Airport Opportunities in India

An Expert's View about Air Transport in India

Posted on: 5 Oct 2010

Opportunities arising out of the privatization of key metro airports, planned upgrade and development of newgreenfield airports in Tier II cities are some of the driving forces in this sector”

Sector briefing Airport Opportunities in India Why India? India is the seventh largest country in the world and second biggest in Asia. With an area of 3.29 million square kilometres and a population of over one billion, it is essential that its transport infrastructure is developed to ensure the continuance of economic growth. The Indian government continues to attach high priority to improving the country?s transport infrastructure, particularly the airports. The needs of an increasingly urban population, coupled with significant increases in industrial, trade and commercial demands have placed immense strain on the country?s transport infrastructure. So some of the key reasons for focussing on the airports sector in India are: ?Opportunities arising out of the privatization of key metro ? Opportunities arising out of privatization airports, planned upgrade and of airports in India development of new ? Focus on PPP models opens up many opportunities greenfield airports in Tier II ? Focus on Tier II airports and cities are some of the driving government focus to develop new and forces in this sector? upgrade existing airports. UK Trade & Investment Sector briefing: Airport opportunities in India Opportunities India?s airports handled 108.88 million passengers during 2008-09, of which the four General Background Metro gateway airports (Delhi, Mumbai, Kolkata and Chennai) account for 50%of India is the second most populous country with revenue and 70% of the passengers. over 1 billion people - 16% of the world?s population. A network of transport corridors There are seven major international airports, - e.g. roads, rail, ports and airports connecting Mumbai, Kolkata, Delhi, Chennai, Bangalore, the main metro cities and urban areas as well Hyderabad and Trivandrum. Four more airports as the major ports is essential for encouraging have been given the status of International sustained economic growth. airport with limited international operation. These are Amritsar, Cochin, Goa and Guwahati. There has been a significant growth of the urban population over the past decade and the Recent years have seen a dramatic increase in following illustrates this point: the levels of passenger and cargo traffic. This increase has placed a heavy strain on the four ? 6 cities with over 5 million (Delhi, Metro airports and has highlighted the need for Mumbai, Chennai, Kolkata, Bangalore substantial investment to develop and expand and Hyderabad); the existing facilities. The number of domestic ? 23 cities with over 1million and international passengers has increased from 5.1 million in 1970 to 108.88 million in With the economic liberalisation of the early 2008-09, while cargo has increased from 1990s and average GDP growth of around 7-8 81,000 tonnes to 1.70 million tonnes during % per annum, the rate of urban development 2008-09 is expected to continue to rise significantly, putting increasing pressure on an already over The forecasts show clearly that Indian airports, stretched infrastructure framework. in particular Delhi, Mumbai and Bangalore will face significant capacity constraints if they are Background ? Airport Sector to be able to handle the projected increases in passenger and cargo traffic. It is estimated The aviation sector is playing an increasingly that the present infrastructure can support a pivotal role in the fast-growing needs of this rise of only 20% in passenger traffic and 10% vast country. The projected traffic growth of growth in cargo, indicating a possible 8.5% per annum in both domestic and saturation of Indian airports in the short term. international traffic (despite now being contested as a generous over-estimate) is Existing domestic airports also requires indicative of the sector?s potential and its likely significant infrastructure improvements, in impact on India?s socio-economic development. areas such as runways, air traffic control, communications, navigation, ground handling, Details air terminals etc. The Ministry of Civil Aviation (MOCA) oversees Privatisation of Airports the provision of airport facilities, air traffic services and the carriage of passengers and In order to meet the increased demand, the freight. There are about 449 airports/airstrips Government has turned to the private sector to in India. Among these the Airports Authority of invest in and develop this sector. India (AAI), an organisation within MOCA, own and operate 120 airports, 61 of which are Initially the government invited tenders for operational. The breakdown is as follows: privatisation of Delhi and Mumbai airports. An Australian consulting company was appointed ? 12 international for evaluation of bids and an Empowered ? 88 domestic Group of Ministers (EgoM) was constituted for ? 