Future development of India as Aviation Hub

1. FUTURE DEVELOPMENT OF INDIA
AS AVIATION HUB
By
PRATHIKSHA R
16MTAL07
1

2. 2
INTRODUCTION
India is likely to become a global aviation hub and be amongst the top three aviation markets
worldwide by 2020 and has the ability to become the world's largest aviation hub by 2030.India’s
civil aviation industry is on a high-growth trajectory. It has ushered in a new era of expansion,
driven by factors such as low-cost carriers, modern airports, Foreign Direct Investment in
domestic airlines, advanced information technology interventions and growing emphasis on
regional connectivity.
According to Airbus’s latest global Market Forecast, in the 20 years from 2015 to 2034, India will
require over 1,600 new passenger and freighter aircraft to help meet growth in demand. Valued at
US$224 billion, these will include 1,230 new single aisle aircraft and 380 wide-body passenger
and freighter aircraft. By 2035, the numbers of Indian cities with over one million monthly air
passengers will more than triple. Furthermore, at current growth rates, the population of India is
set to surpass China’s by 2024. The forecast predicts a fivefold growth in domestic air traffic.
The industry stakeholders should engage and collaborate with policy makers to implement
efficient and rational decisions that would boost India’s civil aviation industry.

3. 3
Having said that, Indian policy makers have put forward proposals for expansion of the sector
such as allowing new airlines to fly abroad, introduction of more regional flights and a new
formula for granting bilateral flying rights and global company to invest in India encouraged by the
‘Make in India’ campaign.
In the Union Budget 2016-17, the government introduced various proposals for MRO operations
for airplanes. For instance, the Indian Space Research Organization has signed a MoU with the
Airports Authority of India, aimed at providing space technology for construction of airports.
Given the ripe conditions, the mantle is now upon the government. It remains to be seen whether
the aviation ministry will be able to combine the rapidly increasing traffic with good policies to
produce an aviation industry that is among the worlds biggest.
There is great scope in India for ‘air cargo logistics’ and ‘MRO’. The growth in aviation sector is
fueled primarily by the rapid development across the country, the ever increasing passenger
traffic and aircraft demand. The availability of talented engineers, and cost effective manpower
further induces an environment for growth. The R&D expertise, and the strategic position of India
in the South East Asia means that the country will have to deal with massive international air
traffic in the coming years.

4. Table of Content
Executive Summary………………….….…….5
Advantage India……………………...….……..6
Market Overview ………………………….…..8
Recent trends and Strategies….…..………..21
Growth Drivers…………………….................24
Opportunities…….……….......………………35
Case Studies…………….....…….……..……37
Industry Associations……………....…...…...40
Useful Information……….......……………….42
4

5. EXECUTIVE SUMMARY
India is set to become 3rd largest aviation market by 2020.
By 2020, passenger traffic at Indian airports is expected to increase
to 421 million from 264.99 million in 2016-17.
300
Travel and tourism to contribute US$ 423.7 billion to GDP by 2026.
The travel and tourism industry is forecast to grow at a CAGR of 6.66
per cent to US$ 423.7 billion in 2026 from US$ 100 billion in 2017.
Business and leisure travel to boost growth.
Spending on business travel is estimated to increase to US$ 39.88
billion in 2026 from US$ 10.26 billion in 2017, while on leisure travel
is forecast to rise to US$ 203.5 billion in 2026 from
billion in 2017.
US$ 181.65
100
Source: World Travel and Tourism Council, Airport Authority of India
39.88
Business and Leisure Travel Spending (US$ billion)
300
200
181.65 203.50
10.26
0
2017E 2026F
Leisure Travel Business Travel
Travel and Tourism industry (US$ billion)
250 CAGR 6.66%
200 228
150
100
50 100
0
2017 2020F
421.00
Air passenger traffic in India (million)
500 CAGR 16.7%
400
200 264.99
100
0
FY17 2020F
5

