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No-frills airports need limited private participation

As per data available with Centre for Asia Pacific Aviation, investments of $40-50 billion are needed to expand/upgrade airport infrastructure across the country to meet the demands for excess capacity arising from estimated traffic projections.

Written by Sharmistha Mukherjee | Updated: December 26, 2015 12:01:26 am
airports, no frills airports, no frills, new airports, new airports india, airports india, india aisrports, india news, latest news New guard, old approach: The NDA government has decided to take forward the previous regime’s proposal to develop no-frills airports by creating assets utilising its own resources.

Even as the government has promised to improve ease of doing business, it has decided to limit the role of private investors in developing airports infrastructure in India.

The NDA government has decided to take forward the previous regime’s proposal to develop no-frills airports by creating assets utilising its own resources. As far as brownfield airports are concerned, the government has opted to award operations and maintenance contracts to private sector entities, starting with two airports in Jaipur and Ahmedabad. The proposal to develop, operate and maintain airports in Kolkata and Chennai on public-private partnership (PPP) basis was shelved recently.

Even as industry experts have raised concerns over capital inflow in the sector, given the latest spate of decisions, senior officials in the Ministry of Civil Aviation informed that considering the modernisation programme for 35 key airports across the country have already been concluded, the focus would now be to improve efficacy of operations by awarding management contracts to private players.

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“The most important airports have already been modernised. The issue now is of maintaining and not creating infrastructure which can be done through management/ consultancy contracts. We needed to opt for PPP to develop airports in Delhi and Mumbai, given the scale of operations, but you do not need the same model for smaller airports in tier-II and tier-III cities. As far as no-frills airports are concerned we have resources to develop them on our own,” said a senior official in the ministry.

But even as government officials played down the need for additional resources, as per data available with aviation advisory firm Centre for Asia Pacific Aviation (CAPA), investments to the tune of $40-50 billion are required to be made to expand/upgrade airport infrastructure across the country to meet the demands for excess capacity arising from the estimated traffic projections. Air traffic in India is projected to triple to 570 million passengers by 2025 from the current 190 million.

The official clarified that the government is committed to increase air connectivity to under-served and unserved towns and cities, the modalities of which would be a part of the civil aviation policy. “We want more and more people to fly for which we will set up no-frills airports. But we can do that on our own. These airports will have basic infrastructure for landing/parking. There need not be brick fencing, for instance. Security will be aircraft and not airport centric to bring down costs of development as well as operations,” he said.

According to some estimates, basic infrastructure for landing, parking and air traffic control services at these airports can be set up in up to Rs 25-30 crore.

No-frills airports will have airstrips long enough to handle turboprops like ATR and Bombardier Q400s. The terminal buildings will be energy-efficient, with minimum security hold and air-conditioned areas to keep costs in check. They will be lean so that passengers can directly step out of the airport upon arrival. The blueprint includes barbed wire, not boundary walls; people handling baggage, and not machines; a shorter check-in time to keep lounges small; and local cops instead of the more expensive Central Industrial Security Force (CISF). There will not be any food kiosks but clean drinking water will be provided. The purpose is to create the minimum facilities for aircraft to operate, without compromising on safety and security. A greenfield airport can be build for in about Rs 50 crore.

The initial push for developing no-frills airports would come for all places of strategic significance such as in the north-east. “There are places where we have difficult terrain such as in the north-east. We have to develop airports there,” another official informed.

In June 2013, the UPA government had decided to build no-frills airports at 50

cities and towns of Assam, Jharkhand, Bihar, Punjab, Uttar Pradesh, Arunachal Pradesh, Rajasthan and Maharashtra.

This was aimed at enhancing connectivity in regional and remote areas, mainly in tier-II and III cities.

The Narendra Modi-led government had started work on five of the proposed airports — at Hubbali (earlier Hubli) and Belagavi (earlier Belgaum) in Karnataka; Kishangarh in Rajasthan, Jharsuguda in Odisha and Tezu in Arunachal Pradesh — in 2014-15. The government, however, decided to study the commercial viability of setting up an airport at the other 45 locations.

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