Indian Aviation Industry – Airport infrastructure

As the global aviation industry charters a course through possibly the worst crisis in its history, China and India are trying to out do each other by creating a massive aviation infrastructure, even as the industry itself struggles to survive.

India vs China
China has laid out ambitious plans to develop 43 new airports by the end of 2010, that would increase to 244 by 2020. India is even more aggressive with its own plans.

 The Indian Civil Aviation Ministry has set itself a target of getting around 500 airports operational by 2020, which would include the redevelopment of currently unused airports. It would develop Greenfield airports, and also establish 'merchant' airports dedicated to the movement of cargo and logistics.

 As of March 2006, India had only 60 airports handling scheduled services. The country has a total of 448 airports currently, including small landing strips, of which around 80 are in active service handling scheduled services.

Of the 448, 136 belong to India's defence establishment, 156 to its various state governments, and 63 to its fledgling private sector.

That is an edge India has over China. In China, just about 60 per cent of the population lives within 100 km of an airport.

On the other hand, in India, virtually every district has an airport or landing strip. That means every district in India, theoretically, can be connected by air. This was a mouth – watering prospect for low cost carriers when they went about their due diligence exercise prior to setting up commercial operations in India.

Advantage India
India's advantages over its larger neighbour also include the number of airport sites in existence, and the presence of an active investor community within the country. Moreover, the state government system is very familiar with airport management than that of China, as China's airports were transferred into the jurisdiction of local governments from central control just four years ago.

For now, both China and India have their air traffic concentrated at a few key airports.

In India, there are 24 international and customs airports collectively accounting for around 94 per cent of traffic, with the remaining six per cent spread over three dozen smaller airports. If the milestone of 500 airports needs to be achieved in just under 13 years from now, India would need to liberalise its aviation policy, and embark upon an aggressive programme to upgrade its existing smaller airports.

Going forward, India's various state governments are expected pursue airport development programmes during the coming years, given the opportunities presented by the development of air services. Consequently, the role of the currently predominant Airports Authority of India (AAI) in airport development would diminish, and would be evident from the changes in the new aviation policy of the central government.

Infusion of investment
Investment in India's aviation infrastructure is set to get a massive infusion of investment over the coming five year period.

Between now and 2020, the development activity around Greenfield airports, including the development of cargo and logistics terminals, is expected to gather pace. Also, a number of the undeveloped airports in the country will evolve into low cost terminals, a lot of them working under the public – private partnership model, and even with the involvement of the low cost carriers themselves.

Examples of the upcoming partnerships are starting to be visible on the horizon. For starters, the Andhra Pradesh government has already issued a request for proposal (RFP) for the development of airports at Tadepallegudam, Ramagundam, Kurnool, Ongole, Bobbili, Nellore, Kothagudam, Nizamabad in the state. Other governments who have identified airports for development include Karnataka and Maharashtra.

The Airports Authority of India (AAI) is planning to earmark around Rs12,434 crore for the process of upgrading and modernisation a number of airports in the country, with 43 per cent of its planned outlay being allocated towards the three metro airports in Kolkata, Chennai and Trivandrum. A large chunk of the remaining funds are reported to be allocated for the upgrading of other non-metro airports and the modernisation of existing aeronautical facilities.

The AAI is in the process of spending around Rs5,332.13 crore for the three metro airports, with Chennai getting the lion's share of Rs2,462 crore. Kolkata airport will see an investment of RsRs2,417 crore in its modernisation programme. Trivandrum airport will get a relatively smaller amount of Rs452 crore for its upgraded version.

The AAI has floated tenders for the modernisation of these metro projects, and once completed, these airports are said to be at part with India's busiest air-hubs of Mumbai and Delhi. Both Delhi and Mumbai airports are getting their own makeovers at the hands of major private players.

 Kolkata and Chennai are two of India's most profitable airports, and a major portion of the funds for their modernisation would be spent on starting new facilities such as integrated passenger terminals, constructing new runways and launching hi-tech communication services. These services would be marked to global standards, and would be developed with the assistance of several foreign partners who would help in construction on turn-key basis.

