Connectivity Enhanced

Both metro and non-metro airports are going to add to the growth story of India. In the next 20 years, there is going to be a quantum jump in the projected traffic—four times in passenger and six times in cargo traffic. Both metro and non-metro airports will be critical enablers of the economy. State governments will need to play a more active role in encouraging airport development and air connectivity if they wish to drive investments and growth.

Airport traffic in India is growing by leaps and bounds. In 2010, it had touched 143 million passengers and the projections by the Centre for Asia Pacific Aviation (CAPA) are that it would go past 450 million by 2020. While most of the passenger movement would be accounted for by major metro-based airports, the role of the non-metro airports, specifically regional airports will get accentuated in the coming years as the country goes in for ‘enhanced connectivity’.

There have been moves both by the government and the private sector to reach out to remote and inaccessible areas of India’s mainland in the hope that air connectivity to the unserved or underserved regions would boost business opportunities, tourism and general prosperity in these areas. The Airports Authority of India (AAI) believes that air traffic from non-metro airports would increase from the present 30 per cent to 45 per cent in the next five years. The Union Government is encouraging private-public partnership (PPP) with the state government as co-promoters and has a policy of identifying regional hubs on the basis of origin-destination surveys, traffic demand and the requirements of airlines.

In its bid to build air connectivity across the nation, the AAI during the Eleventh Five Year Plan period spent about Rs. 12,500 crore, upgrading and modernising 35 non-metro airports including Agra, Ahmedabad, Amritsar, Bhopal, Jaipur, Pune, Goa—most of these in Tier-II cities. Regional airports are looking at both Tier-II and Tier-III cities. The intent of the government is clear to go for pan-India air connectivity. The Rohit Nandan Committee made several recommendations, one of which is mandating scheduled domestic carriers to comply with Route Dispersal Guidelines (RDG) of 1994. The purpose of RDG was to fulfil the social obligation of the government to provide air connectivity to areas which are not commercially lucrative to the airlines. The committee had expressed concern that despite the implementation of RDG, air connectivity has been largely confined to very few airports and that too concentrating on routes connecting to the state capitals. As airlines resorted to cherry picking of routes, the committee recommended development of new tools to achieve the twin objectives of fulfilling the social obligation of ensuring air connectivity to remote regions without adversely impacting the economic viability of the airline industry.

Though at present, regional airports which serve traffic within a relatively small or lightly populated geographical area, have not made substantive impact on the aviation sector; these do have enormous potential. Aircraft such as turboprop regional airliners, business jets and helicopters are going to increase in numbers in India and for them to become operationally viable, regional airports are the answer as metro airports are not only congested but also operationally cost prohibitive.

Daring Private Players

With the government providing a platform, it is for the private players to take the initiative and stake it out as return on investments are going to take time as regional airports have to be nurtured and developed on a slightly different revenue model. A few entrants have forayed into the regional airport infrastructure development and the foremost one is Reliance Airport Developers Private Limited (RADPL). Reliance is the largest private non-metro airport operator in the country. RADPL has designed, developed and is managing five airports in Maharashtra namely Nanded, Latur, Baramati, Yavatmal, and Osmanabad, all on a 95-year lease with the company. SpiceJet and GoAir operate flights connecting Nanded and Latur to Mumbai, Nagpur and Delhi. RADPL aims to develop these airports to boost the regional economy and thereby increase its footprint in the aviation sector.

Regional operators believe that the smaller airports will work as catalysts for economic and social growth in the region that they serve. From the aviation perspective, tapping these underserved and unserved areas could translate into substantial number of passengers. With induction of regional airliners such as Bombardier and Embraer (20 to 100 seat category), the hinterland could be easily connected, which in turn would mean creating business opportunities; boosting employment, moving cargo and tourism growth.

First Regional Airport under PPP

Another player who has ventured into this field is Regional Airport-Holdings International Ltd. (RAHI), a joint venture between IL&FS Transportation Networks Ltd and Comet Infra-Developments Pvt Ltd. RAHI has Greenfield airport projects in Gulbarga and Shimoga, both in Karnataka, and these are nearing completion. According to Umesh Kumar Baveja, Chairman RAHI, the company’s corporate objective is to develop 99 airports by 2025. In the next five years, RAHI will invest in over 15 projects related to aviation infrastructure and services with a value exceeding Rs. 3,000 crore.

The Gulbarga and Shimoga airports are being developed on the PPP model with the concession period being 30 years and extendable by another 30 years. As the first two regional Greenfield airports in India to be operational under the PPP model, RAHI estimates that these can serve up to 1.5 million passengers a year. RAHI has plans of operating 20- to 50-seat aircraft in order to respond to specific demand generated by each location. However, to reduce the burden on passengers for a specific period, RAHI has submitted a proposal to the state government for subsidy on passenger fares for flights operating from Gulbarga airport.

RAHI is planning to utilise the airport city-side for commercial use by the creation of a geo-specific industry cluster to empower local communities and contribute to economic growth. An integrated horticulture and floriculture hub has been proposed at Shimoga. The airport itself will be spread over the area of 137 hectares and the city side will occupy the remaining 128 hectares. In Gulbarga, the project developer is setting up an integrated aviation hub with an International Aviation University. The airport itself will be spread over the area of 148 hectares and the city side will occupy the remaining 129 hectares.

While these airports are looking at enhanced economic activity, the Government of Puducherry is keen on boosting tourism and has given in-principle approval to Super Airport to develop a Greenfield airport in Karaikal. The Ministry of Civil Aviation and defence authorities too have cleared the project.