6. ADVANTAGE INDIA
6

7. ADVANTAGE INDIA
Rising working group and widening middle class
demography is expected to boost demand
Growth in aviation accentuating demand for MRO facilities
Expenditure in MRO accounts for 13-15 per cent of total
revenues; it is the second-highest expense after fuel costIndia plans to increase the number of airports to 250
by 2030 to cater to growing leisure and business
travel
By 2020, the MRO industry is likely to grow over
US$ 1.5 billion from US$ 0.5 billion currently
Country will become the third largest aviation
market in terms of passengers by 2026.
Freight traffic also likely to go up as trade
with the rest of the world increases
ADVANTAGE
INDIA
Investments totalling US$ 12.1 billion in
the airport sector are to be made
during the 12th Five Year Plan (2012-
17); of these, private investments are
expected to total US$ 9.3 billion
The government has been encouraging
private sector participation
Foreign investment up to 49 per cent is
allowed under automatic route in scheduled
air transport service, regional air transport
service and domestic scheduled
passenger airline.
Growing private sector participation
through the Public - Private Partnership
(PPP) route
Notes: FDI – Foreign Direct Investment, MRO – Maintenance, Repair and Overhaul; FY – Indian Financial Year (April – March)
Source: Ministry of Civil Aviation, MRO India
7

8. MARKET OVERVIEW
8

9. EVOLUTION OF THE INDIAN AVIATION SECTOR
India is the 9th largest civil aviation market in the world, In FY17, domestic passenger traffic witnessed a growth rate of 21.5 per cent
In FY17, airports in India witnessed a domestic passenger traffic of about 205 million people.
Investments worth US$ 6 billion are expected in the country's airport sector in 5 years
India’s civil aviation market is set to become the world’s 3rd* largest by 2020 and expected to be the largest by 2030
Scheduled airlines: distance
flown (mn km)
199 1,700 (FY17)
Non-scheduled airlines in
operation
39 112 (FY17)
225 550 (FY18*)Number of aircrafts
703,000 2,930,000 (FY17)Cargo Handled
50 125Number of airports (FY17)
Note: * India ranks after the US and China, FY – Indian Financial Year (April – March), mn km – Million Kilometers, FY18* - as of March 2018
Source: Airports Authority of India, Ministry of Statistics and Programme Implementation, Ministry of Civil Aviation
9

10. INDIA HAS 464 AIRPORTS AND AIRSTRIPS, OF WHICH
125 AIRPORTS ARE OWNED BY AAI
(66)
(7)
Activity in AAI airports -
shares (%) – FY17
maintaining all government airports
Basic facts
Note: AAI – Airports Authority of India, JV – Joint Venture, FY – Indian Financial Year (April – March)
Source: Airports Authority of India
62%
20% 22%
Airports Authority of India (AAI) was –
• Established in 1994 under the
Airports Authority Act
• Responsible for developing,
financing, operating and
• The Aircraft Act (1934) governs
remaining airports
Activity in AAI airports - shares (%) – FY17
120%
100%
80% 78% 38%
80%
60%
40%
20%
0%
Aircraft movement Passenger traffic Freight Traffic
International Domestic
International (17)Civil enclaves (26)
Non-AAI airports
and airstrips (339)
Customs airportsOperational (90)
Airports and
airstrips in India
(464)
AAI managed (125)
Domestic airportsNon-operational (9)
10

11. SIX MAJOR AIRLINES OPERATE IN THE COUNTRY
Note: Market Share as of February’18 and Load Data for the month of February’18
Source: Directorate General of Civil Aviation
Indigo
Market share: 39.9%
Passenger load traffic: 91.8%
Air India
Market share: 13.2%
Passenger load traffic: 86.7%
Jetlite
Market share: 2.2%
Passenger load traffic: 90.3%
Jet Airways
Market share: 14.6%
Passenger load traffic: 90.4%
GoAir
Market share: 9.5%
Passenger load traffic: 90.4%
SpiceJet
Market share: 12.4%
Passenger load traffic: 96.3%
11