26 civil passage at defence airfields. finalisation of tenders. Based on the recommendation of Consultants and further The AAI operate most aspects of the airport evaluation and recommendations by a technical (including air traffic control) and procure most committee set up by Union Cabinet Secretary; of their equipment directly (via global/local tenders). UK Trade & Investment Sector briefing: Airport opportunities in India the tenders were won by following The Committee on Infrastructure has given consortiums. formal approval for the first phase of Rs. Rs50 billion (£625m) modernisation programme of GMR-Fraport, a consortium of Hyderabad the Kolkata International Airport. based GMR Group and Fraport AG, owners & managers of Frankfurt Airport won the bid for The first phase of modernisation will cost about New Delhi airport. The cost of modernising Rs. 15.42 billion (£200m) and will be Delhi airport is estimated as Rs.28000m completed by 2009-10. Out of this allocation, (£370m). Airport Authority of India (AAI) will Rs. 13 billion (£162m) is earmarked for a new get 45.99% of share from the revenues terminal and balance for a new runway and generated by this airport. Communication and Navigation System. Other plans include extension of second runway from GVK-ASA, a consortium of Hyderabad based 2400 m to 2839 m, addition of three new diversified business house and Airport South aerobridges to the existing three at the Africa, which operates 10 major airports in domestic terminal and 48 parking bays for South Africa won the bid for Mumbai airport. large aircrafts (up from 28 now). The The cost of modernising Mumbai Airport is revamped airport in expected to handle about estimated to be Rs.24000m (£316m). AAI will 20 million passengers every year. get 38.70% share from the revenues generated by this airport. The Airport Authority of India (AAI) will implement the project. AAI handed over the two airports to their respective joint venture partners. The likely Chennai Airport Modernisation date of completion of the up gradation of the Programme two metro airports is March 2010. A major modernisation plan for Chennai airport Greenfield Airports will soon be underway with the Prime Minister?s Committee on Infrastructure clearing this project. The letters of Intent for development of Greenfield International Airports at Bangalore Base on the state government?s and Hyderabad were awarded to private sector. recommendations, the Committee decided that The concession agreements for both the the Airport Authority Of India (AAI) would use projects were also signed few years ago. its internal resources to carry out the modernisation work. Both these new airports have now been built and they have commenced operations recently. The first phase of the project is estimated to The new Rajiv Gandhi International Airport at cost Rs.23 billion (£290m) Hyderabad commenced its operations form 23 March 2008 and has handled over one million The expansion plan would not only include passengers in first 50 days of operation. The upgrading the airport to international standards other Greenfield airport namely, Bengaluru but also extending the secondary runway for (Bangalore) International Airport commenced large commercial aircraft to operate there its operations on 23 May 2008. apart from creating additional space for aircraft movements. The Government has identified following eight locations for the development of Greenfield Besides, a new domestic terminal, which will be Airports: able to handle 10 million passengers annually, the existing international terminal is to be Goa, Navi Mumbai, Pune, Kannur, Hassan, expanded to cater to an additional four million Gulbarga, Halwara and Greater Noida. In passengers annually. addition 20 locations have been identified for Greenfield Airports development. These are The modernization process is aimed to be expected to be built as Low Cost Airports. completed by 2010-11. Upcoming Projects Kannur International Airport Kolkata Airport Modernisation Programme UK Trade & Investment Sector briefing: Airport opportunities in India The Kerala Government is planning to develop Opportunities for UK a new international airport at Kannur. The companies- New Projects & proposal for the development of the Airport Growth in Sector received in principle clearance from the Ministry of Civil Aviation in February 2008. Opportunities for UK industry remain good. The Subsequent to that the state Government UK airport industry has an operational and floated a company (Kannur International commercial record that India sees as an Airports Ltd.) for the development of the example to follow where possible. In India, airport. after the initial privatization initiatives the sector has slowed down. There are many The key features of the project are initiatives on privatization of existing Tier II airports and efforts are on to create new ? The airport will be built over 2000 acres Greenfield Tier II airports. of land and will have a single runway, to begin with. The opportunities for suppliers of aviation ground-handling services, project ? The government will own 26 percent of management, consultants, MRO and training the project, public sector undertakings are extensive. Since India has liberated its 23 percent, government promoted domestic and international air services market, agencies 2 percent and the remaining the aim is still to provide Air Traffic Services 49 percent will be given to high (ATS) that supports the privatised networth investors and the general infrastructure as the existing publicly owned public. and operated airports. The state