Indian Airports Outlook Pan-India connectivity at core of rapid expansion

Published: Monday, March 14, 2022

Recently the Minister of Civil Aviation, Jyotiraditya Scindia announced that India had become the third largest domestic aviation market in the world, behind the United States of America and China. “We all know that in this densely globalised economy, air transport is a key element in the country’s transport infrastructure and plays an important role in the country’s economic growth.”

The present dispensation, National Democratic Alliance (NDA) is precisely doing that, creating the necessary infrastructure with many private players having set up some of the best airports in the world. The government’s focus on infrastructure development is reflected, among many other decisions, in exiting from the hugely loss-making national airline – Air India, now back with the Tata Group. The government is keen on creating an eco-system for aviation growth and at the core is the development of airports.

487 airports / airstrips coming alive

Presently, there are 487 airports / airstrips in India, out of which the Airports Authority of India (AAI) manages 137 (29 of them are international airports).  However, only 10 airports contribute over 75% of passenger traffic and they are Delhi; Mumbai; Bengaluru; Hyderabad; Kolkata; Chennai; Pune; Kochi; Ahmedabad and Goa. Indian airports are garnering world attention and four Indian airports — Delhi (at 45), Hyderabad (64), Mumbai (65)  and Bengaluru (71) — found a place in the 2021 Skytrax World Airport Awards.

Exponential passenger growth expected

From April 2021 to January 2022, Indian airports registered 16.39 million and 130.49 international and domestic passengers respectively, total being 146.88 million passengers (as against 81.56 million during the same period in 2021 – (nil international passengers). The freight handled during this period was 2619 metric tonnes (1641.45 international and 977.76 domestic), up from 1946.53 during the same period in 2021. The projected passenger traffic for FY 2040 is 1.1 billion, comprising 821 million domestic and 303 million international passengers, six times the traffic recorded in FY 2018.

With this being the large picture, the top Indian airports continue to focus on capacity expansion as passenger movement is expected to grow phenomenally.  India’s top airport is Indira Gandhi International Airport in New Delhi and it is in the process of revamping Terminal 1 to double its capacity from 20 million passengers per annum to 40 million passengers. The Delhi airport will be the first to have a fourth runway.

Delhi leads the pack

Even as Delhi airport is expanding, there is work going on for another airport – Noida International Airport, Jewar  in the National Capital Region (NCR). The GMR Group which runs IGIA had objected as the Noida airport is within 150 km. But then there is so much potential for growth that a second airport seems a necessity.

Adani Group takes charge of Mumbai, sets goals

Similarly in Mumbai, where the Chatrapathi Shivaji International Airport (CSIA) is bursting at its seams, is to get another airport in Navi Mumbai, in the pipeline for a very long time. With the Mumbai Airport management changing hands from the GVK Group to the Adani Group, there seems to be some stepping up in the project.

The Chairman of Adani Group, Gautam Adani said “Our larger objective is to reinvent airports as ecosystems that drive local economic development and act as the nuclei around which we can catalyse aviation-linked businesses. These include metropolitan developments that span entertainment facilities, e-commerce and logistics capabilities, aviation dependent industries, smart city developments, and other innovative business concepts.”

Mumbai International Airport is the country’s second busiest airport. With eight airports (in its management and development portfolio), Adani Airport Holdings is now India’s largest airport infrastructure company, accounting for 25 per cent airport footfalls. With the addition of MIAL, AAHL will now also control 33 per cent of India’s air cargo traffic.

Navi Mumbai happening, albeit slowly

Navi Mumbai has a 4 phase master plan to handle over 60 million passengers per annum in the future. Initially, the new airport will be capable of handling 10 million passengers a year upon completion of the first phase, 25 million passengers a year in the second phase, and finally, 60 million passengers a year by 2032 with two 3700m x 60m runways.

Bengaluru preferred transfer hub in south

The IT capital of India – Bengaluru which has the Kempegowda International Airport has taken the third spot and has become the most preferred transfer hub for South India. Currently, BLR Airport serves 74 domestic destinations, the highest ever since airport opening date, as compared to 54 routes during pre-Covid and is also the highest amongst South Indian Airports.

Work is going on at frenetic pace (yes, Covid had disrupted it) for the construction and development work for Terminal II. The first phase of the new terminal will have a capacity to cater to 25 million passengers per annum. The construction work of Terminal II is making good progress. The Terminal I, which was initially built to handle 20 million passengers per annum (MPPA), is now capable of handling 36 MPPA, thanks to smart digital interventions such as Digi  Yatra, Smart Security System and Contactless, Self-Bag Drop. This 36 MPPA-capacity Terminal is enough to cater to the growth in traffic for the next 18 months at least.

Hyderabad on an award-winning spree

Coming to the city of Hyderabad where Wings India 2022 will be held, the Rajiv Gandhi International Airport is also expanding. The GMR Group is planning to invest $840m (Rs63bn) here to increase the  capacity to 34 million passengers per annum by 2024. During the fiscal year 2020, the airport handled over 21.50 million passengers and 148,000 tons of cargo. It serves 17 international destinations.

