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Journalism of Courage
Notwithstanding the soaring aircraft orders placed by Indian airlines, which touched 849 with SpiceJet’s order for 205 Boeing planes last week along with opening up of 190 new regional routes, experts say that airport capacity constraints, cost pressures and sub-optimal passenger load factor could mean the Indian aviation market growth may run into headwinds.
While the government has been pushing for better connectivity of smaller cities and has thrown in several incentives for the airlines, it is expected that 45 new airports will get added to the existing list of 73 operational airports.
Even as the plane orders and purchase rights reflect the need to serve the double-digit growth in the domestic market, lack of airport infrastructure can emerge as one of the key hurdles. This comes on the face of a rising passenger traffic in India which is set to cross 10 crore by March-end, making India the third-largest aviation market after the US and China, taking over from Japan.
“Capacity constraints at India’s metro airports have already become visible. The situation at key metros such as Mumbai and Chennai is particularly acute as these airports are fast approaching saturation. But slot constraints and congestion are an issue at most of the metro airports and are expected to remain so in the near term as new terminals and runways will take 2-3 years to develop,” Centre for Asia Pacific Aviation (CAPA) said in its India Aviation Outlook for 2017-18.
The report further says that India faces the prospect of an airport capacity crisis. Delays in developing a long-term national airport plan could jeopardise economic growth. “Based on projected growth rates, most of the 40 largest airports in the country will exceed their design capacities within the next decade. However, it is a serious concern that there is no long-term vision for India’s airport capacity requirements,” it said.
India currently has 1,632 aircraft registered in the Civil Aviation Registry, which include planes manufactured by Boeing, Airbus and other smaller companies. According to data provided by Airbus, India’s largest airline by passenger traffic — IndiGo — alone had 406 pending deliveries as of December 31.
The airline had 126 A320 aircraft, comprising of 14 A320neo as on December 31. The company expects that by year-end its fleet size to be 136, with delays in delivery of A320neo expected be offset by induction of used aircraft on short term leases. While state-owned carrier Air India has pending deliveries of 8 Boeing 787 aircraft, private carrier GoAir is awaiting 140 A320 neo aircraft from Airbus. Jet Airways, the country’s second largest air transporter, is also awaiting deliveries of a total 85 aircraft from Boeing — 737 Max and 787 — and five A330 aircraft from Airbus.
Of its pending deliveries of 29 Airbus planes, Air India has signed agreement for 14 aircraft with leasing and finance company ALAFCO. Out of next 15 units, for 8 aircraft, the state-owned carrier has signed the letter of intent with two lessors and final agreement is in process. The state-owned carrier is also expecting deliveries of eight Boeing 787 aircraft.
Passenger growth
As per data available with the Directorate General of Civil Aviation (DGCA), India recorded 8.52 crore domestic air passengers in 2015-16, a growth of 21.6 per cent over the previous year. The passenger load factor also increased to 82.9 per cent in 2015-16, from 79 per cent in 2014-15 and 73.3 per cent in 2013-14, the DGCA data showed. The number of international passengers taking Indian carriers grew 7.5 per cent in 2015-16 to 1.86 crore. The load factor for international passengers rose to 79.3 in 2015-16 from 78.6 in 2014-15.
After a strong jump in 2015-16, traffic growth rose further in 2016-17. During 2016, domestic airlines carried 9.98 crore domestic passengers as compared with 8.10 crore during the corresponding period of the previous year, a growth of 23.18 per cent.
Private airlines accounted for 85.4 per cent of the total domestic passengers, while 14.6 per cent flew Air India domestically. With the domestic passenger base set to cross 10 crore by March 2017, India will overtake Japan this year to become the world’s third largest domestic market behind the USA and China. Domestic traffic could grow by close to 25 per cent in 2017-18 and approach 13 crore passengers, with the next financial year expected to be the third consecutive year of domestic growth above 20 per cent, according to CAPA India estimates.
Airport infrastructure
As some airports including big ones such as Delhi and Mumbai are nearing saturation in terms of passenger capacity, the government is undertaking expansion and modernisation at aerodrome facilities in the country, hitherto at a slower pace. According to a response by civil aviation minister Ashok Gajapathi Raju in the Lok Sabha on December 15, 2016, as of November 30, out of 33 works undertaken at Airports Authority of India’s airports in the last 4 years, work completion on 20 occasions were less than 75 per cent.
These include projects such as resurfacing of runways, expansion to accommodate certain bigger aircraft, expansion of aprons, expansion and modification of terminal buildings, construction of parallel taxiways, among others. Furthermore, the government is planning to develop 50 no-frill airports in the country in the next four years at an estimated cost of Rs 4,500 crore.
The Niti Aayog, in its review of the infrastructure sector for the financial year 2015-16, had stated that privatised airports recorded higher performance with regard to customer satisfaction when compared with their counterparts operated solely by the AAI.
As per the Airport Service Quality Index, the top 11 AAI airports have been rated 4.53 on a scale of 5.00 during 2015-16, against a target of 4.55 and a benchmark of 4.88. The Aayog has also identified several airports — including Ahmedabad, Indore, Pune, Nagpur — that fall in the middle-rung as per their performance and could do with improvement to make their services more efficient.
