New Delhi/Mumbai: For anyone who travels by air in India, the only thing worse than the performance of the state-owned airline is the experience at state-owned airports.
While at least some of that (in both instances) may be more about perception than reality, Guruprasad Mohapatra, chairman of the Airports Authority of India (AAI), would like to change the way flyers feel about state-owned airports in the country.
To this end, Mohapatra, 54, is in the midst of executing a turnaround plan to make AAI more profitable. For flyers, the turnaround will mean less crowded, more comfortable and efficient airports.
The plan involves spinning off the cargo operations of AAI into a separate firm, a switch to a more profitable tariff model, increasing non-aeronautical revenue, outsourcing terminal management and addressing delays in airport projects, Mohapatra said in an interview on 30 August.
AAI owns and manages 128 airports across the country (21 international, 81 domestic and 26 military airfields).
The to-do list of the former municipal commissioner of Surat, who took charge at AAI in July, also includes giving wing to the government’s ambitious Regional Connectivity Scheme that envisages taking flying to under-served locations, and addressing the problems at India’s major airports—many of which are managed by private developers—that are almost bursting at the seams. AAI owns a 26% stake in the companies managing these airports. He also admits the need to “manage judiciously... the vast network of airports across the country”. Only 94 of the 128 airports under AAI are operational.
For airlines and passengers alike, though, it is the congestion at major airports that’s a cause for concern. This will affect growth, warned Sanjiv Kapoor, chief strategy and commercial officer at Tata SIA Airlines Ltd, which flies under the Vistara brand. “We have been talking of Navi Mumbai airport for 25 years,” he added.
The available capacity at all airports is 250 million passengers per annum, whereas the passenger traffic at airports crossed 223.61 million in 2015-16. And airports at New Delhi, Mumbai and Bengaluru have reached their maximum capacity in terms of airline slots and number of passengers.
Mohapatra admits the need to increase capacity, but points to factors beyond his control: the availability of land, for instance, or the lack of interest from private sector firms in developing airports in small cities.
AAI has completed the redevelopment of a total of 60 airports, including those in Kolkata and Chennai. Out of these, 10 airports that can handle 30 million passengers a year are operating at peak capacity utilization; 23 airports that can handle around 27 million passengers are only handling 17 million. And 14 other airports that can handle more than 5 million passengers a year are dealing with only a fraction of that number.
According to Mohapatra, improved regional connectivity will increase the usage of these airports.
India is set to get 50 new airports in the next three years as part of a plan to boost regional connectivity, and at least 10 of these will become operational over the next year, civil aviation minister Ashok Gajapathi Raju told reporters on 24 August.
As part of this plan, called the Regional Connectivity Scheme, the central and state governments will partly underwrite airlines for operating scheduled flights to airports that currently do not have any. This doesn’t entail any significant expenditure for AAI, according to Mohapatra.
AAI also plans to get its non-operational airports up and running. It plans to make them no-frills airports, to which airlines can operate scheduled flights under the Regional Connectivity Scheme. Mohapatra said AAI will spend Rs50-100 crore on this.
In fiscal 2015-16, AAI reported revenue of Rs10,824 crore and turned in a profit of Rs2,537 crore. It expects revenue and profit to drop this year to Rs9,545.98 crore and Rs1,128.70 crore. Mohapatra attributed the likely fall in revenue and profit to an anticipated decrease in airport lease revenue due to an expected downward revision in the airport tariffs of Delhi International Airport.
Experts said AAI could do more.
“You own some 125 airports. You can make a lot more money by complete outsourcing. That is the fastest way to migrate the existing airports into world-class ones,” said Mark D. Martin, founder and chief executive officer at aviation consultancy Martin Consulting Llc.
But AAI first needs to “put its house in order and make it cleaner”, he said, referring to the need to overhaul the air navigation system. “We need to modernize our air-traffic control infrastructure ground-up—from the smallest of airports to the new mid-level ones,” he said.
According to Martin, AAI has come a long way from the “I can do it all myself” attitude to realizing that others do it better. He attributes the change to partnerships with world-class private airport developers (for the development and management of airports in Delhi, Mumbai, Bengaluru and Hyderabad). “But still, it has a long way to go and the potential is enormous,” he added.