Trends

Hyderabad AirportAs the country gets into action mode to raise infrastructure standards, here’s an update on the current status and future prospects of India’s aviation hubs.

There is a tale, perhaps apocryphal, of how a former bigwig in India’s Aviation Ministry, following a tour of the glitzy airport amenities at Singapore, expressed the fond hope of wanting airports across India, then reminiscent of grimy bus stations, to at least look ‘changa’ if not like Changi, the City State’s exemplary model of how international air terminals must aspire to look like…

HAPPILY enough in the wake of the new millennium, things have begun to happen at Ground Zero with the Government of India taking public ‘Lift kara de’ appeals for airport infrastructure very seriously.
That is manifest in the dramatic transformation witnessed over the past decade through brownfield airport developments at Mumbai and New Delhi and greenfield projects at Hyderabad and Bangalore.
Ergo, it is not without significance that all the four named Indian plane stations figured in the Skytrax Ranking of Top 100 airports of the World – the most prestigious accolades for the airport industry, and a global benchmark for airport excellence – in 2016.
Assuredly change is happening on the airports front, but the verdict from the experts is that for a country of the growing economic importance and sheer physical size like India, the available facilities are clearly niggardly. Indeed there is a universe of infrastructure deficit to be attended to beyond the partial, seemingly cosmetic, world of improvements.
“This is the decade of aviation. More than $6 billion has been invested in airport capacity over the last 10 years, but with current growth and focus on regional connectivity, more investments in new airports and augmentation of capacity at existing airports at metros is imperative and inevitable,” declares Dr S Vasudevan, Director - Aerospace & Defence and Global Lead - Airports, KPMG India.
As someone who knows his infrastructure onions – not to mention the accompanying tears – Vasudevan presents a very persuasive case for aviation minders to kickstart airport project works across the nation ASAP.
Consider the following. With air traffic growing at the rate of 24 per cent per annum, India continues to be the fastest growing civil aviation market in the world. At this rate of growth, India could well become the second largest aviation market in the world by 2026 after China.
Most leading airports in India - Delhi, Mumbai, Bangalore, Hyderabad, Chennai and Goa have seen an unprecedented growth in traffic in the last 3 years, the boom largely helped by consistently low fuel prices, growing per capita incomes and increasing propensity of a fast growing middle-class for domestic and international tourism.
The new National Civil Aviation Policy (2016) has also given fillip to the sector by liberalising bilateral air service agreements, promoting regional air connectivity, rationalising tax structures, easing regulatory norms and providing major incentives for encouraging private investment in airline and airport operations, all of which are expected to drive air traffic and overall industry growth even further in the next decade.
While all of that is good news for investors and developers, this growth has also created significant pressure for new passenger and cargo handling capacity at many airports. Take Mumbai, for example. With more than 46 million passengers having flown through it by March this year, Chhatrapati Shivaji International Airport (CSIA), surrounded by rash of slums at Dharavi, is easily the most constrained air facility in the world. Even at a conservative growth rate of 10 per cent per annum, CSIA would need additional capacity to handle more than 65 million passengers by 2021 and possibly more than a million tonnes of cargo, which will be very difficult to achieve in CSIA because of acute space constraints.
The urgency is further underscored by the fact that there has not been much movement on Mumbai’s second airport. The airport proposed to be developed at Navi Mumbai under the public-private partnership model, was approved by the Union Cabinet as early as July 2007. However, while the project has received all the major approvals required to commence work, it is doubtful if the airport will meet its operational deadline of December 2019 – “It is at least 4 years away,” predicts Vasudevan.
The dismal implementation record has only exacerbated functional pain with the forecast that air traffic will increase to a staggering 100 million passengers in 2035 from 35 million last year. The latest estimate of the project’s cost, courtesy the Civil Aviation Ministry, is $2.5 billion. This absence of planning and lack of decisiveness is not the case just with Maximum City. The Centre has not yet thought in terms of constructing a second air facility at Bangalore, Chennai, Kolkata and Hyderabad.
It is reported the master plan for the expansion of Delhi’s Indira Gandhi International Airport which involves building the fourth runway, construction of a new terminal and expansion of the existing ones is ready. However, the downside is that the airport is expected to be saturated by 2022-23 as it is expected to handle up to nine crore passengers by then. Incidentally it bears mention here that Bhiwadi in Rajasthan has been given site clearance for a second airport in the national capital region while even the Uttar Pradesh Government has proposed an alternative airport at Jewar.
That said, there has also been some forward movement. The Bangalore-based GMR Airports signed a concession agreement with the Goa Government to develop and operate greenfield airport project at Mopa in the north of the State. The first phase of the project is expected to be completed by financial year 2019-20. Meanwhile, work for the proposed airport at Purandhar near Pune has gained momentum after the Airports Authority of India (AAI) gave an in-principle nod for the site.
While it is not exactly a doomsday scenario yet, there is without doubt a terminal crisis slowly brewing out there. With 66.5 per cent of India’s total air traffic ascribed to six cities – Delhi, Mumbai, Bangalore, Chennai, Kolkata and Hyderabad – it is being projected that new airports would be needed by 2025-26 or even earlier.
Global aviation consultant CAPA in its India Aviation Outlook Report, 2017-18 offers the following critique, “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.”