12. THE SIX MAJOR AIRPORTS IN THE COUNTRY
Passenger traffic handled in FY16:
Note: FY – Indian Financial Year (April – March), 1FY 18 – April to February
Source: AAI
Chennai
15.2 million; FY17:
16.7 million
1FY 18: 18.51 million
Bengaluru Passenger traffic
handled in FY16: 19 million;
FY17: 22 million
1FY 18: 24.36 million
Hyderabad Passenger traffic
handled in FY16: 12.4
million
FY17: 15.24 million
1FY 18: 16.47 million
Mumbai Passenger traffic
handled in; FY16: 41.7
million;
FY17: 45.2 million
1FY 18: 44.23 million
Kolkata Passenger traffic
handled in FY16: 12.4
million;
FY17: 14.35 million
1FY18: 18.05 million
Delhi
Passenger traffic handled in
FY16: 48 million;
FY17: 57.7 million
1FY 18: 59.64 million
12

13. Visakhapatnam port traffic (million tonnes)
PASSENGER TRAFFIC HAS EXPERIENCED
GROWTH … (1/2)
HEALTHY
Witnessing a growth of 18.5 per cent over the previous year, total
passenger traffic stood at a 264.97 million in FY17, which was
recorded at 223.6 million in FY16 in India.
Growth in passenger traffic has been strong since the new
millennium, especially with rising incomes and low-cost aviation;
during FY06-17, passenger traffic grew at a CAGR of 12.39 per cent
in the country.
India’s passenger traffic grew 15.80 per cent y-o-y to 280.24 million
during April-February 2017-18.
By 2036, India is estimated to have 48 crore flyers, which will be
more than that of Japan ( just under 22.5 crore) and Germany ( just
over 20 crore) combined.
India has become the third largest domestic aviation market in the
world and is expected to overtake UK to become the third largest air
passenger* market by 2025.
Notes: CAGR – Compound Annual Growth Rate, FY – Indian Financial Year (April – March), April to February 2017-18, CAGR is till FY17, *Air passenger – Domestic + International
Source: Association of Private Airport Operator, Airports Authority of India
FY0673.35
FY0796.49
FY08116.87
FY09108.88
FY10123.76
FY11143.43
FY12162.31
FY13159.40
FY14169.03
FY15190.10
FY16223.60
FY17264.97
1
FY18280.24
Passenger traffic (million)
300 2CAGR 12.39%
250
200
150
100
50
0
13

14. Visakhapatnam port traffic (million tonnes)
PASSENGER TRAFFIC HAS EXPERIENCED
GROWTH … (2/2)
HEALTHY
Domestic passenger traffic expanded at a CAGR of 13.52 per cent
over FY06–17
According to Directorate General of Civil Aviation, domestic
passenger traffic witnessed growth at a rate of 21.5 per cent in FY17,
as against 21.24 per cent in FY16.
150
International passenger traffic registered growth at a CAGR of 9.27
per cent over FY06-17.
0 -20%
During
cent.
FY17, international passenger traffic increased by 8.5 per
Notes: YoY – Year on Year, FY – Indian Financial Year (April – March)
Source: Airports Authority of India, Ministry of Civil Aviation
FY0651
FY0771
FY0887
FY0977
FY1089
FY11106
FY12122
FY13117
FY14122
FY15139
FY16169
FY17206
71
Growth in passenger traffic set to remain strong in future
400 12th Plan Period
300 11th Plan Period
293
200 10th Plan Period 206
100 122
0 59 76
FY02 FY07 FY12 FY17 FY20E
Domestic passenger throughput Domestic (million)
International passenger throughput international (million)
51 55 593832 34 41 43 47
Growth in domestic passenger traffic has been robust
300 50%
250 40%
200 30%
20%
10%
100 0%
50 -10%
International Domestic
Growth-International Growth-Domestic
14

