Govt proposes ambitious airport expansion, AAI to foot bill

The government today proposed to expand airport capacity by "more than five times" to handle a billion passengers a year, leaving the task to raise money for this ambitious project to the Airports Authority of India.
The total number of passengers who flew in the country between April and December last year was at 117 million.
Indian domestic aviation market has seen nearly 20 per cent growth for the past three years and is one of the fastest growing aviation markets in the world. It is also expected to be the third biggest market by 2025, after US and China, according to IATA.

However, infrastructure expansion has failed to keep pace with the growth in traffic and many key airports are either already operating beyond their structural capacity or are likely to reach their threshold by 2022.
"We propose to expand our airport capacity more than five times to handle a billion trips a year under a new initiative - NABH Nirman. Balance sheet of AAI shall be leveraged to raise more resources for funding this expansion," said Finance Minister Arun Jaitley in his budget speech today.
Infrastructure expansion is urgently needed by the aviation sector but the task to collect funds for this has been left entirely to Airports Authority of India which will have to take loans or invest in bonds.

"We have a very significant CAPEX plan. We have doubled our CAPEX from Rs 2,000 crore in 2016 - 2017 to Rs 4,100 crore in 2018-2019. This will be more than doubled in 2019-2020," a senior AAI official said.

He added that in the next financial year, AAI will be spending Rs 14,000-15,000 crore on terminal buildings alone.
"Our balance sheet is good so far as we are not taking any loans. So, we are considering debts, bonds and alternative routes (to raise funds). Around 60 per cent of our requirements will be met from outside," the official explained.
The AAI will also be contributing Rs 200 crore in the current fiscal and Rs 500 crore in the next fiscal from its dividend for the regional connectivity scheme. This amount will be used for providing subsidy to airline and helicopter operators flying on RCS routes.

According to aviation think-tank CAPA, India needs to invest up to USD 45 billion to create an additional capacity of handling 500-600 million passengers at its airports by 2030 as their capacity is likely to saturate within the next five years.
The current capacity of the country's top 17 airports is between 298-316 million passengers per annum, as per CAPA.
Delhi's Indira Gandhi International Airport's current capacity is 64 to 72.5 million passengers per annum and its maximum structural capacity of 90-100 million passengers per annum is likely to be achieved by FY 2022, assuming a growth rate of 10 per cent

Similarly, Mumbai's Chhatrapati Shivaji International Airport with a maximum capacity of 50-52 million passengers per annum is likely to saturate by FY 2019.
India is expected to have about 478 million airline passenger traffic by 2036.