In­dia to build 100 more air­ports over 15 years

The Straits Times - - WORLD - De­barshi Das­gupta In­dia Correspondent In New Delhi

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.

PHOTO: BLOOMBERG

Mum­bai’s Ch­ha­tra­p­ati Shivaji In­ter­na­tional Air­port’s Ter­mi­nal 2. Mum­bai is ex­pected to have a sec­ond air­port by Septem­ber 2021.

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