All Aboard

Growing air travel bodes well for the sector. All that is required is for the necessary infrastructure to keep pace, lest it fall far behind.

India´s civil aviation industry is on a high-growth trajectory. Currently the ninth largest aviation market in the world, with a market size of around $16 billion, India aims to become the third-largest aviation market by 2020 and the largest by 2030. The following facts and figures bear testimony to the remarkable growth the Indian aviation industry and its infrastructure is witnessing:

• During the 12th Plan period (2012-17), the domestic passenger throughput is projected to reach 209 million by 2016-17 (from 122 million in 2011- 12), international passenger throughput is estimated to reach 60 million (from 41 million), the domestic and international cargo is projected to reach 1.7 MMTPA and 2.7 MMTPA respectively by 2016-17.
• The number of airports which grew from 50 in 2000 to 125 in 2012 is expected to touch 250 by 2030.
• According to Department of Industrial Policy and Promotion, FDI inflows in air transport (including air freight) between April 2000 and May 2015 stood at $573.18 million.
• Automated Air Traffic Management is in place at Mumbai, Delhi, Bengaluru, and Hyderabad, and nearing completion at 38 other airports.
• The first phase of the GPS Aided Geo Augmented Navigation (GAGAN) System over Indian airspace, jointly undertaken by the Airports Authority of India and Indian Space Research Organisation has been completed and the second phase is in progress.

No doubt, encouraging developments but there is still a long way to go as the supporting infrastructure has not yet kept pace with the rapidly rising demand in passenger and cargo traffic and the rising expectations of the travellers. Several factors have contributed to air traffic growth in India like entry of low cost carriers, higher household incomes, well informed travellers, increasing tourist and business travel, untapped market, increased cargo movement and supportive government policies, etc.

¨Air traffic has seen a phenomenal upsurge over the past few years with the domestic passenger traffic growing at roughly 14 per cent and international traffic moving up at about nine per cent year-on-year.

At Bengaluru, Hyderabad and Kochi airports alone, the traffic has risen by almost 20 per cent,¨ reveals SN Subrahmanyan, Deputy Managing Director and President, Larsen & Toubro (L&T). He says, ¨With cargo throughput rising rapidly, aircraft carriers expanding their fleets to match the burgeoning demand and most airports functioning at near full capacity utilisation, the need to expand airport infrastructure is real and immediate¨. The government is well apprised of this need which is reflected in the announcement of the second airport at Navi Mumbai and the Mopa airport in Goa as also more non-frill or low-cost airports. The time is therefore, most opportune, for the government to drive forward the announced initiatives and those on the anvil by giving private developers the much-needed confidence boost to aggressively take up projects, Subrahmanyan adds. L&T has constructed and modernised seven airports in India (New Delhi, Mumbai, Bengaluru, Hyderabad, Calicut, Chandigarh and Puttaparthi) and two overseas (Abu Dhabi Airport and the Salalah International Airport in Oman). Two more at Kochi and Kannur are under construction.

The aviation infrastructure is in need of massive overhauling. Right from development of new airports, modernisation of existing ones, revamping the non-functional ones, up-grades of airside and city side facilities, security systems, passenger amenities, to Air Space and Air Traffic Management Systems, navigational aids, network infrastructure, communication systems, Intelligent Building Management System, etc., are still largely way behind the need of the hour. There are several other factors too that need to be looked at. Out of the 125 airports managed by Airports Authority of India (AAI), only seven (Chennai, Kolkata, Goa, Calicut, Ahmedabad, Pune and Juhu) are making profits. Majority of the non-metro airports are running at a loss, while 32 airports are non-operational. The Indian airline industry suffers from huge debt burdens, close to $20 billion, as estimated for 2011-12. Over 65 per cent of the total cargo traffic is handled by just four airports at Delhi, Mumbai, Bengaluru and Hyderabad. In the north-eastern region, the air connectivity is largely confined to state capitals. Further, Indian airports were developed essentially from a passenger perspective, leading to inadequate cargo infrastructure. Hence, in spite of the airports´ strategic location to act as a transfer hub for various intercontinental routes, they have not been able to successfully compete in the market to capture such intercontinental cargo traffic. These routes are currently dominated by European, Middle Eastern and South Eastern Asian carriers.

Policy Parameters
Undoubtedly, the government is aware of the situation and has taken several measures to step up infrastructure development. Some key policy initiatives include permitting 100 per cent FDI (Foreign Direct Investment) under the automatic route for greenfield airports and 100 per cent FDI for existing airports with government approval required for FDI beyond 74 per cent; and 100 per cent tax exemption for airport projects for a period of 10 years.

The draft of a new civil aviation policy is in the final stages of preparation. The government is also conside¡ring setting up an independent regulatory authority as also an Essential Air Service Fund which are expected to resolve several issues plaguing the industry.

To prepare and recommend a Financing Plan for the Twelfth Plan period, the government had constituted the inter-ministerial Task Force headed by BK Chaturvedi, member Planning Commission in 2012. The committee amid its varied recommendations had emphasised the need for active involvement of the private sector and recommended the development and operation of several metro, non-metro, greenfield and non-operational airports through PPP (Public Private Partnership) model. The Task Force had projected a total investment of Rs 71,000 crores for aviation infrastructure during the Twelfth Plan period, of which Rs 56,500 crore was envisaged from the private sector. The private sector has been playing a significant role in this segment since the late nineties.

