Mak­ing of a Global Hub

WE MUST WORK OUT A RE­AL­IS­TIC, COST-EF­FEC­TIVE STRAT­EGY TO MAKE THE WORLD LAND AND FUEL IN IN­DIA.

Business Today - - AVIATION SPECIAL - The writer is Founder and CEO, Martin Con­sult­ing In­dia BY MARK D. MARTIN

Frank Zappa once said, “You can’t be a real coun­try un­less you have a beer and an air­line.” In­dia has six even though a ‘beerair­line’ shut down a few years ago. Zappa was bang on when it came to fig­ur­ing out In­dia be­cause clearly, we are still “worth some­thing”.

Here is a fun fact. Did you know that Indira Gandhi In­ter­na­tional Air­port in Delhi and the Ch­ha­tra­p­ati Shivaji In­ter­na­tional Air­port in Mum­bai now han­dle more than half of the air traf­fic in South Asia and also act as a vi­tal air traf­fic hub sup­port­ing Nepal, Bangladesh and Bhutan? Ac­cord­ing to a re­cent anal­y­sis, Delhi and Mum­bai cur­rently rank as one of the busiest city pairs when it comes to flight ar­rivals and de­par­tures. That alone should drive air­port mod­erni­sa­tion and the logic of es­tab­lish­ing hubs.

The birth of the pri­vately owned and man­aged air­ports has its roots in the pol­icy set up by the NDA gov­ern­ment in 1997 un­der late Prime Min­is­ter Atal Bi­hari Va­j­payee. Later on, then Civil Avi­a­tion Min­is­ter Ra­jiv Pratap Rudy paved the path for pri­vate op­er­a­tors and grace­fully passed the air­port de­vel­op­ment ba­ton to Pra­ful Pa­tel. In­dia’s first pri­vately owned, man­aged and op­er­ated air­port com­menced op­er­a­tions in Kochi in 1999, fol­lowed by Ben­galuru, Hy­der­abad and oth­ers, while Delhi and Mum­bai air­ports be­came gov­ern­ment JVCs. In­ci­den­tally, both JVCs have been leased for 30 years and the gov­ern­ment sits on their boards and earns rev­enues as per a rev­enue-shar­ing agree­ment. Af­ter the lease ends, both air­ports, with their bells and whis­tles, will go back to the Air­ports Author­ity of In­dia.

While Delhi and Mum­bai have world-class fea­tures, cre­at­ing a suc­cess­ful global hub re­quires unique value propo­si­tion as cus­tomers are pretty much open to ev­ery of­fer and it is all about be­ing smart and cost con­ducive if you have to at­tract them. There­fore, lower fuel price and op­ti­mum han­dling, air nav­i­ga­tion, land­ing and park­ing, a thriv­ing and tourist-friendly mi­cro-econ­omy, re­li­able freight trans-ship­ment and easy mul­ti­modal ac­cess are some of the im­per­a­tives that we must fo­cus on.

Here is an ex­am­ple. Un­til re­cently, Qan­tas roosted and tech-stopped in Sin­ga­pore for its flights re­turned from Europe. But thanks to the pack­age deal of­fered by the UAE and the Dubai Na­tional Air Trans­port As­so­ci­a­tion, Qan­tas chose to fly to Dubai.

The rea­son why In­dian air­ports did not pitch to Qan­tas is not dif­fi­cult to un­der­stand. As we all know, ev­ery sin­gle air­side (and city side) ser­vice cost in­cludes a thick layer of taxes, mak­ing us non-com­pet­i­tive. An in­ter­na­tional air­port’s earn­ings are mostly in for­eign ex­change, which means the more air­craft ar­rive and de­part, the bet­ter the growth. So, it is high time to lose the fat tax layer which is mak­ing us unattrac­tive.

In­dian air­ports are los­ing out to strate­gic ones such as the New Doha In­ter­na­tional Air­port Ter­mi­nal, Mus­cat’s state-of-the-art new ter­mi­nal, which is less than two hours away from Delhi and Mum­bai, and the mega Al Mak­toum In­ter­na­tional Air­port in Dubai. The UAE, in ef­fect, is a ‘win­dow-dressed’ desert but it still at­tracts nearly 60 per cent of the world’s freighters, com­mer­cial air­lines and traf­fic. We, too, should have a phased and more re­al­is­tic plan to make the world land and fuel in In­dia.

Un­doubt­edly, the gov­ern­ment should play a vi­tal role to make air­ports com­pet­i­tive. The fi­nan­cial in­sta­bil­ity, rev­enue pro­jec­tion short­falls and ex­tended RoI win­dow of the GVK-owned Mum­bai In­ter­na­tional Air­port are clear in­di­ca­tors that the po­lit­i­cal ma­chin­ery is not in sync with cor­po­rate In­dia. This should change at the ear­li­est as we need to re­alise that build­ing a kilo­me­tre of road takes you just about a kilo­me­tre, but build­ing a kilo­me­tre of run­way takes you to the world.

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