Big Plans

AAI’s steps towards capacity creation

In the past few years, the Airports Authority of India (AAI) has taken rapid strides with regard to creation and expansion of airport capacity. A number of projects for extension and strengthening of runways, taxi tracks and aprons at different airports have been taken up. Some of the recent projects are the construction of a new domestic terminal building and upgradation at Dehradun airport, construction of a new terminal at Lok Nayak Jay Prakash Narayan airport in Patna, expansion of Bagdogra airport, and construction of a greenfield airport at Hollongi, Arunachal Pradesh. Going forward, AAI has laid out plans to privatise a greater number of airports.

Airport upgradation and construction plans, targets and recent initiatives

AAI is planning to upgrade seven airports in the country by March 2022. According to reports, expansion of the runway at Jammu airport is expected to be completed by March 2021, while work on the extension of the runway at Kolhapur airport has already commenced and is expected to be completed by December 2020. Runways at the Jabalpur and Tuticorin airports are expected to be upgraded by December 2021 and March 2022 respectively. Besides, runways at the Umroi, Kadapa and Tirupathi airports are expected to be upgraded by December 2020, March 2021 and December 2021 respectively.

AAI has also taken up the construction of a new terminal at Lok Nayak Jay Prakash Narayan airport in Patna at an investment of Rs 12 billion. The airport will have state-of-the-art technology and will be able to handle 8 million passengers per annum.

The authority has also undertaken the construction of a greenfield airport at Hollongi, Arunachal Pradesh, at an estimated cost of Rs 6.5 billion. The tentative date for project completion is November 2022. The project includes the construction of airport pavements and a terminal building as well as airside works and city-side works. The new terminal building will have an area of 4,100 square metres with eight check-in counters, a rainwater harvesting system and sustainable landscape. AAI is also expected to initiate the construction of two additional bays, one for B738/A320 and other for ATR/Q400 aircraft, in response to increasing parking bays at Silchar airport. The project is expected to be completed within the next two years.

AAI has also commenced the preparation of the detailed project report (DPR) of the Hanimaadhoo international airport in the Maldives. The central government has decided to support the Hanimaadhoo airport expansion project under a $800 million line of credit from the Exim Bank of India. The DPR is being prepared by AAI. Thereafter, the EXIM Bank and the Ministry of Economic Development will jointly prepare the tender documents for the project to select the engineering, procurement and construction contractor. The final tendering for the project will be undertaken by the Maldives government. Work on the project is expected to commence early next year.

Under the Regional Connectivity Scheme (RCS), AAI is planning to develop at least 100 airports, waterdromes and heliports by 2024. The scheme is aimed at providing affordable, economically viable and profitable air travel on regional routes. The authority is also developing a civil enclave at Darbhanga for the commencement of civil flight operations for Delhi, Mumbai and Bengaluru under the RCS.

According to reports, the International Solar Alliance (ISA) secretariat has launched a corporate partner scheme, under which corporate organisations across the globe can get corporate partner status, subject to approval by the ISA assembly, after contributing $1 million to the ISA’s corpus fund. AAI is planning to leverage the ISA to get airport contracts in member countries.

Enhancing private sector participation

Private sector participation is being encouraged in the expansion and upgradation of existing infrastructure. Initially, six airports – Guwahati, Lucknow, Jaipur, Ahmedabad, Mangaluru and Trivandrum – were identified for operations, management and development through the public-private partnership mode.

The central government is also planning to club unviable airports with six main airports in the next round of privatisation. It is in the final stages of framing rules for privatising the airports at Amritsar, Bhubaneswar, Tiruchirappalli, Raipur, Indore and Varanasi. The move to club unviable airports in the same geography with these airports is aimed at improving regional infrastructure. Further, a cap of a maximum of two airports is likely to be placed on the bidders to prevent a monopoly.

Focus on Atmanirbhar Bharat

At present, there is a dearth of domestic air navigation equipment producers, owing to the small domestic market size. In order to promote self-reliance, AAI has signed an MoU with Bharat Electronics Limited (BEL), given its capability of manufacturing specialised equipment. As per the MoU, both parties will collaborate in tapping emerging global opportunities in the airport business, including those in the Asia-Pacific region. Following the MoU, an action plan is being finalised by AAI and is expected to be in the public domain soon.

Besides, the country‘s maintenance, repair and overhaul (MRO) market is not adequately developed, thus increasing the dependence on foreign players for such services. While AAI has already granted tax concessions to the MRO industry, it is now in talks with the Ministry of Civil Aviation to assess if space can be identified at airports or land can be provided at concessional rates so as to attract MRO companies. Apart from this, flying schools in the country have become highly unviable. In this regard, AAI has set up a committee to look for not-so-busy airports where land and other facilities can be made available at attractive rates to attract good flying schools, so that the country‘s pilots do not have to be trained abroad.

Focus on digitalisation and technological upgradation

AAI has always placed strong emphasis on technological upgradation. The authority is planning to launch Digi Yatra or facial biometric-based air travel, commencing with Varanasi airport in December 2020. Under Digi Yatra, automated checkpoints will be set up at kerbside kiosks, airport entry gates, check-in counters, and pre-embarkation security check and boarding points. Passengers opting for Digi Yatra for the first time will need to activate the Digi Yatra ID at the airport registration kiosk through ticket validation and a proof of identity in physical form will be verified by Central Industrial Security Force personnel. Further, the government is planning to expand the Digi Yatra option to IndiGo and Vistara travellers at the Kolkata, Pune and Vijayawada airports from March 2021.

The authority is also in talks with the Indian Air Force and defence authorities for efficient airspace utilisation by way of using it more flexibly. Moreover, it is working towards reducing the cost of travel, ensuring fuel saving, utilising resources optimally, reducing airborne traffic congestion (through air traffic flow management, ensuring efficient runway utilisation through regulated departure sequencing, and ensuring safety of the skies with modern air traffic management systems and ground aids at airports, including the CAD systems and other innovative landing systems. The authority is also using satellites to develop space-based ADSB tools to ensure safety and efficiency.

Future outlook

As per aviation consultancy and advisory firm CAPA, the domestic aviation industry requires capital infusion to the tune of $5 billion in view of the consolidated industry losses that are expected to stand at $6 billion-$6.5 billion during 2020-21, excluding those of airport concessionaires and other ancillary segments. To meet working capital requirements, AAI and private airport operators are planning to tap new funding sources. Due to a fall in revenue, AAI, for the very first time, has borrowed money by taking credit to the tune of Rs 15 billion from the State Bank of India to fund its working capital requirements including salary payments.

Last year, AAI had been a cash-surplus and profit-making organisation, paying dividends and taking up a large number of projects. However, the Covid-19 outbreak has made it hit the pause button, reorganise itself, reprioritise its finances and explore new funding avenues. Going forward, AAI plans to increase its focus on technological upgradation and air navigation to help achieve its Vision 2026.

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