15. Visakhapatnam port traffic (million tonnes)
FREIGHT TRAFFIC GREW AT A CAGR OF 6.8 PER
CENT DURING FY06 TO FY16 … (1/2)
Total freight traffic registered a CAGR of 7.08 per cent over FY06-17
During FY06-17, domestic freight traffic increased at a CAGR of 7.95
per cent, while international freight traffic grew at a CAGR of 6.58
per cent during the same period.
In FY17, domestic freight traffic stood at 1,123.18 million tonnes,
while international freight traffic was at 1,855.06 million tonnes.
During FY17, domestic freight traffic increased at 7.39 per cent while
international freight traffic increased at 11.86 per cent in comparison
with FY16.
By 2023, total freight traffic is expected to touch 4.14 million tonnes
exhibiting growth at a CAGR of 7.27 per cent between FY2016 and
FY23. In addition, international freight traffic is expected to grow at a
CAGR of 7.13 per cent while domestic freight traffic is expected to
grow at a CAGR 7.50 per cent between FY2016 and FY23.
India’s domestic and international freight traffic grew 8.0 per cent y-
o-y and 17.2 per cent y-o-y to 1.106 million tonnes and 1.949 million
tonnes during April-February 2017-18, respectively.
Note: 1From April to February 2018, 2CAGR is calculated as sum of international and domestic traffic till FY17
Source: Airports Authority of India
FY06920484
FY071,023530
FY081,147568
FY091,149552
FY101,271689
FY111,496852
FY121,468812
FY131,407784
FY141,440840
FY151,542986
FY161,6581,046
FY17
1
1,8551,123
FY181,9491,106
International freight traffic was 61.3 per cent of the total in 2016
3,500
2CAGR 7.08%
3,000
2,500
2,000
1,500
1,000
500
0
International( '000 Tonnes) Domestic ('000 Tonnes)
15

16. Visakhapatnam port traffic (million tonnes)
AND IS POISED TO GROW FURTHER … (2/2)
Freight traffic on airports in India is expected to cross 11.4 million
tonnes by 2032.
Growth in import and export in India will be the key driver for growth
in freight traffic as 30 per cent of total trade is undertaken via
airways.
Airports across the globe are planning on increasing their spending
on new technology to keep up with surging passenger traffic, which
is expected to double to 370 million by 2020. The anticipated double
digit growth would make India as the world’s 3rd largest aviation
market by 2020.
Fliers would soon be able to use biometric details for security checks
at airports after good feedback from a pilot project.
India’s total freight traffic grew 13.7 per cent y-o-y to 3.05 million
tonnes during April-February 2017-18.
Notes: FY – Indian Financial Year (April – March), 1From April to February 2018
Source: Airports Authority of India
FY061.40
FY071.55
FY081.72
FY091.70
FY101.96
FY112.35
FY122.28
FY132.19
FY142.28
FY152.53
FY162.70
FY17
1
2.68
FY183.05
Freight traffic (million tonnes)
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
16

17. Visakhapatnam port traffic (million tonnes)
GROWTH IN AVIATION HAS ALSO
AIRCRAFT MOVEMENT … (1/2)
LED TO HIGHER
During FY07-17, growth in aircraft movement was recorded at a
CAGR of 5.59 per cent
In FY17, total aircraft movement increased at a YoY of 3.91 per cent,
as compared to FY16.
In FY17, total aircraft movement stood at 1.86 million
India’s total aircraft movement grew 13.00 per cent y-o-y to 2.11
million tonnes during April-February 2017-18.
In May 2017, Air India has decided to launch flights to three new
destinations in the U.S., Stockholm, Nairobi and Tel Aviv in 2017.
1.00
Notes: CAGR – Compound Annual Growth Rate FY – Indian Financial Year (April – March) YoY – Year on Year, FY18* - up to February 2018
Source: Association of Private Airport Operators, Airports Authority of India
FY071.08
FY081.31
FY091.31
FY101.33
FY111.39
FY121.54
FY131.48
FY141.54
FY151.60
FY161.79
FY171.86
FY18*2.11
Total aircraft movement (million)
2.50 25%
20%
2.00
15%
1.50
10%
5%
0%
0.50
-5%
0.00 -10%
Aircraft movement Growth in Aircraft movement
17