Opening Opportunities
With the government´s thrust towards building robust aviation infrastructure, multitudes of opportun-ities are opening up for all, more so for private players, whether developers, aircraft and equipment manufacturers, security and passenger amenity services, MROs (maintenance, repair, and overhaul), logistics or technology solution providers. The following inked and proposed deals bear testimony to this fact. Eyeing large orders from Indian airlines, the world´s leading aircraft maker, Airbus has committed to source products worth $2 billion cumulatively over the next five years from India and plans to provide customised maintenance and other services closer to the base for all its airline customers. Mahindra Group signed an agreement with GE Aviation to manufacture aero structures at its facility in Bengaluru; French drone-maker LH Aviation signed a memorandum of understanding with India´s OIS Advanced Technologies to manufacture tactical drones in India through an industrial license; SpiceJet plans to enter into a deal with Boeing Co. and Airbus Group SE to purchase 80-120 jets to expand its fleet and rebuild its business; and Hindustan Aeronautics signed an agreement with French engine manufacturer Turbomeca for MRO of Shakti helicopter engine.

Even for private charter companies, opportunities are galore, says Bhupesh Joshi, Director & Chief Executive Officer, Club One Air. ¨Earlier, only top business management personnel and politicians used our air charter services. Today, senior management personnel, entrepreneurs, celebrities and even common man are flying with us and the team size has also increased over the years. We are therefore planning to start new ventures in the coming months, all of which will be in sync with our current service portfolio,¨ says Joshi.

There is enormous untapped potential, too, says SGK Kishore, Chief Executive Officer, GMR Hyderabad International Airport Limited (GHIAL). ¨Aviation in India is under-penetrated and there is a huge growth potential for the Industry including development of airport infrastructure. The majority of this development is likely to require private capital, hence it is imperative the enabling business environment is fostered through Government interventions,¨ he adds. GHIAL developed the Rajiv Gandhi International Airport at Hyderabad.

Innovative Inputs
Adoption of advance innovative technology and new concepts in various areas including construction methods will not only enhance the infrastructure facilities but also maximise the revenue potential and help create sustainable infrastructure, say some industry professionals.

¨Airports globally are moving towards greater use of technology to simplify the airport processes through self-service solutions, enhance passenger experience through use of technology interface and improve operational effectiveness for airlines and other users through deployment of technology enabled solutions. The Indian airports are also adopting these new technologies. Hyderabad Airport is the first airport in the country to have obtained approval for a full-scale roll-out of E-boarding facility that would greatly enhance passenger convenience,¨ reveals Kishore. With sustainability gaining ground world over, construction methodologies are also being altered to protect the environment, particularly in ecologically sensitive areas. Punj Lloyd associated with Sikkim´s first greenfield airport in Pakyong, situated in an ecological hotspot of the lower Himalayas, had to adopt a new technology to ensure that construction activities least impacted the local habitat, protected the rich fauna and flora, as also the water supply from 11 natural streams crossing the proposed runway alignment. The project involved creating a flat surface on hilly terrain to accommodate a 1,700 m long runway, terminal building and other facilities. ¨Construction methodology was suitably altered to protect the local environment from any serious damage,¨ reveals SK Goyal, Executive Vice President & Chief Operating Officer, Buildings and Infrastructure, Punj Lloyd Limited. ¨We used the cut and fill technique where the material cut from the uphill slopes was used for the downhill fill operations, creating the platform for the runway. Composite reinforced soil technology was used to retain the high embankments by reinforced soil walls. While the primary reinforcement consisted of high strength flexible geogrids made of polyester fibres protected with high quality LDPE coating, the secondary reinforcement was provided by heavily galvanized, PVC coated mechanically woven steel wire mesh panels,¨ Goyal adds. Further, the reinforced Earth walls of height varying from 32 to 80.38 m are being created and the slope of 65 degree maintained by using welded wire mesh and steel rods. Biodegradable coir mats are provided at the facia to facilitate growth of vegetation, Goyal sums up.

Setting up of cargo villages near international airports to deal exclusively with cargo and obviate the load on the existing terminal facilities, an Aerotropolis where aviation-intensive businesses and related enterp-rises are set up along with hotels, retail outlets, entertainment complexes and exhibition centres, etc., have also been recommended by industry pundits.

The Challenges
While opportunities and avenues are wide for aviation infrastructure development, there are also several challenges and impediments that need to be addressed. They include inordinate project delays, procedural delays, viability issues and non-availability of funds for expan¡sion, lack of a long-term national level policy, etc.

¨Land acquisitions, mandatory approvals, environmental clearances, financial closures, accurate estimates of future traffic potential still remain the perennial road blocks. These are not only queering the pitch but are making private developers wary to commit. Industry hopes that the government will mitigate these hindrances and create an enabling atmosphere of transparency,¨ avers Subrahmanyan.

Seconds Kishore, ¨The key enablers required to facilitate development of airport infrastructure in India are, availability of private capital, favourable regulatory frame¡work that lends certainty and ensures fair return for private investors, strategic thought process in terms of developing an optimal network of regional airports connected to identified metro or gateway airports to form a hub and spoke model.¨

The regulatory environment needs to be more conducive, says Joshi. ¨The aviation sector in general is still in need of many regulatory changes to make it more conducive for private operators. From the charter aviation sector, we would like reduction in the fuel and parking charges and more visibility at the airports with our own booking counter to create awareness about charter services,¨ he adds. Evidently, India´s aviation infrastructure needs a major overhaul. However, with the right policies, its effective implementation, conducive investor environment and relentless focus on quality, cost and passenger interest, India will be well placed to achieve its vision of becoming the largest aviation market by 2030.