Better airport infrastructure
The influx of low cost carriers in the Indian skies has led to the need for airports to revamp their facilities, as per a report by CAPA Global Aviation Research KPO (July 2015). Excerpts:
The Indian market has shifted predominantly to low-cost and it is really only Jet Airways and Air India which continue to operate with a full service cost structure, even if they do retain jointly a 30 per cent market share of seat capacity. As if the Indian LCCs were problematic enough to those FSCs the entry of AirAsia India (AirAsia Investment/Tata Sons/Telestra) in June 2014 really set the cat amongst the pigeons. It plans to grow its route network to service all Indian metropolitan centres and a selection of tier-II cities. However, it has not yet made much of an impact on overall seat capacity.
AirAsia is recognised for having one of the lowest cost structures in the world, efficient processes and a strong brand. IndiGo (the largest indigenous LCC) may therefore face stiff competition on routes where AirAsia operates, bringing further pressure on airports to provide appropriate infrastructure at an appropriate price.
Firstly, what has happened and what is planned at the major metropolitan airports to recognise this shift towards low cost?
There are no plans for any sort of low-cost terminals or piers at Bangalore, Hyderabad, Chennai and Kolkata airports. The first two of those airports are already PPP ventures while the latter two will now be developed under ‘management contract’ opportunities.
On the face of it the decision not to build LCATs at these airports might seem to be an odd one. LCC penetration there is as follows (again by seat capacity): Bangalore 59.8%; Hyderabad 57.1%; Chennai 49%; Kolkata 64.2%. One might assume that the entire airport in each case is now a ‘low cost’ airport even if charges do not reflect that, and that further infrastructure development might be geared towards the remaining – and any new – full service/network carriers.
In the capital Delhi, a PPP since 2006 and where there are two terminals – T1D and T3 – T1D is effectively the lowcost terminal. It was originally constructed as a temporary terminal for all domestic services while T3 was being constructed. But it proved to be quite popular with airlines and passengers. It is modern, bright and airy, has a good range of retail, F&B and other amenities and its design means that it is a very short distance from the check-in to the boarding gate, from where passengers are bussed to the aircraft.
When T3 was opened, all airlines were meant to move there and T1D would no longer be used. But the LCCs liked T1D and felt that T3 with its lengthy piers and long walks made it less efficient for their ground staff, impacted on-time performance and was less popular with passengers. T3 is also around 10-15 minutes further from the city. So they remained there. Meanwhile the full service carriers moved their domestic operations to T3 so that they could have D-I/I-D connections under one roof, apart from which T1D was beyond capacity…
With most of the AAI's portfolio of airports losing money it was concluded that it would be better to address the viability infrastructure rather than investing in capital in new airports which could become white elephants