government has identified 2,000 Specific opportunities acres of land for the airport of which 900 acres has already been acquired and KIAL has issued a) Privatisation: notification for 783 acres. The airport project will explore other related projects like Privatisation of airports as a whole is not going Maintenance, Repair and Overhaul (MRO). to progress in the near future, particularly since the developments of Chennai and Kolkata are now under the control of Airport Authority Development Plans for Non ? Metro of India (AAI). However there is still a large Airports number of private developers interested in building airport projects undertaken by various Indian Government has plans to develop 35 state governments for economic and tourism non-metro airports to create an aviation grid. development of their respective states. Below The planning commission has already given its is the list of airport projects undertaken by nod to the proposal and a feasibility study has various state governments and there are been undertaken. The Indian Government is opportunities for UK companies to be part of also looking at developing intra-state, intra- consortiums building these airports. region air links besides creating airstrips at various small locations. The Ministry of Civil State Government Airports Projects Aviation has given a final go-ahead of Rs. 80,000 million (£1000m) for upgrading of 35 Maharashtra non-metro airports. The orders for air side ? Nagpur International Airport development for phase I of the project have ? Navi Mumbai International Airport already been placed and these are likely to be ? Chakan International Airport implemented by end of 2010. The city side development of Udaipur, Jaipur, Amritsar and ? Sindhudurg Airport Lucknow has been taken up and the work is ? Saswad Airport at Pune likely to be awarded soon. Andhra Pradesh ? Kadapa Airport (Upgrade) ? Warangal Airport (Upgrade) ? Ongole Airport (Greenfield*) ? Nellore Airport (Greenfield*) UK Trade & Investment Sector briefing: Airport opportunities in India ? Kothagudem Airport (Greenfield*) particular, the need for hotel and conference facilities close to the airports is growing. ? Bobilli Airport (Greenfield*) ? Ramagundam Airport (Greenfield*) As these airports develop, off-airport facilities ? Tadipalligudem Airport (Greenfield*) will become significant contributors to their ? Kurnool Airport (Greenfield*) ability to achieve growth, as will the ? Nizamabad Airport (Greenfield*) development of MRO facilities and training academies. * These are at the stage where techno- economic feasibility studies are being done. Developers should also take account of 175 proposed Special economic Zones, many of Expansion of existing airports at which are located close to airport Visakhapatnam, Vijaywada (Gannavaram), infrastructure. Rajahmundry, Tirupathi and Puttaparthi are being planned. c) Consultants and Advisers There are opportunities for consultants who Karnataka can assist the Indian developers and the state ? Gulbarga Airport development corporations with feasibility ? Hassan Airport studies and the development of master plan and financial studies etc. Other opportunities ? Simoga Airport include assistance with tender and bid ? Bijapur Airport preparation and due diligence activities. ? Bellary Airport Goa d) Airport IT, Engineering and ? Mopa Airport Contractors ? Pernem Airport There are opportunities for engineering design expertise, airport operational management, Madhya Pradesh project management etc. The use of ? Dabra Airport, Gwalior Information Technology for airport ? Singhrauli (Sasan) Airport management systems to support operational processes, safety & security of the airport are some of the areas where UK companies can Uttar Pradesh demonstrate their expertise. ? Greater NOIDA International Airport e) Equipment Supply Kerala Equipment Supply opportunities will continue ? Kannur Airport to grow with the development of airport infrastructure. The need for specialist West Bengal technologies such as Navaids and ATC will be ? Durgapur Airport subject to compliance and certification, most probably by FAA. The need for airport fit out Haryana equipment, such as baggage systems, cargo- ? Airport at Jhajjar handling systems, ground support equipment, ? Sonepat Airport furniture and fittings will continue as airport facilities get developed and become Punjab operational. ? Ludhiana Airport Often details about these opportunities are Puducherry mentioned in the tender documents available ? Karaikal on AAI website Rajasthan ? Paladi ? Ramsinghpur Airport Aid Funded Business: b) Developers and Operators Aid-funded Business was launched in Opportunities still remain for developers and September 1998 in order to raise greater operators to become involved in the city side awareness of UK firms to the substantial development of non-metro airports. In opportunities that exist in aid-funded business. UK Trade & Investment Sector briefing: Airport opportunities in India It also aims to help firms tap into such business, which emanate from the World Bank, the European Commission, the UN agencies and some bilateral development programmes. For further details of these opportunities please see the Aid Funded Business web pages. UK companies can also become aware of business opportunities on a regular