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Cover Story
 
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COVER STORY
Indian airports: A story of unreal advances
The clamour can’t be ignored. Somebody needs to stitch together a central plan to salvage what’s left of India’s airport modernisation plans. And fast.
Issue Date - 30/03/2013
 
How much transformation the IGI Airport at New Delhi has undergone – as compared to five years back – is nothing short of magic. No more queues standing under the sun, no more dust blowing into the faces of passengers waiting for security checks, no heat, cold and rain. It was a change much needed, a big leap for India’s airport sector. But we need 60-odd more such miracles in the next seven-eight years. Tough proposition.

India’s aviation sector will need additional airports, given that passenger footfall is set to rise to 269 million by 2017 (360 million domestic and 90 million international) and 450 million by 2020 from the current 162 million (2011-12; as per CAPA). At present, work is on at over 35 airports (both greenfield and brownfield projects). Expectations are that over Rs.30 billion will be invested in Indian airports over the next decade, which is good news. Bad part is: delays have left taxpayers in metros like Kolkata, Mumbai, Pune, Chennai and other smaller towns wondering whether India’s airport infrastructure was destined to be a symbol of organised confusion. Land acquisition issues, lack of power supply, delays in arrivals of aerobridges and setting up of substations, delays in installation of electronic and security systems, incomplete bids for lounges and retail outlets, are some reasons why airport projects are stuck. For instance, the initial deadlines set for completion of modernisaiton work at Chennai and Kolkata airports (initiated in 2008) were March 2011 and August 2011 respectively. While the deadline for completion of work at Kolkata airport was postponed thrice (total cost incurred was Rs.23.25 billion), that at Chennai was delayed four times (cost – Rs.23.50 billion). It is hard to imagine that of the many months that work at Chennai airport was delayed, four of them were lost (between December 2011 and March 2012) due to lack of power supply. And can you believe that the government only made up its mind to invite private players to invest in both the delayed Chennai and Kolkata airport projects four years after the projects had commenced, despite the Planning Commission recommending a PPP model years back? Precisely the reason why we claim that the airport infrastructure in India represents a confused state of affairs. Though these two airports were inaugurated in January last, no one expects them to be operational before April 2013. Such stories of delays are common across India – Mumbai’s Chhatrapati Shivaji International Airport expansion project that commenced 10 years back when private participation was allowed in the airport infrastructure business, is not expected to be completed before end-2014. And that is despite the cost of work having increased by more than 100% of the initial estimates (expenditure has reached Rs.160 billion). Pune, Hyderabad, Jaipur, Lucknow, Bhopal, Pakyong… the list of airport projects running behind schedule is long.



The need of the hour is FDI and increased private participation. But they are hard to come by. In the 11th Five-Year Plan period, of the $500 billion planned in investment in developing India’s infrastructure, only $425 billion was invested. The 12th Five Year Plan (2012-2017) has budgeted an investment of $1 trillion. Of this, $12.7 billion has been allotted for the airports sector. Considering the state of the economy and little excitement amongst private players due to land acquisition issues and other regulatory and financial hurdles, the capital will not be easy to come by. A bigger challenge will be to attract FDI. The government expects three quarters of the investment in India’s brownfield and Greenfield airport project to come from the private players. Difficult to imagine.

Land scarcity is the biggest worry that needs to be taken care of if India’s airport infrastructure story is to read any better. Out of the 61 requests submitted by the Airports Authority of India (AAI) to relevant state governments for allocation of land for various projects, only 26 have been approved. Some of the air traveller-dense locations where requests for land have either been rejected or are still pending clearance include Warrangai (435 acre of land required), Dibrugarh (227 acre), Guwahati (215 acre), Jorhat (86 acre), Patna (227 acre), Raipur (2207 acre), Ahmedabad (67 acre), Porbandar (276 acre), Rajkot (52 acre), Kangra (26 acre), Mysore (122 acre), Indore (2542 acre), Aurangabad (245 acre), Bikaner (50 acre), Jaipur (60 acre), Vellore (1046 acre), Port Blair (711 acre), Bagdogra (118 acre), Dehradun (167 acre) et al. Considering that work in these locations will either commence after 2015 or will not commence at all, by 2017, we could expect saturation of existing facilities at most airports.

          

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