The growth of aviation sector is critical to connecting people from distant places. The aviation sector not only promotes connectivity and tourism but create jobs as well. According to IATA Economic performance of the airline industry mid-year 2018 report, the consumers are likely to benefit from lower real travel costs, more routes, and will spend 1% of world GDP on air transport in 2018. The growth of passenger traffic in recent times has added pressure on the existing airport infrastructure and calls for building new infrastructure as well upgrading the existing ones. To keep pace with the rise in demand various expansion projects are being implemented across the country. M. Venkaiah Naidu, Vice President of India while addressing Aero Expo India last November has said that India is on the way to become the third-largest aviation market in the world in terms of passengers by 2026. India’s air cargo is estimated to grow at 9 per cent over the next few years. IATA also expects the air passengers to double from 3.8 billion air passengers in 2016 to 7.2 billion by 2035. Sandeep Sharma takes a look at the aviation sector in India.
FACTS AND FIGURES
The country has witnessed phenomenal growth rate in the range of 18 to 20 percent in the last 3 years. According to IATA Traffic Study, India, at 7th position as of now, is likely to take 3rd position by 2023-24 by overtaking UK, Japan, Spain & Germany. The current rate of the growth in domestic aviation sector of India is the highest globally. Passengers carried by domestic airlines during Jan-May 2018 were 571.58 lakh as against 465.87 lakh during the corresponding period of previous year thereby registering a growth of 22.69%.
The Minister of Civil Aviation recently reviewed the sectoral projects and has called for preparation of a holistic “Vision - 2035” document. The vision document aims to address issues such as congestion at airports, runways and airspace; development of unserved and underserved airports; ways and means to boost the air connectivity to small cities and towns - thereby increasing revenues. It will further provide a direction to the economic development in these areas in terms of job creation and cargo infrastructure development.
NABH (NextGen Airports for BHarat) NIRMAN
To meet the growing demand, Government of India has launched a new initiative of NABH Nirman (NextGen Airports for Bharat), wherein systems and processes are geared to provide enhanced airport capacity to handle 1 billion trips in the next 10 to 15 years.The government of India has reiterated its commitment to the building of airport capacity as part of NABH (NextGen Airports for BHarat) Nirman initiative. The three key aspects of NABH Nirman are (1) fair and equitable land acquisition, (2) long-term master plan for airport and regional development and (3) balanced economics for all stakeholders.
To meet the growing demand, the airport capacity upgradation and expansion projects needs to be undertaken. To build sufficient capacity, development of new greenfield airports and expansion of existing brownfield airports has to be undertaken. Airports Authority of India (AAI) and the private sector are likely to fund these projects. AAI is in the process of creating additional capacity with a capex of Rs. 20178 Crore over the next 4 to 5 years. The airports include Chennai, Guwahati, Lucknow, Agartala, Patna, Srinagar, Pune, Trichy, Vijayawada, Port Blair, Jaipur, Mangalore, Dehradun, Jabalpur, Kolhapur, Goa, Rupsi, Leh, Calicut, Imphal, Varanasi and Bhubaneswar.
GREENFIELD AIRPORT DEVELOPMENT
Under New Greenfield Airport Policy, many of the major cities in India are likely to have multiple airports to ease out congestion on the existing ones. Government has granted approval for Noida International Airport (Jewar), Mopa (Goa), Purandar Airport (Pune), Bhogapuram Airport (Visakhapatnam), Dholera Airport (Ahmedabad), Hirasar Airport (Rajkot). New greenfield airports approved by the Government of India will see a capex outlay of Rs.50000 crore. The upgradation and expansion of airports by the private sector to the tune of Rs 25,000 crore over the next five years is in the offing for Delhi, Bengaluru, and Hyderabad Airports.
The civil aviation ministry have accepted the recommendations made by the steering committee on Greenfield Airport to accord site clearance approval to the Greenfield International Airport at Purandar, Pune. Maharashtra Airport Development Company Ltd (MADC) is executing the project. The ‘in-principle’ approval is given to the Government of Uttar Pradesh for setting up of Noida International Greenfield Airport at the North of Jewar Village, Uttar Pradesh. Yamuna Expressway Industrial Development Authority (YEIDA) is the implementing agency for the project.
