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Airports such as Chennai (pictured) are receiving an injection of government funds to help them modernise |
INDIA. Passenger capacity at India’s airports will double over the next six years, to around 200 million, according to Government of India Secretary of Civil Aviation Madhavan Nambiar. He was speaking at this week’s Routes Asia 2009 Conference in Hyderabad, which gathered airlines and airports from across Asia Pacific to discuss air services, but which also focused on key challenges such as the growth of non-aeronautical revenues. The Moodie Report Deputy Publisher Dermot Davitt was also a speaker at the event, which was hosted by GMR Hyderabad International Airport Limited (GHIAL).
Speaking at a special Leaders’ Forum, Nambiar admitted that poor infrastructure had let the country down in the past, but he insisted that investment in airports was starting to make a difference.
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The Routes event was hosted by GMR Hyderabad International Airport Limited |
He said: “Since we invited private companies to invest in airports infrastructure the situation has begun to improve. We earmarked 60 airports for development, and the government is investing Cr12,000 (US$2.4 billion) under the current five-year national plan. That’s around six times what we spent in the previous plan.
“Within six to seven years we expect capacity to exceed 200 million passengers a year at our airports, which will be double what they can cater for today. That includes the new Delhi T3 (which will cater for 34 million passengers a year -Ed).
Nambiar added: “A major thrust of that growth drive will be in second tier cities. Today, 70% of all traffic goes through the six major airports, and that uneven distribution is not encouraging. There are vast areas of the country where people have spending power and there is an opportunity for route development from airlines. We see over-capacity on trunk routes, and under-capacity on non-trunk routes within India.
“It’s our aim to provide affordable connections for the common traveller in this vast country. Airports Authority of India is incurring heavy losses on its regional airports (of around US$20 million last year-Ed) but we need to ensure they remain sustainable.”
“It’s my firm view that the current economic downturn is an opportunity to build more airports, ports and highways at competitive prices – rather than prompting major cost-cutting on this essential infrastructure.
“Aviation should play a major role in India’s development, and it should be market-driven. With at least 300 million people in our middle class they should be able to use aviation as the prime choice for travel. We have seen other industries such as telecoms surge ahead in recent years because it served the demand that was there – there should be no reason why aviation cannot do the same.”
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Routes Asia in Hyderabad attracted a high-calibre audience – and featured top-class social events too |
“Aviation challenge
Aviation in India faces major other challenges alongside infrastructure development, delegates to the Routes event heard. India’s airlines need to urgently restructure if they are to thrive, according to Sudheer Ragavan, Chief Commercial Officer of one of the country’s leading carriers, Jet Airways.
Raghavan said: “We need to challenge the accepted wisdoms about the future growth of Indian air traffic. We all talk about the burgeoning middle class, their new lifestyles and economic growth – and we have long talked up the explosion in traffic growth – but the fact is that aviation is in crisis.”
He said that airlines had expanded capacity too rapidly, and relied too heavily on dynamic, low-fare pricing to fuel their growth. The airline industry will now have to cut back on routes and services to survive, he said.
“India will take 30% of global airline industry losses in 2009. The question is: will we survive? We face some fundamental challenges. The low fares we offered in the good times to drive growth didn’t make us money and they are now unsustainable. We are seeing falling yields, yet our cost structure is still too high as an industry.
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GHIAL CEO PS Nair welcomes delegates to Routes Asia 2009 |
“The infrastructure at airports is not there to support the level of growth we have seen, and even the new airports are struggling with their business model. They are creating vast new terminals that they expect will pay for themselves within three to five years, which is unrealistic. Plus in India we lack skilled manpower in air traffic management, which combined with airport inefficiency means planes are spending too long circling airports and burning fuel, costing us more money.”
Jet Airways Executive Director Surej Dutta reinforced the point, saying the liberalisation of air services in India had attracted a flood of new entrants who provided capacity that ran well ahead of demand, and said that recovery would take “a long time”.
Delhi International Airport Limited CEO BS Shantharaju said the aviation market required more “discipline” in how it operates in India. He added: “We need to develop the asset base of our airports beyond airline income, and create new revenue streams.”
Also speaking at the event, Consultant Gordon Bevan of Routes parent group ASM cast doubt on the country’s ability to meet the projections for air services. He said: “India is targeting an additional 5 million tourists by 2010, but look behind these ambitions and that means 40 more 747s landing here every day. How realistic is that given that many of the top source markets are suffering economically? And at the same time, places like Singapore and China are also talking up their tourism targets. One thing is sure: there are not enough aircraft to realise all these countries’ ambitions, so something will have to give in the years ahead.”
Indian international tourism arrivals hit 5.37 million in 2008, the event heard, up from 5.08 million in 2007 and 4.45 million in 2006.
About Routes
Routes – The World Route Development Forum – is an annual airline and airport networking event. Routes facilitates and encourages the role of airports in the development of air services through organising global and region specific airline/airport networking forums.
This year’s World Route Development Forum will take place in Beijing on 13-15 September. Routes Regional events include Routes Americas, Routes Asia, Routes Europe and Routes Africa. Routes Asia 2009 was hosted by GMR-Hyderabad International Airport Limited. The 2010 Routes Asia event takes place in Adelaide next April.
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