18. Visakhapatnam port traffic (million tonnes)
GROWTH IN AVIATION HAS ALSO
AIRCRAFT MOVEMENT … (2/2)
LED TO HIGHER
During FY07-17, domestic aircraft movement increased at a CAGR
of 5.59 per cent, while international aircraft movement expanded at
5.39 per cent CAGR over the same period.
During FY17, the total number of domestic aircraft movement
increased to 1.86 million, as compared to FY16.
India’s domestic and international aircraft movements grew 13.90 per
cent y-o-y and 9.50 per cent y-o-y to 1.711 million and 0.400 million
during April-February 2017-18, respectively.
10%
1,000
Notes: YoY – Year on Year; FY – Indian Financial Year (April – March), CAGR – Compound Annual Growth Rate, FY18* - up to February 2018
Source: Association of Private Airport Operators
FY07216862
FY082491,059
FY092701,036
FY102821,049
FY113001,094
FY123091,235
FY133141,165
FY143361,201
FY153461,260
FY163751,481
FY173651,502
FY18*4001,711
Aircraft movement growth
2,500 25%
20%
2,000
15%
1,500
5%
0%
500
-5%
0 -10%
International ('000) Domestic ('000)
Growth-International(%) Growth-Domestic(%)
18

19. AAI DOMINATES, BUT PRIVATE SECTOR
PARTICIPATION IS RISING
Until 2013, AAI was the only major player involved in developing and upgrading airports in India
Post liberalisation, private sector participation in the sector has been increasing
Private sector investment increased to US$9.3 billion during the 12th Five Year Plan from US$ 5.5 billion in the previous plan
Notes: AAI – Airports Authority of India
Development of Simoga and Gulbarga airports in Karnataka
Development of Bengaluru International Airport
Development of Bengaluru International Airport
Development of Bengaluru International AirportMajor private
sector players
Modernisation of Mumbai International Airport
Development of Hyderabad International Airport; modernisation of
Delhi International Airport
19

20. Porter’s Five Forces Framework Analysis
services offered hardly differ with
Positive Impact
Neutral Impact
Negative Impact
Source: Central Asia-Pacific Aviation
Threat of New Entrants
Low - Threat remains low because of
the nature of the industry (Regulatory
hurdles, Capital-intensive)
Air Asia India has been granted
DGCA approval (Price War)
Air Asia started services to Bagdogra
and Srinagar from Delhi.
Bargaining Power of Suppliers
High - Bargaining power of suppliers
remain high as there are only few fuel
and aircraft suppliers
Talent pool of pilots, engineers and
other staff is also limited
Competitive Rivalry
High - Competition among major
players is very high, especially in
LCC’s (Low cost carrier) section
because the airlines compete for the
middle income group customers and
passengers of air-conditioning
segment of railways. This group has
low brand loyalty and is highly price
sensitive
Bargaining Power of Buyers
Low - Bargaining power of customers
remains low as the demand for low
cost air travel is quite high
The costs of switching airplanes and
each other
Threat of Substitutes
Low - Threat remains low in this
sector also as no other means of
transport is as swift and convenient as
airlines
It saves time
20

21. RECENT TRENDS
AND STRATEGIES
21

22. NOTABLE TRENDS IN THE AIRPORTS SECTOR
Rising private
participation and
Investments
Greater use of non-
scheduled airlines
User development fees
Focus on non-
aeronautical revenue
Notes: FY – Indian Financial Year (April – March), NSOP – Non Schedule Operators Permit
Source: DGCA
Indian airports are emulating the SEZ-aerotropolis model to enhance revenues; focus on revenues from
retail, advertising, vehicle parking, etc.
With the initiative of displaying “Art for a cause,” Nagpur airport became India’s 1st airport to take up the
cause of empowering the girl child in a unique way.
Absence of complementary meals in low-cost airlines have boosted the F&B retail segment at airports
Increasing use of development fees by airport developers and operators
Airport Development Fee: Delhi, Mumbai airports to fund expansion
User Development Fee: Hyderabad, Bengaluru airports for maintenance
Rising business activity leading to higher demand for non-scheduled airlines
As of February 2018, there are 111 operators (NSOP)
Currently, five international airports have been completed successfully under PPP mode
The sector is expected to witness investments worth US$ 25 billion by 2027.
Four existing airports and two greenfield projects will be offered on PPP basis which is expected to attract
investments from private players
Delhi International Airport, a GMR led consortium, signed a land license agreement with Airbus to set up
India’s 1st full flight simulator at the Aerocity, Indira Gandhi International (IGI) Airport.
22