GMR Goa International Airport Ltd (GGIAL), a subsidiary of GMR Airports Ltd (GAL), is developing a Greenfield Airport at Mopa in Pernem taluka, North Goa district in the State of Goa on the Public Private Partnership (PPP) model, which is based on a Design, Build, Finance, Operate and Transfer (DBFOT) basis. The Mopa airport will be the biggest airport, after Mumbai with the capacity to handle 30 million passengers annually along with the air cargo. The airport project is expected to cost Rs 3,000 crore. The phase-I is likely to complete by 2019-20. The proposed airport will have Integrated Passenger Terminal Building; Runway, Taxiways, Rapid Exit ways, Air-traffic control and meteorological facilities; Cargo terminal and ancillary facilities for processing and storage; Aircraft Rescue & Fire Fighting facilities; Infrastructure for Aircraft Fuelling Services; Reserved Services; Emergency services; Flight catering services; and Vehicle parking, etc.
IRB Sindhudurg Airport Pvt Ltd is constructing the Sindhudurg airport on a design-build-finance-operate-transfer (DBFOT) basis for the Maharashtra Industrial Development Corporation (MIDC).The proposed greenfield airport is being built at Chipi-Parule in Sindhudurg district, in the State of Maharashtra. The airport development comprises a 2500-meter runway which has provision for future development. The airport will be built at an approximate cost of Rs 520 crore. The airport will have the capacity to handle 200 departing and 200 passengers arriving during peak hours with expansion facilities to serve up to 400 departing and 400 arriving passengers without additional construction. As of May 2018, the construction of taxiway, apron and isolation bay has been completed and works on the airfield ground lighting in on. Construction of passenger terminal building, ATC tower and technical building is on in full swing. Construction of other ancillary buildings is in progress and will be completed on time.
AIRPORT UPGRADATION AND EXPANSION
AAI has already awarded the works at Agartala, Calicut, Port Blair towards construction of new state-of-the-art integrated terminals. The Cabinet Committee on Economic Affairs has given its approval in May 2018 for the expansion and upgradation of integrated terminals at Chennai, Guwahati & Lucknow Airports. 1) Lucknow Airport: The new integrated terminal will have an area of 88,000 sqm along with the existing terminal building with 16292 sqm. The airport will have annual capacity to handle 2.6 million international and 11 million domestic passenger traffic. The new terminal building would cater to the requirement of passenger growth up to the year 2030-31. The project is estimated to cost Rs 2,467 crore. 2) Chennai Airport: Total built up area of the proposed terminal building, including the present proposal measuring 197000 sqm shall be 336000 sqm with an annual capacity to handle 35 mppa. The new terminal building incorporates green building features with an aim to achieve GRIHA-4 Star rating. The building would cater to the requirement of passenger growth up to the year 2026-27. The project is estimated to cost Rs 1,383 crore. 3) Guwahati Airport: The new terminal building shall have an area of 102500 sqm to handle combined annual capacity (old and new terminals) of 9 mppa. The building would cater to the requirement of passenger growth up to the year 2026-27. This will encourage investment & tourism in NER with thrust on ‘Act East’ Policy. The project is estimated to cost Rs 1,232 crore.
Similarly, upgradation of airside capacity by way of strengthening and extension of runways, construction of new apron bays has been taken up by AAI to cater to the demand from airline operators who have placed confirmed orders for almost 900 aircrafts in the coming 10 years.
NATIONAL AIR CARGO POLICY
The Government of India is likely to announce its cargo policy that would help to contribute 40% of India’s GDP from global trading.The government of India has recognised the need to increase air cargo industry size and the civil aviation minister has made the following observations in line with forming National Air Cargo Policy.
Sufficient land should be earmarked in the upcoming airports for cargo operations.
Should create air cargo transshipment hubs in India – sourcing cargo from neighbouring states and partner countries.
