August , 2019
Boosting aviation infrastructure
15:18 pm

Aritra Mitra

Airports being the nuclei of myriad economic activities assume a significant role in the economy of a nation. The quality of airport infrastructure, which is a vital component of the overall transportation network, contributes directly to a country's international competitiveness and towards the flow of foreign investment. While cargo carried by air in India weighs less than 1% of the total cargo exported, it accounts for 35% of the total value of exports. Better cargo handling facilities lead to enhanced levels of international trade, especially of capital goods and high-value items. 97% of the country's foreign tourists arrive by air and tourism is the nation's second largest foreign exchange earner.

There are 449 airports/airstrips in the country. Among these, the Airport Authorities of India (AAI) owns and manages 92 airports and 28 civil enclaves at defence airfields and provides air traffic services over the entire Indian airspace and adjoining oceanic regions.

In 1996-97, these 120 airports/civil enclaves handled 3.96 lakh aircraft movements involving 243 lakh domestic and 122 lakh international passengers and two lakh metric tonnes of domestic and 4.8 lakh metric tonnes of international cargo. 52% of traffic was handled at the international airports of Mumbai and Delhi. Presently, various airlines are operating only through 61 airports. The remaining lies unutilised, at best handling occasional aircraft operations.

For the 2020 fiscal, CRISIL Research expects airport passenger traffic to grow by 14-16%, compared with 15-17% growth in fiscal 2019 on account of slower domestic traffic growth. Domestic passenger traffic, which accounts for 80% of total airport passenger traffic, is expected to slow down on account of spiralling air fares.

UDAN scheme

The Ude Desh Ka Aaam Nagarik (UDAN) scheme launched in June 2016 has been hailed by the government as a game changer. The agenda of the scheme was to connect un-served and under-served airports across the country in an affordable manner and boost connectivity.

On the flipside, passengers on metro routes are forced to bear an additional Rs. 50 as an UDAN levy. There is no certainty on fare levels as there is no transparency on the mechanism on how one can access an UDAN seat and there are no fare controls on airlines like IndiGo and Spicejet which have not taken the UDAN subsidy. According to AAI and media reports, only 80 out of 453 (18%) of the routes awarded under this scheme are operational and only 16 of the 56 unserved airports (29%) are operational.

Harsh Arora, Business Head, BVC Logistics, deals with transportation of high value goods. For his business, he has to opt for airline facilities quite often. He told BE, “The UDAN scheme was not promoted on a very large scale which should have been done. The scheme should have been linked to cargo transport to smaller cities but currently, it does not have such facilities.”

Airport infrastructure

An Air India official working at Netaji Subhas Chandra Bose International Airport, Kolkata shared his opinions with BE. He said, “I cannot say about the whole of India but as far as Kolkata is concerned, the infrastructure is quite satisfactory. The security is very stringent and the airport has a vast waiting lounge.” When asked about airports in smaller towns, he admitted that the infrastructure is not well-developed. He said, “The number of flights is very less in comparison to metro cities. The infrastructure is also outdated. For instance, when I was posted at Silchar a few years ago, there were no air conditioners in the passenger lounge.”

Arora shared his views regarding airport infrastructure with BE, “As we are in the high value business, we need a safe house to store these goods once they are landed in the airports. This makes the process of distribution easier to places where there is no airport connectivity. These strong rooms are available in the airports of the metropolitan cities and apart from them, available only in a few other cities.” The unavailability of strong rooms in majority of the airports makes high value cargo transportation to smaller towns difficult.

New airports started operations in Kannur and in Sikkim recently. The government awarded the contract for second airports in many states, including Navi Mumbai and Mopa in Goa. However, the Navi Mumbai airport is already running behind schedule and the announced date of commissioning has long passed. The government could not oversee faster expansion of Delhi and Mumbai airports, which account for most of the air traffic flows in the country.

Modernisation of air traffic management

In 2018, AAI signed a 15-year contract worth Rs. 945 crore with Harris Corporation for its Futuristic Telecommunications Infrastructure (FTI) initiatives. Dr. Guruprasad Mohapatra, Chairman, AAI informed, “India's exponential air traffic growth is creating demand for new aircrafts, air navigation technologies, airport security equipment and infrastructure. Futuristic Telecommunications Infrastructure provides a dedicated nationwide telecommunication network to support air traffic management operations, with an emphasis on safety and high reliability and the ability to expand for growth.”

Initiatives to improve aviation infrastructure

The Vision 2040 for the Indian aviation sector has been unveiled recently. It charts out a comprehensive strategy for the growth of the sector. India will require 200 airports and a financial commitment of $40-50 billion to handle - at minimum - 1.1 billion passengers flying to, from and within the country.

Exponential growth in the sector has pushed the government to propose an Amendment Bill in 2018 which proposes to first amend the definition of ‘major airport’ as any airport with passengers in excess of 3.5 million from the existing 1.5 million mark. The Airports Economic Regulatory Authority has been under tremendous pressure with an increase in the number of private operators entering the sector. Some of the major airports are now functioning under public-private partnerships. It was felt that if too many airports come under the purview of the authority, it would be difficult to determine tariffs and monitor the service standards of the major airports efficiently. In order to meet the growing demand, NABH Nirman was launched to create enhanced airport capacity so as to handle one billion trips in the next 10 to 15 years. In August 2018, a new transaction structure for future Greenfield airports proposed under NABH Nirman was unveiled. AAI's plans to privatise six airports - Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvanthapuram and Mangaluru - have also inched closer to reality. This is expected to enhance revenue generation and increase economic development.

Weak aviation industry affecting aviation infrastructure

In spite of economic growth and investments, the aviation industry is facing certain problems. High costs and low yields is one of the major problems of the Indian aviation sector. India’s aviation industry fell from record profit in FY18 to mega losses, resulting in dire need of recapitalisation. The most significant example happens to be the suspension of operations by Jet Airways, which once used to be the largest passenger airline in India. Jet Airways has almost Rs. 1500 crore in dues and the fate of 15000 unpaid staff has been left in uncertainty. Air India also has debt repayments worth Rs. 9000 crore lined up this year.

IndiGo, the country’s biggest airline, and its rival low-fare carrier SpiceJet both ordered aircrafts that have been facing severe technical glitches. The Pratt & Whitney (P&W) geared turbo fan engines that power IndiGo’s Airbus A320 neo (new engine option) planes have developed repeated technical issues since they were pressed into services, leading to several groundings.

The problems of the leading players in the Indian aviation sector have spilled over and slackened the pace of creation of aviation infrastructure. These problems need to be resolved in order to improve aviation infrastructure in India.

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