Towards creating a better infrastructure in the country, the Airports Authority of India (AAI) is working hard to connect smaller towns with major cities. In an exclusive interview with Rai Umraopati Ray, VP Agrawal, Chairman, AAI says that AAI has developed 32 project in tier II and 10 projects in tier III cities.
Of late, there has been a lot of transition in the aviation infrastructure in the country. How do you look at the growth of this sector in past few years?
The rising income of Indian middles class, entry of low-cost carriers in Indian aviation sector, and supportive policy environment is driving the growth of aviation industry in India. Infrastructure in aviation started changing with the relaxation of government policy and allowing airports to partner private players through joint ventures, allowing airports to come in the PPP and greenfield airports, which can come up even through private sector. It worked well and as a result we have developed some of the best airports of the world.
Till 2002, there were only 45 airports in the country but in past few years, the numbers have reached 85. The growth of these 85 airports is the direct outcome of rising income of Indian families. We have been witnessing constant growth in Indian economy. The rise of the economy also enabled large Indian middle class. This section of the population led to the rise of aviation infrastructure in India.
How has AAI used modern age technology to upgrade airport infrastructure in India?
Since 2002, we have been constantly working towards upgrading technology of air traffic system. We provided radar coverage to the entire country. Now, one can get the real time information of an aircraft's exact location. The entire process is aimed at providing seamless services to the consumers.
AAI has developed a satellite based navigation system named Gagan with the help of ISRO. However, due to limited number of manufacturers in the aviation sector, India has to depend on these players for technology part.
From where do you feel the demand will come in the future and how AAI is preparing itself to meet this rise in demand?
The growth of the middle class in India has influenced all the sectors including aviation. Private players identified this opportunity and now there are few domestic carriers, which offer low cost air travel to this large middle class population.
Despite large potential in non-metro cities of India, aviation sector's focus still remains on metro cities. We have realised this potential and AAI is developing airports infrastructure in non-metro cities of India also.
We were banking on 35 tier-II cities. Mostly these airports were either in capital town or places of great tourist importance. These were the second most eligible cities from air traffic point of view.
Out of these 35 cities, projects in 32 have been completed. Out of the remaining three projects, two will be completed by June this year. We have also identified potential in tier III towns. We have been doing the development in these towns without much publicity. Out of the 26 cities that we have identified for development, we have completed work in 10.
Safety and security of non-metro airports in India are on the same level of safety and security of any large airport in metro cities like Delhi or Mumbai. Qualitative terminals of these non-metro airports are as good as the airports in New Delhi and Mumbai.
You said the rising income level of Indian middle class is giving a boost to the aviation sector. However, despite many enablers, there are some constraints also. Please tell us about the constraints ahead of AAI.
Availability of land remains a major problem as airports require large piece of land because of the safety norms and the sheer nature of it. We have been requesting state governments to help us to acquire land for airports.
Building of an airport is a very capital intensive exercise, which do not give any economic returns for next 7-8 years. Even when the states provide land, these airports are not going to earn any profit for next few years. This is just to provide connectivity and allowing industrial growth in that city. FDI will certainly bring in more investment to Indian aviation sector. Whosoever (companies) comes would be investing in financially viable projects in metros only.
Keeping India's economic stride in mind, the future of aviation sector looks promising. At present, India is the fourth largest economy from the air traffic point of view. I am very optimistic about the growth of this sector that India would surpass Japan if the growth of Indian economy keeps its pace. There will be more and more travellers, who would be availing, air services. At present, there are around 85 airports; I feel India will need 200 more airports to meet the rise in the demand. The only way to meet the rise in the demand would be developing infrastructure on 457 existing airports or air strips in the country by states joining hands with AAI. There is a huge opportunity but it will require huge capital investments also.
However, affordability in smaller towns would be an issue and it can be addressed by acquiring smaller aircraft. So far we have seen that most of the airlines are acquiring Airbus 320 kind of aircraft for their fleet, which require sufficiently large infrastructure and initially it would not be good to run these aircraft on the new routes.
The need of the hour is that more and more small aircraft are acquired and should be operated on these routes. It is wise to start this way than to suffer losses. I am prepared and want that every city should have at least mid size airport.