Action plan
Thankfully enough for India Inc looking to soar into an infrastructure growth orbit, it now looks like action stations. The urgency for movement on the planeport front couldn’t have come sooner in the year. It has found happy resonance in the Union Budget 2017 announcement with the government paving the way for monetisation of airport land.
While allowing private companies to manage and operate select airports in Tier II cities currently run by state-owned AAI under public-private partnerships, Union Finance Minister Arun Jaitley has spoken of reforms under which land utilisation in many of the AAI airports will now be allowed by changing existing regulations.
This move will open up portions of the 55,000 hectare of urban airport land available with the AAI for building multiplexes, shopping centres and convention centres and help generate additional revenues to be utilised to provide better facilities and reduce passenger charges.

Sidharath Kapur, President, GMR Airports Ltd, while lauding the move said, “The change of land use is excellent from the point of view of infrastructure deficit in the country. The reform will go a long way in improving the viability of the airports sector.”
What has transpired via the Union Budget announcement is only an extension of what the government has been quietly doing thus far. As part of its strategy to bolster aviation, the Centre has done an extensive city-by-city analysis of airport traffic projects which shows domestic air travel growing at 26.2 per cent last July. This robust growth in air traffic has caused capacity constraints and increasing congestion at the Indian airports and the problem appears large from the point of view of shortage of runway slots, parking bays and terminals.
It is easy to see that India has to get to work now since airport capacity constraints cannot be sorted out overnight with issues like land acquisition, securing approvals and clearances, not to mention design, construction and urban planning holding back project implementation. Experts are of the view that to meet air traffic growth of 10-20 per cent, airport capacity will have to be doubled across India over the next 10-15 years.


Building capacity
While details of the various alternatives to fund the airport developments are currently in the realm of debate, it is reported New Delhi has planned regulatory changes to attract global private players. Currently, out of the 125 airports managed by AAI only 69 airports receive commercial flights. That’s because the Centre, the state governments and the airlines do not have a consensus so far to make their operations viable. These were constructed largely by the UPA government as part of their mission to build 200 ‘no frills’ airports. There are at least 25 airports – which include facilities at Gondia, Juhu, Kolhapur, Sholapur, Akola and Jalgaon, Jaisalmer and Pathankot – on which Rs 600 crore was spent in the last 2 years and are technically operational, but which have not seen a single scheduled flight taking off. In addition to those, there are 30 other airports which are classified as non-operational. Some mitigation efforts are on now finally on their way with the government planning to revive what critics describe as ‘ghost’ airstrips.
India needs to build 50 new airports with a projected investment of Rs 2.72 lakh crore, to handle air traffic in the next 5-7 years. There are plans to open between ten and 15 airports in 2017 as part of the programme to boost regional connectivity. It bears mention here that work has already commenced at five locations - Hubli and Belgaum in Karnataka, Kishangarh in Rajasthan, Jharsuguda in Odisha and Tezu in Arunachal Pradesh.
Under the aegis of the Regional Connectivity Scheme (RCS), a key component of the National Civil Aviation Policy, aviation authorities have planned to develop 50 unserved or under-served airstrips as low-cost airports in Tier-II and Tier-III cities at an estimated cost of Rs 100-150 crore each. The scheme to be in operation for a period of 10 years will ensure that operations on the ground start with a minimum time-gap once the bidding process is completed. To give the scheme a push, the government is offering various concessions in matters such as airport charges and navigation and in terms of free parking of planes at airports.
Late last month, AAI had reported receiving an encouraging response to the RCS scheme with 45 proposals from 11 bidders covering more than 200 air routes. “The scheme has generated a lot of excitement,” says R N Choubey, Civil Aviation Secretary. “For the first time, the civil aviation sector has achieved rail parity. The policy is progressive and augurs well for India’s plans to become the third largest aviation market in the next seven years.”

