The privatisation of Indian airports started in 2000, with the Cochin International Airport being the first to be privatised. At present, there are five privately managed international airports in the country, developed through public-private partnerships (PPPs) – Delhi, Mumbai, Bengaluru, Hyderabad and Cochin. Of these, while Delhi and Mumbai are brownfield airports, Bengaluru, Hyderabad and Cochin are greenfield airports. At all the five airports, the public sector retains a 26 per cent share through the Airports Authority of India (AAI) or the relevant state government.
In terms of operations, PPP airports have been faring rather well. Together, the five airports regularly account for over 50 per cent of the overall passenger traffic in the country. Between April 2017 and July 2017, these airports carried passenger traffic of 53.56 million, an increase of 10.6 per cent over the same period in 2016-17. The growth in the cargo segment during 2017-18, however, has been less pronounced due to an overall global slowdown.
Airport-wise, Delhi airport witnessed the highest passenger traffic of 20.87 million between April 2017 and July 2017, followed by the Mumbai and Bengaluru airports at 15.6 million and 8.16 million respectively.
A similar trend was observed regarding freight traffic during the same period, with Delhi recording 0.32 million tonnes (mt) of freight traffic, followed by the Mumbai and Bengaluru airports at 0.29 mt and 0.11 mt respectively.
Ongoing and upcoming projects
Of the four PPP metro airports, three have plans to expand capacities. Mumbai airport, although constrained by capacity, cannot invest in expansion due to the location of the airport. Instead, the airport is focusing on improving connectivity and developing airport-owned land for commercial purposes.
- Expansion plans: The Indira Gandhi International Airport’s (IGIA) expansion project includes the expansion of the existing terminals (T1, T2 and T3), the construction of a new terminal (T4), the expansion and construction of landside facilities, etc., to raise the passenger handling capacity from the present 62 million passengers per annum (mppa) to 109 mppa, and cargo handling capacity from 1.5 million tonnes per annum (mtpa) to 2.2 mtpa by 2034. The proposed expansion will be carried out in three phases – Phase 3A, Phase 3B and Phase 4.
- MRO facility project: This involves the development of a maintenance, repair and overhaul (MRO) facility as well as fixed-base operation (FBO) facilities. The project is being developed on a design-build-finance-operate-transfer basis by the Bird Group-ExecuJet Aviation Group joint venture and is expected to entail an investment of Rs 1.5 billion. In March 2017, Bird ExecuJet Airport Services entered into a strategic partnership with Honeywell India for providing fixed-based operator and maintenance services at IGIA, Delhi.
- Land monetisation plan: GMR Infrastructure Limited is going ahead with its plans for the monetisation of land parcels in a bid to unlock higher potential returns. To this end, the company has chalked out the Aerotropolis Development Plan, which envisions commercial development of 230 acres of land near the airport.
- GVK SkyCity: There are plans to develop GVK SkyCity over 20 million square feet of land. The proposed commercial development will house service apartments, hotels, etc. Mumbai International Airport Limited (MIAL) invited request for qualification bids in August 2016 for selling five land parcels in GVK SkyCity. These land parcels will be connected by three metro rail stations. In April 2017, MIAL issued a letter of award to Ashoka Buildcon Limited (ABL) for developing land parcels located at NS-C02 and NS-C03 in CTS No. 145-A (Part) of Sahar village under the SkyCity project.
- Metro connectivity project: The Colaba-Bandra-SEEPZ metro, which will provide connectivity to major areas of the city, will pass through Sahar Road, and connect to the airport’s T2. The total project cost is Rs 231.36 billion, of which MIAL’s contribution will be Rs 7.77 billion. Since April 1, 2016, a levy of Rs 20 (for domestic passengers) and Rs 120 (for international passengers) is being charged towards the development of the project.
- Expansion plans: The airport is undertaking the construction of the second terminal – T2 – and a parallel runway, at a cost of Rs 40 billion. The initial work began in February 2016 with earthmoving machinery levelling the earth to make way for a new 4,000 metre x 60 metre parallel runway. T2 will be constructed in two phases. Work on the first phase, which will serve up to 25 mppa, is ongoing and is expected to be completed by 2021-22. The second phase of T2 is expected to cater to another 20 mppa. Once T2 is completed, the airport can serve 45 mppa and the combined capacity of T1 and T2 will be approximately 65 mppa.
- Expansion plans: GMR Hyderabad International Airport Limited (GHIAL) is planning to expand the passenger terminal capacity of Hyderabad airport from the existing 12 mppa to 25 mppa. The cost of additional facilities at the existing airport terminal is estimated to be Rs 26.29 billion. The plans include the development of a dual runway connected by two cross taxiways, multiple rapid exit taxiways, two integrated passenger terminals and large dedicated cargo terminals.
- Delhi: In April 2017, DIAL increased the solar power generating capacity at IGIA from the existing 2.14 MW to 7.84 MW. Currently, internally generated power constitutes 5 per cent of the airport’s total power consumption. DIAL plans to further increase the generation capacity of the solar plant to 20 MW by 2020.
- Hyderabad: In April 2017, GHIAL launched its “Passenger is Prime” programme to enhance the level of service and passenger experience.
- Bengaluru: In March 2017, the Fairfax Group completed the purchase of a 33 per cent stake in Bangalore International Airport Limited (BIAL) for Rs 22.02 billion. Fairfax has also bought another 5 per cent stake in BIAL from Flughafen Zurich AG. After the deal, Fairfax holds a 38 per cent stake in BIAL, followed by Siemens Project Ventures with a 26 per cent stake, the central government and the Karnataka government with a 13 per cent stake each and GVK with the remaining 10 per cent stake.
- Cochin: In March 2017, Cochin International Airport inaugurated its new international terminal (T3). The terminal was built at an investment of around Rs 10 billion and is expected to handle about 10 mppa. In the same month, CIAL also installed a solar carport, or car parking bay with rooftop solar panels, at Cochin airport. The solar carport has been laid out over 0.225 million square feet, with a capacity to generate 2.7 MW power from about 8,500 solar panels.
- Earlier, in February 2017, technology provider Ganges Internationale Private Limited (GIPL) bagged a repeat order of 11 MW module mounting structures from Cochin airport following its successful solar implementation at the airport earlier. GIPL has invested Rs 50 million during the manufacture and installation of module mounting structures, enabling Cochin airport to be the first green airport globally.
- Multi-airport: Effective April 1, 2017, the Central Industrial Security Force scrapped hand baggage stamping for both domestic and international flyers at seven airports including the Delhi, Mumbai and Cochin airports.
The way forward
The role of private sector investment in the development and upkeep of airports, despite the existing challenges, cannot be overlooked. AAI’s strong capabilities in airport development and operations coupled with monetary support from private players, and meticulous planning that factors in the requirements of airlines, are likely to go a long way in shaping the future of the PPP model in the sector. With the government giving greater thrust to the PPP model, the trend is likely to continue in the coming years.