The Centre will require up to ₹3 lakh crore for doubling the airport capacity over the next 10 to 15 years, Minister of State Civil Aviation Jayant Sinha said.
“We will need Rs 2.5-Rs 3 lakh crore for financing airports in addition to the money spent on land acquisition. As a result of that, we need to ensure that we attract investors, both equity and debt, into the airport asset class,” Mr. Sinha told The Hindu .
He said the Centre had done an extensive city-by-city analysis of airport traffic projects and worked out a plan to double the airport capacity over the next 10-15 years.
At present, out of 125 airports managed by Airports Authority of India (AAI), 69 airports receive commercial flights.
The existing airport terminals can handle 25 crore passengers per annum, according to AAI.
Mr. Sinha said while new terminals were being planned at some of the existing airports such as Delhi and Bengaluru, greenfield airports may soon come up at places such as Patna and Guwahati.
“If air traffic grows at historic rate of 10-20 per cent, we will have to at least double the airport capacity in 15 years,” the Minister said.
Financing options
Without divulging much detail, Mr. Sinha said there were “many alternatives” being evaluated for financing airport development and the Centre is planning regulatory changes to attract global private players.
“We need a robust airport operator industry. There are many strong and capable players around the world but we need to create an attractive policy framework for them to operate in India. Our regulations have made it difficult for developers to get adequate returns from operating airports,” the junior Civil Aviation minister said.
With the new Civil Aviation policy pushing for a fresh approach for calculating airport tariffs to attract investors, the Airport Economic Regulatory Authority (AERA) has initiated the process to abandon the single-till approach it has followed till date.
Hybrid-till model
The National Civil Aviation Policy (NCAP) 2016 has called for adopting a hybrid-till model for all airports under which 30 per cent of airport operator’s non-aeronautical revenues would be used to subsidise airport costs.
Since its inception, AERA has adopted a single-till model to determine aeronautical charges at 20 major airports across the country, including Kolkata and Chennai. The airports at Delhi, Mumbai, Bangalore and Hyderabad follow a shared-till model.
Under the single-till model, both aeronautical and non-aeronautical revenues are taken into account to calculate passenger fee. Apart from its core operations, airports earn income from the non-aeronautical side which includes food and beverages, duty-free shops, advertising, car parking and hotels.
“Based on projected growth rates, most of the 40 largest airports in the country will exceed their design capacities within the next decade. However, it is a serious concern that there is no long-term vision for India’s airport capacity requirements. There will be unthinkable economic ramifications if air connectivity to India’s centres of commerce, industry and tourism is choked off due to airports being saturated,” global aviation consultant CAPA said in its India Aviation Outlook 2017-18 report.