Opportunity zone
The huge requirement for newer and better airport infrastructure as well as a need to maintain existing ones will doubtless throw up a major challenge for the stakeholders such as construction firms, technology czars, project management consultants, design and architecture experts, suppliers of airport equipment and products, construction materials, green building and sustainability experts, hospitality and retail players among others. But the biggest incentive for them to override the challenge will be the never ending horizon called business opportunity.
It is not difficult to see that with a spurt in demand for various products and services, players operating across the entire airport development value chain will have an eye on the big business through 2017-2018. This means busy times on the airport firmament for construction sector leaders like L&T, Tata Projects, Vinci and others.
And for global design and architecture firms like Arup, SOM, HOK and Gensler, each of whom have already left their brilliant individual stamp on projects like Mumbai’s Terminal 2, CSIA’s Air traffic Control Tower, Kempegowda International Airport in Bangalore and airport structures at Hyderabad, Chennai and Goa, the prospects for the future can only be very bright.
Not to forget players offering building equipment. “There will be a lot of new greenfield airport projects like the Navi Mumbai airport taking off. All greenfield projects and airport expansions require foundation equipment which is our forte. They need equipment like vibro floats for soil stabilisation and vibratory hammers for piling,” says Surajit Mukherjee, Managing Director, Suretech Infrastructure Pvt Ltd.

Tech thrust
Technology too is very big on the airport opportunities radar. There is a growing mandate for multiple products embedded with the latest technologies to ensure smooth functioning of the airport. This includes HVAC (heating, ventilation, and air conditioning), lighting, transporters like elevators and escalators, automation, airport construction materials like steel, cement and glass, power generators, security and surveillance equipment, access control, baggage handling products, electronic information systems…

Airports are now increasingly investing on new technologies in an attempt to enhance the passenger experience and meet rising expectations. Self-service options, mobile technologies, and web services are some of the major IT investments. According to Technavio, globally, many airports are investing heavily in emerging technologies such as iBeacon, cloud, 3D face recognition, bar-coded boarding passes (BCBPs), and video analytics to improve airport operations.
The forecast for the application of new airport technologies looks very promising from the following:
yyThe airport lighting market is expected to grow from $ 473.7 million in 2016 to $ 672.2 million by 2021.
yyThe airport information system market was valued at around $3.71 billion in 2015, and is expected to reach approximately $5.01billion in 2021
yyBaggage processing accounted for the dominant share in the global market in 2015, valued at $ 6,303.9 million.
yyThe global airport full body scanner market is poised to reach approximately $168 billion by 2025.
Understandably therefore with the Indian government looking to expand airport infrastructure to Tier II and III cities, firms offering a range of products and services have now branched out across the country with their sales and marketing teams to cater to the new demand for the latest in airport technologies. Products are being bolstered with technological upgrades and innovative features to ensure that they comply with the requirements of airports pan India.
PL Muttusekkar, Managing Director, Nord Drivesystems Pvt Ltd, a Pune-based German multinational which has installed its drive units for baggage conveyor belts at airports in Chandigarh, Goa and Chennai, says, “The technology offered by us has the promise to be a major driver in India’s airport development thrust.”
Spanish multinational Indra, which offers a whole range of Air Traffic Management Systems and Airport Solutions, including Surveillance, Automation, Communications, Simulators and Navaids has ambitions of extending its already considerable influence across India’s aviation space. Almost 41 airports in India currently use the company’s Air Traffic Management (ATM) systems and the most notable new addition this year being New Delhi’s T3.
“India is a great platform for Indra’s technology and we are greatly excited about the prospects in the airports sector,” says Amit Nagyal, Director Business Development, Indra Sistemas India Pvt Ltd.
For air conditioning requirements, airports depending on their size will need centrifugal chillers, screw chillersor VRF systems thus throwing the ring open for players like Blue Star Ltd. The airport development programme offers opportunities for international firms like Thyssenkrupp and Otis to install moving walkways, freight and passenger ferrying elevators and escalators of varying designs and sizes equipped with multiple features.