ATC finally comes up to speed
India's two largest airports - Delhi and Mumbai – have been faced with a severe shortfall of ATC staff. Just about 100 air traffic controllers guide almost 500 planes a day, representing an almost 50 per cent shortfall in ATC staff.
 
Of the 87 domestic airports, an inadequate 1,000 air traffic controllers guide air traffic across India's booming aviation sector. Against the 2,500 flights per day currently witnessed in the sector, India needs a minimum of 2,500 ATCs.

Yet, an official from the Airport Authority India (AAI) admits that no new ATCs have been recruited during the last five years.

However, hope is at hand. The AAI would also spend a large part of the Rs1,743 crore into modernising aeronautical communication systems at over 125 airports managed by it.

The money would go towards installing new communication and navigational systems for the air traffic control (ATC) in inland and oceanic areas, using satellite mode of communication at these airports for faster transfer of aircraft and cargo.
 
Flexible Airspace use to drive down costs
With congestion growing in India's airspace, the Indian Air Force (IAF) and Airports Authority of India (AAI) have decided to lend a helping hand to each other across the country for facilitating more flexible usage of airspace.

The defence and civil aviation bodies have set up the Joint Regional Air Traffic Coordination Centre (JRATCC) at Chennai airport, and the Indian Air Force now plans to replicate this to other parts of the country.

Earlier this year, the Ajay Prasad Committee had recommended flexible use of airspace as a measure to optimise both military and civil aviation needs. This was after major lobbying by the civil aviation community, which insisted that the policy change could help them save at least 15 per cent of the operational costs of the airlines if air routes are straightened and civil aircraft are provided more air space.

The committee had been established to come up with a master plan for the next generation of futuristic air navigation services, and both the defence ministry and the IAF had accepted the committee's recommendation pertaining to flexible use of airspace.
 
Air cargo plans firm despite industry slowdown
Erstwhile Deccan Aviation chief Capt GR Gopinath has started a  separate cargo airline company,  Deccan Cargo. He has also outlined plans to acquire a large version of cargo airplane from Boeing's European rival Airbus.

 Flyington Freighters, the Hyderabad based air freighter is also reported to be mulling a fleet of around half a dozen cargo planes to start international freighter operations.

 National carrier Air India is reported to be evaluating conversion of the older planes in its fleet into cargo haulers. Air India has a separate cargo division, and has leased some cargo planes to logistics provider Gati.

Tier II expansion, feeders airlines, airport cities, and job opportunities
Following real estate, automobiles and organised retail, the aviation sector is the latest to draw up expansion plans to tier two cities in India. 

 Low-cost airlines are eyeing the at tier two cities to for possible expansion of its operational network, proposing connectivity with Mumbai and Delhi from cities like Coimbatore, Hyderabad, Jaipur, and Pune.

Airports infrastructure player GVK Power & Infrastructure Ltd, too planned to launch a new airline in association with a domestic carrier, as a new feeder service that would focus on 35 tier-II city airports.

Bengaluru International Airport is looking to grow an ''Airport City'' in its vicinity that will create one lakh jobs for qualified people.

Aviation experts say that airports of the 21st century will shape business location and urban development, just as sea-ports did in the 18th century, railroads did in the 19th century, and highways in the 20th century.

The economic landscape is set to change with the developing aviation infrastructure.

Once the air connectivity though India's 500 airports becomes a reality, it would lay the foundations for truly inclusive grown, rendering geographical distances meaningless.

Besides reducing passenger and freight travel times, the economic benefits of the industry's ability to move inland and leverage lower cost land and labour would not only ensure higher profitability and return on capital, but also ensure that the benefits of industrialisation trickle down to the interior of India.

The likes of Infosys would not need to hinge their businesses around metros anymore, and would have better access to the Indian workforce. Levelling this playing field, aviation infrastructure would also have multiple benefits for India's manufacturing sector, as goods would move faster via the cargo and logistics hubs to domestic and international destinations.

Investment would no longer be concentrated near highways and ports, and the interior of the country would also see rapid industrialisation.

Only then, would India be able to attain its double digit economic growth potential.