Home » India Airports 2011 Infra around airports needs major boost: Experts

India Airports 2011 Infra around airports needs major boost: Experts

India Airports 2011 Infra around airports needs major boost: Experts

Investment opportunities of $110 billion are being envisaged up to 2020 with $80 billion towards new aircraft and $30 billion towards the development of airport infrastructure, according to the Investment Commission of India. But are the new aircraft and big development plans likely to materialise? A report on the conference held last month in Delhi.

A recent conference, India Airports 2011, focused on aspects of modernisation and expansion of India’s airports—a much discussed but under­delivered promise. With the growth in the industry, non-aero revenues have gained momentum, and city-side development has been accorded importance. It has been predicted that airports would provide around 300,000-400,000 sq ft retail space by 2015. The number of domestic passengers is estimated to grow more than fourfold to as many as 180 million, and international traffic may exceed 50 million annually by 2020. As much as 97 percent of the country’s foreign tourists arrive by air and tourism is the nation’s second largest foreign exchange earner. Airports need to be integrated with other modes of transport like railways and highways, ena­bling seam­less transportation to all parts of the country.

In his inaugural address, Airports Authority of India (AAI) Chairman VP Agarwal outlined AAI’s recent achievements in developing smaller airports and pointed out to opportunities for the private sector in cityside development. Airports Economic Regulatory Authority of India (AERA) Chairman Yashwant Bhave said that urbanisation and growth of airports will continue to have a close correlation: With seven new cities emerging along the Delhi-Mumbai Industrial Corridor (DMIC) and other new urbanisation initiatives, the next decade promises to hold high growth for airports.

Speakers indicated at the opportunity for creating private participation in the 500 operating airports expe­cted in the next 10 years, an addition of 370 airports. Ansgar Sickert of Fraport India suggested that while AAI has delivered well, it is perhaps time for private par­ticipation in the modernisation of the 35 non-metro airports. Panel discussions on viability of smaller airports and the need for modernisation of Indian airports deb­ated the need for a comprehensive infrastructure policy that includes airports, water, roads and ports. While inv­estors look for sound investment with minimum sur­prises and complementing infrastructure, Sotiris Pagdadis of PwC said these were areas of concern in the Indian environment. Vidya Basarkod warned that promoters need to “really hang in there for about 10 years” if they would like to invest in smaller airports. She suggested that rather than focus on cityside development alone, developers should emphasise obtaining airline commi­tments, or opex could shoot up. However, SK Agarwal of SBI Caps believed it would be prudent to invest in MRO, land, real estate etc while awaiting aero revenues.

Cargo infrastructure formed an interesting point of deliberation, and speakers were unequivocal in the opi­nion that cargo airlines have not been successful in India because the cargo infrastructure is poor. Discussants also suggested ways to decongest airports of cargo traffic from the current 3-6 day dwell to 3-6 hours, the international norm. Amber Dubey of KPMG recommended estab­lis­hment of air freight stations in remote locations as opp­osed to the current trend to use expensive and difficult-to-acquire land around airports. The inevitable debate on User Development Fee (UDF) and Airport Development Fee (ADF), which has been under the scanner after the Supreme Court ordered, to the chagrin of the developers, that airports could charge ADF only if AERA passes a rule to do so. Recently, Delhi airport has been asked to credit to the Consumer Welfare Fund nearly Rs 1,500 crore worth of ADF.

Technology, too, found a place in the conference as tech companies such as GE, TCS, MAS-GMR and NIIT presented new and emerging efficiency solutions such as Performance-Based Navigation, risk management and multi-airport management system software. 

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