The demand for air travel in the coming years is expected to grow multifold in a growing economy like India. But experts have raised concerns over the possibility of widening the gap between the acceleration in demand and the expansion of airport infrastructure.
A report by aviation consultancy group CAPA in 2018 estimated that India’s airports would “exceed structural capacity by 2022.”
Jayant Sinha, minister of state, civil aviation, has been working towards improving airport capacity by reviving defunct airports and thereby boosting regional connectivity under the much-lauded UDAN scheme. He has earlier been quoted as saying that India will require 150-200 airports by 2035.
Speaking at the Global Aviation Summit in Mumbai on Tuesday, representatives of the airport industry said that while India has come a long way, a lot more needs to be done to keep up with rising demand.
“The airport infrastructure is, of course, challenged at this time, especially in Delhi and Mumbai. We have huge challenges in terms of parking spots and slots,” said Ajay Singh, CMD, SpiceJet. He then continued, “But one of the things this has done is it has spread aviation throughout the country. As we get new aircraft, we’re being challenged to find new destinations to fly to and new airports to park at.”
Singh then lauded the government’s UDAN scheme, saying he expects India to add 75 airports to its network in the next three to four years. However, he emphasised on the need to continue expanding the existing airports so that airlines can fly larger planes into them.
“If India is to continue to grow at a fast pace, then we need to ensure that the end customer gets a low-cost experience… We needn’t build very fancy airports. We need to build more functional airports,” he said, adding that the telecom revolution could be replicated in the aviation sector if the infrastructure expands and flying remains affordable.
Sidharath Kapur, executive director and member of the board at GMR Airports, the largest private developer and operator of airports in India, stressed on the need for more clarity and flexibility in the concession agreements for developing airports.
“While a revenue-sharing model is good from a risk mitigation point of view, there is always an element of suspicion whenever there is a payment to the government in whether that payment is correctly determined or not based on your accounting records,” he said, adding that instead, a one-time payment which can be funded by banks would be a more efficient way and ensure that government interference in business is minimal.
Although Kapur commended the government’s new model concession agreement which shifts the contribution to the government to a per passenger model and delinks it from total revenue, he went on to say that restrictive clauses that bar players from entering joint ventures or taking deposits hurt business.
R.K. Jain, CEO, Mumbai International Airport, pointed out that there was a need to address the inhibitions of banks when it comes to funding large infrastructure projects like airports. “Banks are shying away from funding infrastructure projects when airports are actually very good assets to fund,” he said. He then added that regulatory clarity, too, is essential for privatisation which he said was the only solution to bringing in the huge investment required for the growth of India’s civil aviation.