23. STRATEGIES ADOPTED
Expansion
Ancillary services
Increasing operations
Government’s push
Source: Central Asia-Pacific Aviation
In June 2017, the Ministry of Civil Aviation launched DigiYatra Platform through which travellers will be able to access
information on all the stakeholders and vice-versa. The ‘Digi-Yatra’ is an industry led initiative coordinated by the
Ministry in line with the government’s vision of Digital India.
In June 2017, the government announced that it is planning to allow relaxations under the UDAN scheme hoping to
increase air connectivity to undeserved routes. The airlines operators will be allowed to bid for a route connecting an
airport which is underserved, and to allow operators to bid for a route which are separated by less than 150 kms.
In February 2018, the Prime Minister of India launched the construction of Navi Mumbai airport which is expected to
be built at a cost of US$ 2.58 billion. The first phase of the airport will be completed by end of 2019.
Indian LCC’s are looking forward to increase their low cost products on routes which will take up to four hours (shorter
international routes)
This will allow deleveraging of domestic fleet, increasing aircraft utilisation and improving commercial performance
Chennai, with its strategic location in South India has a strong potential to become a hub, with connecting flights to
Gulf and across South East Asia
Indian LCC’S are looking forward to increase their ancillary services, without tampering their business models. This
includes services like lounge access, priority boarding, customer loyalty memberships and customer meals
The AAI has allowed the BRTS buses to foray in the airport premises in Surat. The initiative is to allow the passengers
to reach airports on time and allow smoother transit.
In April 2017, Indigo Airlines entered the record books by registering a record breaking 900 flights a day, most by any
Indian airline.
Expansion of CAPA; further, rise of LCC’s was also supported by the exit of Kingfisher, which is on the verge of
insolvency
Capacity will also increase with new terminals coming up in Mumbai, Bengaluru, Chennai and Kolkata
Indian carriers to double their fleet capacity by 2020 to around 800 aircrafts
23

24. GROWTH DRIVERS
24

25. STRONG DEMAND
INVESTMENTS
AND POLICY SUPPORT DRIVING
Growing demand Policy support Increasing investments
Expanding middle income
group and working
population
AAI driving large
modernisation,
development projects;
expansion and
upgradation of existing
airports; development of
low-cost airports
Greater government focus
on infrastructure
Inviting Resulting inRising domestic and
foreign tourists and
travellers
Increasing liberalisation,
Open Sky Policy
Increasing private sector
participation, increasing
greenfield projects
Strong growth in external
trade
Policy sops, FDI
encouragement
Strong projected demand
making returns attractive
25

26. Visakhapatnam port traffic (million tonnes)
PASSENGER TRAFFIC SPIKES
AIR TRAVEL SOARS
UP AS DEMAND FOR
The share of travel and tourism in India’s GDP was depicted to be
9.6 per cent in 2017E; and is expected to grow at a CAGR of 7.2 per
cent per annum between 2017E-2027
Overall, leisure travel and tourism spending inclined at a CAGR of
15.74 per cent between 2007-17E.
Emergence of business hubs like Mumbai (Finance), Bengaluru (IT),
Chennai (IT), Delhi (Manufacturing, IT) is likely to boost business
travel as well.
Leisure travel spending grew to US$ 181.65 billion in 2017E from
US$ 96.20 billion in 2016.
Notes: IT – Information Technology, E – Estimated
Source: World Travel and Tourism Council, Make in India, Global Business Travel Association
22.1
42.1
24.4
46.2
18.8
48.7
22.3
60.9
25.5
69.3
26.4
68.7
20.8
77.9
17.8
90.2
19.1
96.0
19.1
96.2
10.3
181.7
Travel and tourism spending (US$ billion)
200.0
180.0
160.0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Business Travel and Tourism Spending (in USD Bn)
Leisure Travel & Tourism Spending (in USD Bn)
26