Today, Hyderabad Airport is rated among the best airports in the world and has set benchmarks in operations, service quality and passenger experience. It has been consistently rated among the best airports, having been ranked as Global Top 3 airports in 5 – 15 million passenger per annum category for 9 consecutive years by Airport Council International (ACI) – Airport Service Quality (ASQ) passenger survey and as World No. 1 for 4 times.

Regional Connectivity Scheme or ‘UDAN’, a catalyst

Moving away from these top four airports, India is looking at pan-India air connectivity. It is only in the recent past, smaller airports are seeing growth as the government continues to push the regional connectivity scheme (RCS) initiative called ‘UDAN’ which is a Hindi acronym for ‘Ude Desh Ka Aam Nagrik’ which translated means ‘the common citizen will fly’. The ‘UDAN’ scheme launched in October 2016 has logged in till now (upto January 1, 2022) 8.6 million passengers, reflecting the propensity for further growth from under served and unserved regions of the country. Till date, out of 948 valid routes, 403 routes involving 65 airports (including 8 heliports & 02 water aerodromes) have been operationalised across the country under the RCS initiative. UDAN has transformed the way people travel in Tier-2 and Tier-3 cities. Regional airports like Jharsuguda, Kishangarh, Belgaum, Darbhanga, etc. have been witnessing exponential growth in air traffic.

The growth figures would have been far more impressive, if not for the pandemic and the subsequent travel restrictions. According to rating agency ICRA, domestic air passenger traffic remained 44 per cent lower in the April-December 2021 to 111 lakh against the corresponding period of FY20.

Over 13 billion USD mid term capital outlay

To cater to future demand, the government is focusing on expanding air connectivity like never before. AAI and other Airport Developers have targeted capital outlay of approximately USD 13 billion in airport sector in the next five years for expansion and modification of existing terminals, new terminals and strengthening of runways, among other activities.

Greenfield airports sprouting

Under the Greenfield Airports Policy-2008, the Government has so far accorded ‘in-principle’ approval for setting up of 21 Greenfield Airports across the country namely Mopa in Goa, Navi Mumbai, Shirdi and Sindhudurg in Maharashtra, Kalaburagi, Bijapur, Hassan and Shimoga in Karnataka, Datia (Gwalior) in Madhya Pradesh, Kushinagar and Noida (Jewar) in Uttar Pradesh, Dholera and Hirasar in Gujarat, Karaikal in Puducherry, Dagadarthi, Bhogapuram and Oravakal in Andhra Pradesh, Durgapur in West Bengal, Pakyong in Sikkim, Kannur in Kerala and Hollongi (Itanagar) in Arunachal Pradesh. Out of these, eight airports  namely Durgapur, Shirdi, Sindhudurg, Pakyong, Kannur, Kalaburagi, Oravakal and Kushinagar have been operationalized.

Till 2014, there were 11 domestic air cargo terminals and 19 international air cargo terminals in India. Airports Authority of India (AAI) / AAI Cargo Logistics and Allied Services Company Limited (AAICLAS) have created another 27 domestic air cargo terminals. These terminals are in Amritsar, Madurai, Mangalore, Visakhapatnam, Chennai, Indore, Kolkata, Ahmedabad, Raipur, Aurangabad, Bhubaneswar, Varanasi, Goa, Srinagar, Ranchi, Trivandrum, Guwahati, Vijayawada, Bagdogra, Jammu, Leh, Surat, Bhopal, Dehradun, Rajahmundry, Tirupati and Hubballi.

In addition, there are joint ventures (JVs)/ public private partnerships (PPP) and State Government airports which are also engaged in the process of establishment of cargo terminals, thus expanding infrastructure to facilitate enhanced trade. The overall freight handled by the country’s airports during the first two quarters of FY21-22 (combined) has recovered to more than 80 per cent (15.36 lakh MT during April-September) of the pre-pandemic level.

Huge civil aviation market

With a market size of US$ 16 billion in July 2021, the country is the tenth-largest civil aviation market. AAI plans to invest US$ 3.58 billion in the next five years to augment facilities and infrastructure at airports. It has opened the airport sector to private participation as six airports across major cities are being developed under the PPP (public private partnership) model. Investment to the tune of US$ 6-6.5 billion is expected in India’s airport infrastructure between FY18-23.

     Year-on-year change in passenger traffic FY2021 vs. FY2020

  Delhi Mumbai Bangalore Hyderabad   Kolkata India
Domestic -60.8% -70.7% -62.4% -58.5%   -60.2% -61.8%
International -82.0% -90.1% -89.8% -85.3%   -95.1% -84.8%
Total -66.4% -75.9% -66.3% -63.4%   -64.9% -66.3%


Year-on-year change in cargo volumes FY2021 vs. FY2020

  Delhi Mumbai Bangalore Hyderabad   Kolkata India
Domestic -22.7% -46.1% -20.6% -23.9%   -28.7% -27.9%
International -22.9% -24.1% -7.4% -22.4%   -36.6% -24.0%
Total -22.9% -31.3% -12.7% -23.0%   -31.6% -25.6%

Source: CAPA India research and analysis; Airports Authority of India