The government agrees that the future of Indian aviation is in smaller cities. Ajit Singh, the minister of civil aviation, says the development of low-cost airports is the most important component of the ministry’s effort to improve connectivity across India.
The government has engaged Deloitte as a consultant to identify the factors inhibiting the growth of domestic connectivity and suggest steps to correct them. That will likely include enhancement of helicopter operations and construction of heliports to serve less populated areas, including religious and tourist sites.
The Civil Aviation Ministry’s Vision 2020 plan emphasizes development of the country’s infrastructure and aims for user-friendly airports to handle as many as 280 million passengers per year by 2020.
“One of the key challenges will be to ensure that Indian airports function with the same efficiency as international hubs,” says one airline official.
Buoyed by the success of the public-private partnership (PPP) model in airport development, the government plans to invest $30 billion in the next 10 years and modernize more existing airports.
Airports in New Delhi, Mumbai, Bengaluru (formerly Bangalore), Hyderabad and Cochin are being placed in PPPs now. A new terminal is under construction at Mumbai airport, with international operations set to begin by August and a second phase, for domestic operations, to be ready by August 2014. The existing greenfield airport at Bengaluru is undergoing expansion to meet the growing capacity demand.
The Airports Authority of India has undertaken expansion and upgrading of airports at Kolkata and Chennai. And the government has approved 15 more airports under the Greenfield Airports Policy, most of which are being developed in PPPs, the ministry official details.
However, skeptics question the authority’s abilities to manage infrastructure growth. They say that of the 115 airports run by the authority, only 71 are commercially operational. The rest are closed, mainly because they have proved to be economically unviable.
The ministry official cites examples of companies such as Regional Airport-Holdings International Ltd. (RAHI), which has revealed plans to develop India’s regional aviation market, starting with two airport projects. Over the next five years, RAHI has plans to invest $700 million in more than 15 aviation infrastructure and services projects.
In addition to the model agreement to develop greenfield airports under the PPP model, the government has also allowed 100% foreign direct investment, under the automatic route.