India lags behind in airport construction

Slow pace of airport growth in India is owing to lower than expected growth in non metro and regional airports: CAPA report

Airport projects in India account for just 1% of $385 billion dollar worth airport development works which are underway around the world, according to a Centre for Asia Pacific Aviation's recent report. Aviation experts say the slow pace of airport growth in India is owing to lower than expected growth in non metro and regional airports, financial crisis in airlines and policy inaction by government.

The CAPA report says that airport  projects worth $115 billion are being planned or in progress in Asia with China taking the lead in construction. Sixty nine regional airports are under construction in China and will be complete by 2015. Other countries showing fast growth are Oman, Saudi Arabia and Turkey.

Other cities in India's neighbourhood like Dubai and Singapore  which look up to India as important source markets are also investing heavily in airports. Singapore is planning a fifth terminal for Changi airport (fourth terminal will be complete by 2017) to increase airport capacity to 135 million passengers per annum by mid-2020s. Dubai is executing $34 billion Dubai World Central project which will involve construction of five runways and capacity to handle 160 million passengers a year.

According to the CAPA report airport projects valuing $4.9 billion are underway or in planning in India. The largest project  is Mumbai airport modernisation project valued over Rs 12,000 crore. CAPA has used  conversion rate at 50 to a dollar and pegged the project cost at $ 2.6 billion. The much delayed Navi Mumbai airport pegged at $ 2.3 billion (Rs 14,000 crore) gets a mention though it still remains mired in uncertainty.

"There is no large capital expenditure in airport projects in India. The modernisation of 35 non metro airports by Airport Authority of India is complete. Mumbai's airport's T2 too is complete. Uncertainty surrounds Navi Mumbai airport,'' said Kapil Kaul, CEO (South Asia) of CAPA.

"It is difficult even in best case scenario to see the second airport opening before the current Mumbai airport reaches saturation,'' the CAPA report noted.

According to experts reasons for India lagging behind airport development are two fold  - the small nature of India's civil aviation market and financial difficulties of Indian airlines which has hindered their growth and limited their expansion.

"For a country with 1.2 billion people the aviation market is small with just 61 million passengers last year. Much of the market is concentrated in six cities (Mumbai, Delhi, Kolkata, Chennai, Bangalore and Hyderabad) which account for 70% of domestic traffic. The remaining 30% traffic is shared by other 100 odd airports in the country,'' said aviation expert Hormuz Mama.

According to him the other reason hindering airport development in country is that financial condition of airlines is pathetic and they are uncompetitive. " Today you see foreign airlines picking up traffic from India. India is the biggest market for Emirates and second biggest for British Airways after the US,'' he added.

Experts also point out that growth in traffic has been slower than expected in regional and tier II airports making operations unprofitable. "An airport can not be viable until it gets a good throughput. The cost of running an airport are high. In rural airports where Central Industrial Security Force is not deployed the state police provides security. The security cost is high and can work out to around a crore rupees a year,'' said a former executive director of Airport Authority of India.