The policy should aim at creating intermodal hubs and should have air-sea, air-road, air-inland waterways connectivity Geographical location and distinct products related to that location should be kept in mind while developing the cargo policy.
The ministry of civil aviation is considering making a comprehensive development plan for skilling the people in the aviation sector due to the growing demand. As per a study, by 2035, the Indian Civil Aviation sector would require 0.8 to 1 million personnel directly and another 3 million indirectly. The plans under consideration includes setting up skill development centres across all States, The government is keen to come out with a comprehensive development plan on skill development along with funding related strategies that will aid the capacity building required in the sector.
The Union Cabinet has recently approved signing of the Memorandum of Understanding (MoU) between India and Germany on Cooperation in the field of Civil Aviation. The joint declaration will lead to promotion of safe, effective and efficient development of air transport between India and Germany.
The government of India has accorded top priority to the manufacturing of aircraft and aviation equipment under the Make in India programme. Apart from this the government top priorities include enhancing safety and security in the aviation sector, creating world-class passenger and cargo hubs in India.
UDAN-RCS, UDAN (Ude Desh ka Aam Naagrik) is a regional airport development and "Regional Connectivity Scheme" (RCS) of Government of India, with the objective of making air travel affordable for the common man, to boost inclusive national economic development, job growth and air transport infrastructure development of all regions and states of India. Airports Authority of India (AAI) is the implementing agency of UDAN. The passenger airfare for one hour journey of 500 km on a fixed wing aircraft or for a 30 minute journey on a helicopter is capped at Rs. 2,500, with proportionate pricing for routes of different stage lengths / flight duration. The selected airline operator would have to provide 50% of the flight capacity (subject to a minimum of 9 and a maximum of 40) as RCS Seats for operations through fixed wing aircraft and a maximum of 13 RCS Seats on the RCS Flights for operations through helicopters. Where the fixed wing aircraft has less than 9 passenger seats, then all such seats would be RCS seats. Selected Airline operator would be given a three years exclusivity of operations. To reduce the cost of operations of airlines on flying such routes, a financial stimulus in the form of concessions from Central and State government, airport operators and the Viability Gap Funding to the interested airlines would be provided to kick-off operations from such airports, so that the passenger fares are kept affordable. State Government will provide a certain share of VGF (20% for States other than North-East States where the ratio will be 10% of VGF determined). In this regard, till January 2018, 29 States and UTs have signed MoU.
The growing disposable income with the burgeoning middle class is likely to boost the fortunes of the aviation sector in India. It is estimated that more than 500 million people are expected to be in upper and middle class by 2025.The country is expected to be the fourth largest economy by 2022. National Civil Aviation Policy has laid the foundation for sustainable future growth. The policy targets to enable 500 Mn domestic ticketing by 2027 and 200 Mn international booking through implementation of UDAN scheme (i.e. RCS), which will target indicative airfare of INR 2500 per passenger approximately, for a distance of 500 kms to 600 kms on RCS routes (equivalent to about one hour of flight).
In February, 2018 the CAPA released its preliminary outlook for Indian aviation for financial year 2018-19. As per CAPA, with the expected induction of 125 aircraft in the coming year, the domestic capacity is projected to increase by about 25%, stimulating traffic growth of around 20%. This would be the fourth consecutive year-on-year growth rate of around 20% as per CAPA. On the international front, traffic has been growing a relatively healthy rate of about 10% to 12%. According to CRISIL Research, the air passenger traffic growth at Indian airports is expected to decline to 14-16% in fiscal 2019, compared with 15-17% growth in fiscal 2018, mainly due to infrastructure constraints and rise in air fares. The overall passenger traffic at airports is projected to clock 12-14% compound annual growth rate (CAGR) between 2017-22, with domestic traffic expected to grow by 13-15%, and international traffic by 9-10%. While the domestic share of total passenger traffic is pegged to increase, it is dependent on growth in gross domestic product (GDP) and airport infrastructure (through greenfield and brownfield projects), as well as a revival in the global economy.