basis by registering on the UKTI website: UK Trade & Investment Sector briefing: Airport opportunities in India Major events and activities UKTI contacts Marcus Archer Aero India 2011 Deputy Head, Airport Sector Team 9-13 February, 2011; Bangalore UK Trade & Investment 66-74 Victoria Street Defence Exhibition Organistion London SW1E 6SW New Delhi T: +44 (0)207 215 4655 Tel: 91 11 2337 1623, 2337 1950 F: +44 (0)207 215 4064 Email: Email: India Business Aviation Expo 2011 21-23 February 2011; New Delhi Arun Pillai Head of British Trade Office Exhibitions India Group British Trade Office New Delhi Regus Midtown Tel: 91 11 4279 5061 Level1, Midtown Plaza, Email: Road No.1, Banjara Hills, Hyderabad 500034 Aerodrome India 2011 Tel : 91 40 4433 4134 April 8 -10 2010; New Delhi Fax : 91 22 4433 4444 E-mail : Find full details of all India Airports events on the UKTI website. New export events are added daily to the site and you can register to be alerted to them on a daily, weekly or monthly basis UKTI?s Tradeshow Access Programme (TAP) provides grant support for eligible Small & Medium Sized Enterprises (SME's) to attend trade shows overseas. Find out more about UKTI support for attendance at overseas events UK Trade & Investment Sector briefing: Airport opportunities in India BOOT Airport Projects: The best entry Next steps - strategy for UK companies would be to have a How UKTI can help? joint venture/consortium with an Indian company for a project. India has an excellent manufacturing base supported by a skilled workforce and Further information on doing business in India technically well qualified, competent can be found at A bilateral management. It also has the world?s largest Double Taxation agreement exist between number of graduate engineers, plentiful labour, India and the United Kingdom and further a low cost base, and is a world leader in information on this can be found at computer programming personnel. There are opportunities in this sector where UK UK Trade & Investment can produce tailor- companies can be successful. However any made market research reports for UK companies considering doing business in India companies. These reports called Overseas should bear the following general principals in Market Introduction Service (OMIS - mind: can include: ? be pro-active and aggressive in pursuing business opportunities; ? Market information ? take a strategic, long term view; ? Identification and assessment of ? carry out basic research and potential agents systematically gain information on doing ? Distributors or vendors business in India; ? Validated and warmed-up local contact ? seek specialist advice from the relevant lists trade associations and authorities; ? Market assessment of the goods or ? appoint a carefully selected, reputable services to be exported agent in India; ? Advice on the best market approach; ? ensure all necessary Indian government ? Information about potential local and other approvals have been business contacts obtained; ? Information on major trade shows and ? be prepared to transfer the latest events technology, design, quality, ? Visits to India support and programme manufacturing and operating techniques arranging service and and principles; ? General information on local investment ? install quality systems from the start; opportunities. and ? Investigate in detail the availability of These reports cost between £250 and £2000 local raw materials. depending on the regions of India that are covered. These reports need to be Specific points about doing business in the commissioned through the nearest Business airport sector are: Link (contact details for your local UKTI office.) in the UK or by contacting the post in market Supply of Equipment and Services: All who can commission the OMIS on your behalf. procurement is done by the AAI through local and global tenders. UK companies can Publications participate in these tenders directly or through Ministry of Civil Aviation Annual Report an agent. It is important to develop contacts 2009-10; this can be viewed at within the AAI in order to market products with the key decision-makers. More Detailed Sector Reports Research is Private Sector companies, who have been critical when considering new markets. UKTI developing green field projects or have won provides market research services, which can tenders for modernisation of Delhi and Mumbai help UK companies doing business overseas airports, would require best and latest including: technology, niche products & services. It would be advisable for UK companies to contact these Overseas Market Introduction Service consortiums at an early stage for success. (OMIS). Bespoke research into potential UK Trade & Investment Sector briefing: Airport opportunities in India markets, and support during your visits overseas Export Marketing Research Scheme: In- depth and subsidised service administered by the British chambers of Commerce on behalf of UKTI Contact your local International Trade Advisor if you are interested in accessing these services or for general advice in developing your export strategy, please visit the UKTI website to find contact details for your local UKTI office. UK Trade & Investment Sector briefing: Airport opportunities in India
Posted: 05 October 2010

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