Competition among Delhi, Noida airports expected to be intense: CAPA India

Airports will have to adjust to an environment in which two principal airlines will hold all of the strategic keys

Among India’s network of airports, a clash has already been foretold between a newbie in Noida and a veteran in neighbouring Delhi. On Wednesday, aviation consultancy firm CAPA India said that the competition between the two airports is expected to be intense and could play out even before the airport in Jewar, Noida, begins operations this year.

“Currently, the VAT (value added tax) on aviation turbine fuel (ATF) for domestic services is 25 per cent at Delhi airport, but it will only be 4 per cent at Noida airport. This will have a bearing on capacity allocation (by airlines) and expansion,” CAPA India’s report mentioned. ATF constitutes roughly 40 per cent of an airline’s costs in India.

A key development to monitor is whether Delhi’s Indira Gandhi International Airport, operated by the GMR Group, will allocate exclusive terminals to Air India and IndiGo. A decision on the matter could be taken in 2024 and its long-term implications on international traffic would have to be assessed, the report added.

The Delhi airport, India’s busiest, handles approximately 1,200 flights per day. The Noida airport, developed and operated by Swiss firm Zurich Airport International, is expected to commence operations with 65 daily flights.

According to the report, between December 2024 and April 2025, two of India’s primary metro cities — Delhi and Mumbai — will have dual airport systems that will change the dynamics of the National Capital Region and the Mumbai Metropolitan Region (MMR), even beyond aviation.

A crucial distinction is that both airports in MMR will be operated by the Adani Group, whereas in Delhi-NCR (Jewar falls within it) separate entities will run the two airports, resulting in intense competition.

“A key issue to address will be to ensure that airspace is appropriately redesigned, given that parallel networks will be operating into these airports,” the CAPA India report said. The distance between the Delhi and Noida airports is about 80 km.

CAPA India also said that airports would have to adjust to an environment in which two principal airlines will hold all of the strategic keys. “Air India Group and IndiGo currently have a combined domestic market share of around 90 per cent, and an international market share of 41 per cent. And these two carriers will be the principal growth engines, going forward, giving them substantial negotiating strength,” the report mentioned.

Airlines, particularly IndiGo and Air India, will evaluate the impact of airport charges more deeply, and will engage more actively with airports at all levels from 2024 onwards, it said.

According to CAPA India, in such times the enhanced institutional independence of the Airports Economic Regulatory Authority — which determines tariffs such as landing charges and parking fees that the airport operator can collect from airlines — will be of key importance.

Airports, therefore, need to have a clear understanding of the business plans of the two airlines, their customer propositions, and long-term strategies, the report said.

“These will have fundamental implications for airport operations, commercials and financials. It will no longer be sufficient to simply focus on how much capacity the airlines will deploy. This will be a new regime that airports have to deal with. A key point to watch is which airports will seek to align strategically and decisively with these two carriers,” it said.