No-one doubts the urgency underpinning India’s airport construction needs. According to the recently released CAPA Airport Finance & Privatisation Review 2018, India will become the third largest aviation market in the next seven years. Passenger traffic is expected to be about 322 million in 2018-19 and is forecast to grow consistently at a rate of 20% per annum.
- India’s airport build programme is more comprehensive than initially meets the eye;
- The process is mainly state-driven but the private sector plays an important role;
- Planning for an airport is more involved in India than it is in the west;
- A scheme is underway to build regional airports where highways will serve as landing strips.
The government has made it clear it wishes to direct investment now to selected airports in ‘Tier 2’ cities and by using public-private partnership (P3) agreements. The largest airports, at Delhi and Mumbai, also Bangalore and Hyderabad, have private sector interests and construction needs there have been met and remain consistently under review. Moreover, a new airport (‘Navi Mumbai’) will be built to serve that city though there are doubts about a similar scheme, the Delhi Greater Noida/Jewar Airport, as farmers refuse to sell their land.
CHART – It is clear why Mumbai is in need of a second airport when you consider the passenger growth at Mumbai Chhatrapati Shivaji Maharaj International Airport this decadeSource: CAPA – Centre for Aviation and Airports Authority of India
However, there is still a lack of clarity on the government’s part concerning airports in two other Tier 1 cities, Chennai and Kolkata. They may have to wait until other airports have been privatised, and they may be subject to experimentation, such as which bids propose the lowest landing and passenger charges, which may not be the way forward for India.
Several external organisations have been attempting to put pressure on the Indian government and notably IATA, whose director general recently counselled the Indian government not to rely on privatisation “to address the problem of inadequate airport capacity”.
To be fair to the Indian government it has not done that. Only a handful of big airports have been privatised and Airports Authority of India, which operates 137 airports, remains a very significant player and the state generally is still very much part of the set-up.
The Minister of State for Civil Aviation, Jayant Sinha recently said the government has a “very extensive programme underway to increase capacity” of the aviation and airport system across “everywhere” in India. He said the focus would be on “getting to an airport, terminal capacity, aerobridge capacity or runway capacity – every element of airport capacity we are looking at”.
CHART – India’s aviation system capacity has grown at double-digit year-on-year rates in each of the past two years and is on track to achieve this again in 2018Source: CAPA – Centre for Aviation and Airports Authority of India
In achieving this, he revealed some of the issues. It is not simply a case of building an airport or adding a runway or terminal to an existing one. In India, the fundamental support infrastructure may be lacking – roads, railways, commercial estates to service airline-related businesses and so on. Employees need to be trained in places where there is zero aviation experience in the workforce and in highly technological subjects such as biometrics.
There is also the question of how to use the land the airport is built on, which is often taken from farmers or in big cities from neighbourhood residential areas. Airport land can be invaluable in other ways to the benefit of the wider community. Some Indian airports generate their own power through solar panel farms. At least one (Cochin) is self-sufficient and even sells spare power to the national grid. Mr Sinha also said: “We are also looking at building entirely new airports. Over all our effort is to increase capacity 4-5 times.”
According to the CAPA Airport Construction Database, there are 71 known existing Indian airports with construction projects, where the collective investment total is USD14.07 billion (where the amount is known). Only five airports have projects valued at over USD1 billion – Bangalore (USD2 bn); Chennai (USD1.1 bn); Delhi (USD1.8 bn), Jaipur (USD1.7 bn); and Mumbai (USD2.9 bn). The total for Asia as a whole is currently USD170 billion and the figure for India is USD4.6 billion less than that of the whole of Latin America.
The same database provides information on new airports. India has 57 new airports under development or consideration at a known total value of USD16 billion, out of a total of USD147.8 billion in Asia. That is slightly more than in the whole of Africa. There are three over USD2 billion – Navi Mumbai, Delhi Noida and Pune. Overall, USD10 billion will be spent on developing airport infrastructure over the next five years by the government alone.
Of particular note is that the Government has been drawing up an action plan for the revival of unserved and underserved airports. There are about 160 airports and air strips with State Governments which can be revived at an indicative cost of INR50 crore (USD 8 million) to INR100 crore (USD16 million) each, which in western terms is very inexpensive.
Airports Authority of India will partner with the State Governments to develop some of these airports for regional connectivity. Similarly, 10 of the 25 non-functional air strips with the Airport Authority of India are also to be developed.
Intriguingly, the Road Transport Minister recently informed the Lok Sabha (Parliament) that the Government plans to develop up to 17 facilities on national highways that can be utilised both as roads and as airstrips. The airstrips will be developed in areas lacking airports within 300km and the roads will be closed to vehicle traffic when aeronautical activities are taking place!