India to build 100 more airports over 15 years
The eastern Indian state of Sikkim, currently the only one without an airport, will finally be connected to the country’s aviation network on Oct 8, when the Pakyong airport near its capital, Gangtok, becomes the 100th operational commercial airport in the country with scheduled flights.
This milestone comes at a time when India has declared an ambitious plan to ramp up its aviation infrastructure to keep pace with its double-digit air passenger traffic growth.
The country will construct 100 more airports over the next 15 years, at a cost of US$60 billion (S$82 billion), Minister for Civil Aviation Suresh Prabhu announced at the International Aviation Summit earlier this month in New Delhi.
India is the fastest-growing domestic air transport market among the main ones tracked by the International Air Transport Association (Iata). Last year, more than 158 million passengers flew on routes to, from and within India, an increase of almost 15 per cent from 2016.
Iata expects these numbers to more than triple over the next 20 years to more than 500 million passenger journeys per year. India is also on track to overtake Germany, Japan, Spain, and Britain within the next 10 years to become the world’s third-largest air passenger market.
This growth, together with India’s economic development requiring greater cargo services, has meant that the existing aviation infrastruc- ture in the country has struggled to cope with the rise in air traffic.
A recent audit by the Airports Authority of India found widespread cascading delays, congestion and occasional diversions at choked airports, such as the ones in Delhi and Mumbai, caused by delayed as well as before-time arrival of flights.
The list of new airports proposed includes a second airport for the national capital region in Jewar in Uttar Pradesh, located around 80km from the current airport in Delhi.
This project has been hobbled by land acquisition problems, even forcing the local legislator to campaign in its favour and meet the locals, urging them to hand over their land.
The locals remain unconvinced by the compensation amount, other benefits and resettlement policy, a familiar story in India when it comes to acquiring land for development projects. The airport is slated to be operational five years from now.
Mumbai is also expected to have a second airport by September 2021, more than two decades since the project was proposed in 1997.
Mr Amber Dubey, the partner and India head of aerospace and defence at global consultancy firm KPMG, thinks India, with its 718 districts, needs around 200 to 250 airports if each one is expected to cater to a rough average of three districts.
The government is already trying to promote air transport to some of the country’s smaller airports by subsidising flights for three years, with the hope that some of these sectors could become profitable by then.
The programme to build the additional 100 airports will be carried out on a public-private partnership mode, with much of the expenditure coming from the private sector.
The anticipated expenditure is more than 60 times the ministry’s budget for 2018-19. “We would like to put (the project) in the public domain so that anyone of you interested in the business of building infrastructure or building airports would get advanced intimation of when it is going to happen,” Mr Prabhu said in his remarks.
Private airport infrastructure developers in India have struggled to post profits and have been saddled with growing debts.
Mr Dubey said: “Building and running an airport is highly capital intensive. The location and timing of new airports, therefore, have to be decided carefully, based on a thorough demand-supply analysis.”
India currently has five airports that are run on a public-private partnership, and the government has been tweaking regulation to make this sector more attractive and viable for private players.
In 2016, it relaxed norms to allow 100 per cent foreign direct investment in brownfield airport projects, that is, those being upgraded.
“The focus of the government and industry is shifting towards lowfrills, smart, efficient airports where the capital cost and operating costs will be bare-bones, without compromising on passenger comfort, safety and security,” Mr Dubey said.
The government has proposed to amend the Airports Economic Regulatory Authority of India Act, which determines the tariff for aeronautical services at airports every five years.
Instead of exposing developers to tariff uncertainties, the amendment will allow airport developers to bid on a pre-determined tariff.
Mr Dubey said more foreign airport investors are, thus, likely to be attracted to India, with its focus on affordability, sustainability and predictability.
Global investors have so far either stayed away from bidding for new airports being built in India or have been minor players in the bidding consortia.
Mumbai’s Chhatrapati Shivaji International Airport’s Terminal 2. Mumbai is expected to have a second airport by September 2021.