February 9, 2017 TnH Global

Low airport capacity worries aviation insiders

The Indian government currently has ‘no vision’ in airport infrastructure and the mammoth aircraft orders by airlines pitted against paucity of airport space will create ‘a crisis’ for the industry in the coming years, said the CEO of Mumbai airport, the country’s second busiest and most congested airport.

‘The way aircraft are being ordered, I don’t know where they will be parked, where they will fly. All major airports will be constrained in the next five years. There will be a crisis,’ said Rajeev Jain at the CAPA India Aviation Summit 2017. He said several airport modernisation projects haven’t been enough to handle growing traffic. He gave the example of Guwahati and Madurai which have been saturated even before their expansion was completed by the state-run Airports Authority of India.

In July last year estimated that the aggressive fleet expansion by Indian carriers may far outstrip the growth in demand for air travel, forcing airlines to take a hit on yields. The additional capacity will also be difficult to sustain unless airport infrastructure in the country is rapidly developed. Indian carriers currently have 880 planes on order, of which 600-650 are expected to be delivered over the next ten years, around 30% of which will be for replacement, said a recent note by CAPA Centre for Aviation, a Sydney-based consultant.

Earlier in the day, Vistara’s chief operating officer Sanjiv Kapoor said constraints in airport capacity was the ‘elephant in the room’ which had to be addressed. Industry experts also said that due to issues in concession agreements has completely sapped investor interest in India’s airport projects which have been up for investment.

The Rs 16,000 crore Navi Mumbai project recently had three of four selected bidders saying they wanted to opt out of the bidding process. Interestingly, the GVK-led Mumbai International Airport is the sole bidder left in the process.

Meanwhile, CIDCO, the nodal body for the airport is still struggling to clear land for the project. Jain said it was giving Rs 1 crore as compensation for moving each temple located in the area. Also, last year, AAI had twice rejected Changi Airport’s proposal to operate and maintain airports at Jaipur and Ahmedabad airports on the grounds that it was “unfeasible” and not commercially viable for AAI.

PS Nair, group CEO at GMR Airports said while there is a vision, ‘what has not been available is a clear roadmap for this ecosystem, how to take things forward,’ He said there are land use restrictions that impede generation of non-aeronautical revenue.

News Source: timesofindia.indiatimes.com