Meanwhile in line with the demand for steel which constitutes a major chunk of the material used in the construction of airport projects, companies like Tata BlueScope Steel have introduced a brand called Lysaght, especially for airport construction usage, as it meets the specific requirements of extreme engineering, challenging construction and design.
Japanese multinational electronics corporation Panasonic too has stepped into the airport zone offering its expertise in automation solutions. Successfully tried out at Vienna International Airport, Panasonic’s products Toughpads and Toughbooks have changed the dynamics of airport design, construction and maintenance. The successful experiment could find replication across the emerging Indian airport landscape.

Retail potential
Airport Retail too is expected to be a big draw if the experience of the outlets at the planeports in Mumbai, Delhi, Bangalore and Hyderabad is any indication. As per a report by Fung Global Retail and Technology the global travel retail market valued at $63.5 billion in 2014 is expected to touch $85 billion by 2020, registering a CAGR of 6.7 per cent between 2015 and 2020. While the Asia-Pacific region will garner a large chunk of the sales, India, despite its comparatively small earnings from retail as compared to global rivals, is expected to be the fastest-growing market at 20.7 per cent between 2015 and 2020. Veritably collaboration will be the key. With airports evolving strong partnerships with airlines and retailers, the sky won’t be the limit for the players aspiring for the business pie.

Green airports
Further in keeping with the global trends to make airports self sustaining and to veer towards carbon neutrality Indian airports too have been investing in the use of renewable energy. Cochin International Airport, for example, left its imprimatur in aviation history in August 2015 by becoming the first airport in the world to be fully operated on solar power. The airport is now looking to double solar power generation from 15.4 MW to 28.8 MW in the coming months.
Things are looking up on the renewable front across other airports as well. Terminal 3 of Delhi Airport is a LEED Gold certified green building, enabling among others to optimise the use of daylight. It is directly generating renewable electricity on-site through 7.84 MW solar power plants. What is significant is that the new class of airports supports the use of alternative fuels or electricity for ground operations.
With his hugely successful experience behind him V J Kurien, Managing Director, Cochin International Airport Ltd (CIAL), is encouraged to say, “Our initiative is exemplary not just because it is the first of its kind but because we are in a position to offer assistance to other airports for setting up solar plants.” With the solar operation in Kochi now being studied by authorities of other airports, including Chennai and Nigeria, it looks like boomtime for sustainability consultants.

Flight path
It is easy to see that India’s airport infrastructure is on the verge of takeoff with the government pulling out all the stops to catapult creaky infrastructure to global standards. Evidence of the seriousness of purpose may have come from the recently announced Union Budget. Aviation minders in New Delhi are in the process of putting into place mechanisms to fast forward airport development work. Last month, the Airport Economic Regulatory Authority of India announced their decision to rate airports across the country based on parameters such as cost efficiency, entry time, security clearance, check-in and boarding facility, among other services. Under this practice to be made public airports are to be incentivised or penalised based on their services and performance. The new system, which will also take into consideration passenger feedback, will initially be applied to 16 major airports and then to other facilities across India.
Let’s hope this changa change on the ground – along with other promised measures – will lead our air terminals to resemble Singapore’s Changi.

For once the future of flying seems bright.

-          Shrikant Rao

 

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