Pune, Chennai and other smaller towns wondering whether India’s airport infrastructure was destined to be a symbol of organised confusion.

Land acquisition issues, lack of power supply, delays in arrivals of aerobridges and setting up of substations, delays in installation of electronic and security systems, incomplete bids for lounges and retail outlets, are some reasons why airport projects are stuck. The need of the hour is FDI and increased private participation. But they are hard to come by. In the 11th Five-Year Plan period, of the $500 billion planned in investment in developing India’s infrastructure, only $425 billion was invested. The 12th Five Year Plan (2012-2017) has budgeted an investment of $1 trillion. Of this, $12.7 billion has been allotted for the airports sector. Considering the state of the economy and little excitement amongst private players due to land acquisition issues and other regulatory and financial hurdles, the capital will not be easy to come by. A bigger challenge will be to attract FDI.

Land scarcity is the biggest worry that needs to be taken care of if India’s airport infrastructure story is to read any better. Out of the 61 requests submitted by the Airports Authority of India (AAI) to relevant state governments for allocation of land for various projects, only 26 have been approved. Some of the air traveller-dense locations where requests for land have either been rejected or are still pending clearance include Warrangai (435 acre of land required), Dibrugarh (227 acre), Guwahati (215 acre), Jorhat (86 acre), Patna (227 acre), Raipur (2207 acre), Ahmedabad (67 acre), Porbandar (276 acre), Rajkot (52 acre), Kangra (26 acre), Mysore (122 acre), Indore (2542 acre), Aurangabad (245 acre), Bikaner (50 acre), Jaipur (60 acre), Vellore (1046 acre), Port Blair (711 acre), Bagdogra (118 acre), Dehradun (167 acre) et al. Considering that work in these locations will either commence after 2015 or will not commence at all, by 2017, we could expect saturation of existing facilities at most airports.

We happily claim that India is headed to become the third largest aviation market by 2020 after US and China. But we forget that given present facilities, we have no room for about 300 million more fliers at our airports.

At present, the IGI airport in Delhi has a capacity of 60 million. Given the expected rise in traffic, work on the second airport should start latest by FY2018. For that to happen, land must be identified at the soonest. Mumbai airport is already functioning at saturation levels. Its capacity is 30 million while it handled 30.4 million passengers in FY2012. When modernisation work ends there, the capacity will rise to 40 million. Not enough for the long run. Putting a third airport in place should be considered at the earliest and that facility should become functional in at least 12 years from now. Chennai airport that has a capacity of 40 million (including the yet to be functional facility) is expected to get choked by 2017, therefore the city needs another airport soon. Kolkata and Hyderabad airport (whose current capacities are 24.1 million and 12 million passengers a year respectively) would also require a second airport by 2021. No land in either city has been identified as yet. Pune (annual capacity: 2.3 million passengers; traffic in FY2012: 3.2 million), Lucknow (2.4 million, 2 million), tourism dependent Goa (7.5 million, 3.4 million), Patna (0.3 million and 1 million), Calicut (3.4 million, 2.2 million), Nagpur (1.1 million, 1.4 million), Srinagar (2 million, 1.5 million), Bagdogra (0.6 million, 0.7 million), Coimbatore (1.3 million, 1.4 million), Trichy (1 million, 0.9 million), Mangalore (1.2 million, 0.9 million), Port Blair (0.4 million, 0.6 million), Jaipur (1.6 million, 3.5 million) and Ahmedabad (8 million, 4.7 million) are some cities where the airports are either handling more traffic than installed capacity or given the expectations of rise in count of air travellers, will reach saturation in another decade. Strangely, AAI has not finalised a capital expenditure plan on airports beyond 2017!

It is also important that AAI seriously mulls over increasing the count of transit passengers by enhancing airport infrastructure to levels that meet global standards of ‘hubs’. This will not only help increase revenues for AAI, but will also ensure a smaller hole in the pockets of domestic travellers in India.  Today, this world’s ninth-largest aviation market is in need of serious reforms in airport infrastructure. A master plan to accelerate the proceedings and avoid delays in execution is needed. Unless that happens, foreign investors, carriers and domestic private money will avoid the Indian aviation sector, and we will continue to invest much less than what the sector needs.

Steven@PlanmanMedia.com

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Issue Dated: Feb 5, 2017