Flying Into The Backyard

061122_airport_passengers.jpgLong queues to check-in at the airport, take-off delays, circling in the air waiting to land and high congestion charges for low cost airlines could soon become the thing of the past. Now the Indian aviation industry is all set to pave the way for the next step towards development – low-cost airport terminals.

Air travel today has become accessible to the common man who opts for no-frills airlines, as they are a time saving, cost-efficient option over the traditionally preferred railways. However, there seem to be some operational hassles for these airlines in terms of airport facilities. The pressure on single domestic terminals that cater to both regular airlines as well as low-cost carriers has increased due to congestion, delay of flights, disruption of schedules, and such.

A separate terminal for the low-cost airlines would eliminate dependence on the amenities of regular domestic terminals. This would mean better schedules, timely arrivals and departures and a better flying experience.

For such airports to be built the main crisis would be that of land. However, these airports are being planned outside the main city like low cost carriers fly to Luton in London instead of the ‘bursting as it seams’ Heathrow. This will mean less time in queue at the airport, on the runway and circling in the air. It will also help airlines cut on the fares, as they would not burn excess fuel while waiting to land.

As the impact of the Indian aviation juggernaut reaches the smaller towns, the travel demand will increase by at least 20 per cent a year until 2012, airport developers have been getting into the act and recently a consortium comprising Air Deccan, GVK Airports, IDFC and Rahejas has set its eyes on emerging opportunities in the low-cost airport business. The potential of these airports is huge with even two international players, including the Tata-Changi consortium bidding for the Karnataka airports. The Maharashtra government has already started the process for tendering expressions of interests for low-cost airports in the state, while Andhra Pradesh and West Bengal will also start the process soon.

Globally, of course, such airports provide alternatives to the major hub airports and are used by low-cost carriers flying smaller aircraft. These airports have to be more convenient and cheaper for its users. It has just an airstrip, a basic terminal building with air traffic control and night-landing facilities. A typical low-cost airport with no frills can be built at a very low cost. But the prime concern is that such airports will not attract much traffic initially. And here the Government will have to play an important role by providing incentives like cash injunctions, underwriting flight seats and discounting air turbine fuel (ATF) taxes at least till such time as traffic stabilizes on these remote airports.

The biggest challenge for any airport investor involved in such projects will be generating high levels of non-aeronautical revenues that will require additional land. The money invested in building the airport and running it can be recovered by other real estate developments. As most state governments are granting land to private airport operators for various other development projects, it’s obvious that land development will drive revenues.

Namit Agarwal