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Air Traffic Growth

Airports modernization plans take wing in India

eTN Staff Writer  Feb 11, 2009

MUMBAI, India - The growth of air traffic in India has increased aircraft movement per airport, which in turn, has necessitated an expansion of the capacity of airports or development of new airports. Airport development primarily involves the improvement of the land, as well as air areas and the terminal building. This offers great opportunities for companies involved in such development activities.

Opportunities in the Indian airports infrastructure modernization and development market, finds that the number of air travel passengers are expected to increase from 102.73 million in 2008 to 290.19 million by 2014, at a compound annual growth rate of 15 percent.

India has five major airports (Mumbai, Delhi, Kolkata, Chennai, and Bangalore) and three airport models, namely government-owned, private-owned, and public private partnership (PPP). Delhi, Mumbai, and Bangalore, as well as most of the airports developed in the recent past, were all based are on the PPP model.

However, with the PPP model, there could be a potential issue of the government holding all the reins. Industry authorities and the government could ease this anxiety by drawing up regulations.

"The potential in the Indian airport modernization market is huge and to take advantage of this, airports are also developed on the built, ,and transfer (BOT) model," said Frost & Sullivan research analyst John Siddharth.

Apart from actively participating in airport development, the Indian government has also drawn up an airport-wise infrastructure development budget for metro, non-metro, and the green field airports. There are set funds for communications, navigation, and surveillance systems for air traffic management (CNS/ATM) and the other equipment.

The revenue stream of the Indian airports is broadly divided into two categories - aeronautical and non-aeronautical. The aeronautical segment accounts for a huge chunk of the revenue (70 percent), while non-aeronautical contributes the rest (30 percent).

"The aeronautical revenues comprise the returns from cargo-related and the passenger-related traffic, while the non-aeronautical revenues are mainly obtained from property-related and retail-related income," noted Siddharth.

Airports modernization plans take wing in India
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