AIRPORTS AUTHORITY OF India (AAI)
has developed several passenger terminals at a number of other locations. These new terminals present impressive architecture, rich façade and structural innovations and in most cases, upgrade of terminal processing facilities. These have investments to the tune about Rs 40,000 crore.
The Ministry of Civil Aviation plans similar investment on airports during the next 5-7 years. These are massive investments by our standards, compared to other sectors much more critical like primary health, food, power, education and other social sectors.
It is, therefore, time the country takes a look at the rationale of these investments. This can also help straighten any skews in our approach, which demand course corrections.
Two cardinal principles...
Airport development around the world follow two cardinal principles:
- One, the airport capacities developed are in line with the projected demand, will avoid congestion and ensure that the desired service levels in the airports are maintained under all conditions, including inclement weather and operational emergencies. To avoid lumpy investments, modular development programmes are adopted.
- Two, all sub-systems of airports like, runways, taxiways, parking aprons, approach roads for landside access, etc must match the airport terminal capacity. In the event of mismatch, the subsystems with the lowest capacity determines the overall airport capacity, which has been a serious planning deficiency in airport planning in India.
Bengaluru saturated; Delhi under-utilised
Look at few cases of skewed planning on recently built airports in India. Bengaluru new terminal got saturated in the first two years of starting its operations, throwing out of gear the traffic projections made for the next 25-30 years. Delhi’s Terminal-3, on the other hand, looks almost empty and grossly under-utilised, even after three years of commissioning. This in addition to the fact that the earlier IGIA terminal, with floor area of about 50,000 sqm which was upgraded when GMR took over the operations, remains today unutilised. This is when substantial capital cost was incurred, providing large areas in terminal-3. The large area of IGIA terminal commissioned in 1986 could have been leased out to any airlines to earn substantial revenues and in turn make reasonable savings in the cost of Terminal – 3; the latter could have been developed on modular concept in tandem with traffic growth. This could have avoided the need for revision of original estimates of new facilities from Rs 5500 crore to Rs 12,500 crore.
Similarly Mumbai’s terminal 2, with proposed 40 million passenger capacity per annum, is likely to be a mismatch with Mumbai’s runway capacity, which cannot be increased due to land constraints.
If we look at Bengaluru pavement system, exit taxiway configuration is resulting in excessive runway occupancy time and therefore, needs innovative planning to give its best performance, avoiding delays of aircraft before takeoff.
The list of items, not meeting cardinal planning principles is long, which points to the necessity of planning in-depth.
The few points pointed above are only illustrative. This goes to indicate that developments at the airports were undertaken mostly driven by over-enthusiasm, aided by political over-drive, without strictly following professional guidelines by airport developers. Any corrective measures undertaken now would obviously cost high, in addition to disturbing operations at airports with heavy traffic.
Steep increase in airport tariffs...
Higher investments generally result in steep increase in airport tariffs. This in turn dampens the growth of tourism, a life line for several states in India. If facilities are modernised, the user gets better service and would agree to pay a reasonable price. Airport users do get a prick when extravagance is shown to give only cosmetic values to the terminals. In today’s environment, when airlines are passing through their worst economic crisis, any increase in tariff can hurt the airlines and their traffic projections.
Focus on an effective regulator...
Another matter of importance is the functioning of Airport Economic Regulatory Authority (AERA), charged with the responsibility to oversee economic activities at the airports and their effectiveness. This is to provide confidence to the users that all services meet the desired standard at reasonable cost. This assumes importance in the light of air transport becoming popular and affordable for the middle class.
Regulatory authorities are positioned to ensure that airport services, basically a monopoly business, is kept under strict control over the cost of services the developers provide. For example, in U.K., Australia, USA and other countries, to increase the cost of even a cup of coffee by few pennies need the approval of the Airport Regulatory Authority. The teeth of such authorities are sharp and their actions swift. Each complaint, big or small from the airport users, is looked into seriously and airport operators are pulled up. It imposes fines, in case of deficient services. Unfortunately AERA in India has failed to gain such confidence of the airlines, passengers and other stake holders.
There seems to be no mechanism, as is the case of airports abroad, for regulatory authority to meet and consult regularly airport stake holders, keep them abreast of new developments and their cost. We must learn from the experience of other countries, where the regulator has extensive authority and powers to consult stake holders and take decisions with minimum interference from the controlling ministry.
The regulatory authority’s conclusions on quality of services and tariff structure are not usually challenged. These are levied only after consideration of the suggestions and opinion of the stake holders. All developments and programmes, involving major investments are discussed with the users and their execution prioritised taking into account safety, operating efficiencies, passenger and airlines satisfaction and cost. The basic parameter being, that passengers, airlines and users pay a reasonable price for the services and in return get their money’s worth. In case of any infringement by service providers, the Regulatory Authority comes down heavily and ensure fair deal for airport developers and airport stake holders.
Airports around the world are exploiting non-aeronautical revenues in increasing proportion and keep airport tariffs low. In India, the proportion of aeronautical revenues to commercial revenues are much lower, which is counter-productive for air transport growth.
Airlines operating between Europe, Asia, South East Asia, Australia, connecting India with other parts of the world are today, recording healthy growth with almost 82 per cent occupancy and seats not available on certain routes for weeks and these routes are reaping rich harvest.
In contrast, our aviation sector still continues to remain in melt down mode, shy to inject life into such lucrative routes, by not able to attract stake holders and passengers using innovative skills in operations, facilities and pricing.
IATA is working hard today to integrate airport and airlines business into one entity. Therefore, there is urgent need for aviation professionals, to work on integrated development of airports and airlines to maximise returns on large investments.
Such integration within the aviation sector can make air transport operations from India more competitive, economical, efficient, maximise returns on such large investments.