Govt’s plans to upgrade Indian airports hit an air pocket5 min read . Updated: 06 Jul 2011, 10:42 AM IST
Govt’s plans to upgrade Indian airports hit an air pocket
Govt’s plans to upgrade Indian airports hit an air pocket
Mumbai: India’s plans to develop and modernize airports in 35 cities other than the four metros has hit an air pocket even as domestic airlines continue to buy more planes. And even the modernization programme of two metro airports, in Chennai and Kolkata, is incomplete.
Some of the other projects are non-starters and airlines are blaming difficulties in acquiring land, raising money and lack of clarity in guidelines for the stalemate that has hit the world’s ninth largest aviation market.
Union civil aviation minister Vayalar Ravi said the development of 35 non-metro airports will happen, but in phases.
“The modernization of non-metro airports is happening. There were some issues in modernization of Chennai airport because of (problems in) land acquisition. The work will start soon as it (this hurdle) is cleared. The Kolkata airport modernization is also taking off," Ravi said.
The deadline for the launch of the refurbished Chennai airport was June; that for Kolkata is August.
As for the other 35, the process started in April 2008 with the government calling for bids for modernizing the Udaipur and Amritsar airports, only to scrap it soon after over fears that the development plan would become a pure real estate play. The process is yet to restart, for these two airports and for 33 others.
Experts say the aviation industry will pay the price for this delay. Nawal Taneja, professor emeritus in the department of aviation at Ohio State University and a respected aviation writer, said infrastructure constraints will hurt the Indian aviation industry.
At the Paris Air Show last month, IndiGo (run by InterGlobe Aviation Pvt. Ltd) and GoAir (Go Airlines India Ltd) placed orders for 252 aircraft worth $23 billion (around ₹ 1 trillion) at the list price—one-third of the firm orders the show witnessed.
According to the Centre for Asia Pacific Aviation (Capa), a specialist consultancy firm, Indian airlines have orders worth around $40 billion.
In a report, Capa quoted Airports Authority of India (AAI) chairman V.P. Agrawal saying the number of passengers at Indian airports could reach up to 450 million a year by 2020 due to continued double-digit domestic traffic growth, creating the need for investment of up to $30 billion in airport infrastructure over the next 15 years. The number was 54 million in the last fiscal.
Despite repeated efforts, Mint could not reach Agrawal.
“Without the infrastructure, airlines will not be able to achieve the growth in demand predicted. There is also no question that other developing markets will surpass India in terms of growth," Taneja said, citing the example of China, which is building infrastructure, including airports, at a much faster rate than India.
Airlines recognize the threat this poses.
A senior executive from a large private airline, who spoke on condition of anonymity, said: “Aviation is considered a sunrise industry, but it is actually a sunset industry with no airport infrastructure, high airport charges, fuel taxes and poor regulations. Airlines will have to be bailed out by the government banks if the current trend continues."
The worst affected will be airlines with regional plans. India’s second largest low-fare airline SpiceJet Ltd, for instance, plans to fly to around 100 cities and towns across the country. The airline’s chief executive officer Neil Mills declined to comment.
SpiceJet, controlled by media baron Kalanithi Maran of Sun TV, is changing its business model with the induction of 15 Bombardier Q400 turboprop aircraft. “India has only 36 runways where a Boeing 737 can land. If you want to grow beyond that, you will have to access tier II and III cities and for that you need a different machine," Mills said in a February interview. “With Bombardier Q400s, we’ll be able to land on 97 runways in India."
The ministry of civil aviation announced a greenfield airports policy in April 2008 and assured that all approvals and clearances would be on the fast track, but work on most of the greenfield airports is yet to begin.
Among these is the Navi Mumbai airport, designed to decongest the Mumbai airport. The government approved this in principle in 2007.
It took till November 2010 for the environment ministry to clear the project (but not before environment minister Jairam Ramesh and former aviation minister Praful Patel clashed over it). And Patel told Parliament in August 2010 that the government was yet to release funds for the project.
The project requires 2,054 hectares (ha) of land out of which the state government currently has 1,341ha. In March, Ravi told Parliament that the time taken to complete the project depends on multiple factors, including the ease of land acquisition, availability of mandatory clearances and financial closure.
Another greenfield airport project at Mopa in Goa was delayed over the fate of the existing Dabolim airport. Ravi said the government has allowed the latter to stay operational; meanwhile 1,000 acres has been acquired for the new airport. The Mopa airport was approved in principle in 2000.
Another airport at Kannur in Kerala (approved in February 2008) is the victim of state-level politics although the firm created to build the airport, Kannur International Airport Ltd, has acquired 1,277.19 acres.
Airport projects at Pakyong (Sikkim); Sindhudurg (Maharashtra); Gulbarga, Bijapur, Hassan, Shimoga (Karnataka); Dabra (Madhya Pradesh); Andal (West Bengal); Paladi-Ramsinghpur (Rajasthan); Kushinagar (Uttar Pradesh) and Karaikal (Puducherry) are at various stages of development.
Another major project that has not taken off as yet is Multi-modal International Hub Airport at Nagpur, popularly known as MIHAN. This was envisaged as an international cargo and passenger airport in a multi-product special economic zone (SEZ). The land for the project is in the possession of the state government, but the project is stuck over issues related to compensation (for people from whom land has been acquired) and funding.
“Farmers are not opposed to surrender their land to the project, but the issue is about compensation package. We are having negotiations with farmers’ representatives and we hope to conclude it very soon," said U.P.S. Madan, managing director of Maharashtra Airport Development Co. Ltd (MADC). Madan added that project was also facing an issue of viability gap funding.
MIHAN, a joint venture between MADC and AAI, is developing the airport and the SEZ.
A senior AAI official, who too spoke on condition of anonymity, admitted that things are not moving in the right direction. “Nothing is happening. Many of the greenfield airports are yet to take off. We are awaiting the final nod from the government for non-metro airports. Nobody knows when it will come," he said.
Makarand Gadgil contributed to this story.