Ready for construction? Delhi’s new airport moves out of planning, but there’s still lots of unknowns

Prime Minister Narendra Modi is expected to inaugurate the Jewar Noida International Airport (JNIA) – aka the New Greater Delhi Airport redevelopment project – between 23- and 25-Feb-2019, by laying a foundation stone for the (up to) USD3.1 billion project, which will be the largest airport in India by surface area upon completion.


Summary:

  • Foundation stone for the new (second) Delhi airport will be laid in late Feb-2019;
  • The land acquisition issues that dogged the Navi Mumbai airport project appear to have been curtailed in this instance;
  • It is a P3 project but GMR Group has first refusal as developer;
  • IATA was against the development on what may be spurious grounds.

JNIA is a new airport construction project for the Indian capital, Delhi. It will provide the National Capital Region with a second facility after Delhi Indira Gandhi International Airport (DIGIA). The plans for the airport were approved by India’s Aviation Ministry in Jun-2015 and given in-principle government approval in Jun-2017.

The Government granted site clearance to Delhi Mumbai Industrial Corridor Development Corporation (DMICDC) for the establishment of this greenfield airport. The facility required a 2200 acre site and construction is expected to take three to four years, so that it is operational in 2022/23.

An alternative possibility was near Bhiwadi in Rajasthan’s Alwar district, but eventually the Noida site was selected, in Gautam Budh Nagar, a largely suburban district of Uttar Pradesh state which is part of the National Capital Region, and 72km from DIGIA.

The deliberations over the location of the airport were protracted and required not only complex land acquisition procedures in a country where it is often protected for environmental reasons, but also landowner compensation, relocation of project-affected persons and irrigation matters. Land acquisition procedures were completed in Dec-2018.

This selection necessitated amendment of regulations preventing the establishment of a new airport within 150km of an existing facility. It was determined from the start that the project would be implemented as a public private partnership, for which the concessionaire would be sought through an open market competitive bidding process. Having said that, the GMR Group holds first right of refusal for any new airport in Delhi and in Feb-2018 GMR Infrastructure’s director K Narayan Rao confirmed GMR plans to participate in the project.

Considerable effort has gone into improving and expanding DIGIA. According to the CAPA Airport Construction Database, DIGIA, which is operated by Delhi International Airport Limited (which itself is owned by GMR Infrastructure [64%], Airports Authority of India [26%] and Fraport [10%]), has seen extensive refurbishment and expansion of its terminals in a continuing procedure that will also add dedicated charter and private terminals, rapid exit taxiways and a fourth runway within the next few years. The cost runs to USD1.8 billion through to 2025.

Even so, DIGIA is struggling to keep pace with demand. Even though growth peaked at 21% in 2016, it is anticipated that India will shortly become the third largest aviation market on Earth and that even this new airport, which will be built to handle 50 million ppa, could become ‘saturated’ by 2040.

CHART – Even though growth peaked at 21% in 2016, Delhi Indira Gandhi International Airport still reported double-digit passenger rises in 2017 and 2018Source: CAPA – Centre for Aviation and Airports Authority of India

That rather makes nonsense of a statement in Jul-2015 by IATA in which it said it was not in favour of the proposal to develop a second airport in New Delhi until the existing airport reached saturation. The reasoning was that having a single airport would grow Delhi as an aviation hub as it would make it convenient for passengers making flight connections. Airlines could focus all their resource in one location, and there would be greater efficiencies in not having to duplicate services.

However, that statement appeared to overlook the burgeoning enlargement of the low-cost segment in India, which has grown to 26% of total seats on international flights and 72.4% of seats on domestic services in Jan & Feb-2019, along with the self-connectivity that goes with it. At Delhi, the low-cost impact is not that high, namely 11.2% and 56.6% respectively, but then it is the capital.

CHART – The rise of the LCC segment, particularly in India’s domestic market, has been clear to see this decadeSource: CAPA – Centre for Aviation and OAG

As this article was written, the Delhi Metro Rail Corporation (DMRC) said it will submit a feasibility study report for the development of a rail line connecting the new airport to both Delhi and Greater Noida in Feb-2019. The proposed line includes provision for express rail connectivity with limited stops between Delhi and Jewar and metro service connectivity between Greater Noida and Jewar.

The laying of a foundation stone always indicates at least that the planning stage is over and that construction work can begin. The appropriate city and regional authorities here will be congratulating themselves that they have narrowed the gap on the Navi (New) Mumbai Airport, which will fulfil a similar role in that city, construction of which is underway, but it was first proposed long before the new Delhi Airport, and it was originally scheduled to open in 2014. That highlights that the Delhi project seems to have avoided some of the pitfalls that befell Navi Mumbai.