27. Visakhapatnam port traffic (million tonnes)
MORE PASSENGERS AND RISING TRADE AIDING
HIGHER AIRCRAFT MOVEMENT
Over FY09-17,
• India’s exports expanded at a CAGR of 5.04 per cent to US$
276.28 billion in FY17.
• Imports registered a CAGR of 2.85 per cent which reached to
US$ 75.9 billion in FY17.
India’s merchandise exports and imports reached US$ 273.73 billion
and US$ 416.87 billion during April-February 2017-18.
Growing trade augurs well for airports as they handle about 30 per
cent of India’s total trade (by value)
liberalised aviation
Notes: CAGR – Compound Annual Growth Rate, FY – Indian Financial Year (April – March), FY18* - April 2017 to February 2018
Source: Ministry of Commerce
185.29
303.69
178.75
288.37
249.82
369.77
305.96489.32
300.40
490.74
314.41
450.20
309.56
447.52
262.03
380.60
274.65
380.38
273.73
416.87
Rise in freight traffic
Growth in passenger
traffic
Higher aircraft
movement
FDI in aviation and
policy
Increasing airline
operators
Rising exports and imports (US$ billion)
600
500
400
300
200
100
0
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18*
Exports Imports
27

28. POLICY SUPPORT AIDING GROWTH IN THE
AIRPORTS SECTOR … (1/2)
Greater focus on
infrastructure
Liberalisation, Open
Sky Policy
Encouragement to
FDI
Notes: India currently has bilateral air service agreements with 104 countries. These include Brazil, 27 members of the EU, and China. In 2008 traffic rights were been enhanced with
Mexico, Saudi Arabia, Netherlands, Qatar, Iran, Japan and Turkey, FDI – Foreign Direct Investment, GOI – Government of India
The GOI has allowed 100 per cent FDI under automatic route for greenfield projects, whereas, 74 per cent FDI
is allowed under automatic route for brownfield projects.
100 per cent FDI is allowed under automatic route in scheduled air transport service, regional air transport
service and domestic scheduled passenger airline. FDI over 49 per cent would require government approval.
Approval of 49 per cent FDI in aviation for foreign carriers.
FDI inflows in India’s air transport sector (including air freight) reached US$ 1,608.51 million during April 2000
and December 2017.
With the opening of the airport sector to private participation, six airports across major cities are being
developed under the PPP model
Currently 60 per cent of airport traffic is handled under the PPP model, while the remaining 40 per cent is
managed by the AAI
Increased traffic rights under bilateral agreements with foreign countries
India signed its 1st open skies agreement with Greece
In May 2017, India and Spain signed an MoU for cooperation in civil aviation industry. The MOU would spur
greater trade, investment, tourism and cultural exchanges between both the countries.
In April 2017, Brussels Airlines launched its service from Brussels to Mumbai, its 1st flight to Asia. The launch
is a part of Lufthansa’s group strategy to expand its business in India.
AAI is going to invest Rs 15,000 crore (US$ 2.32 billion) in 2018-19 for expanding existing terminals and
constructing 15 new ones.
The Indian government is planning to invest US$ 1.83 billion for development of airport infrastructure along
with aviation navigation services by 2026.
28

29. POLICY SUPPORT AIDING GROWTH IN THE
AIRPORTS SECTOR … (2/2)
Taxes and duties
Budgetary support
National Civil Aviation
Policy, 2016
Notes: AAI – Airports Authority of India, DGCA – Directorate General of Civil Aviation, FY – Indian Financial Year (April – March)
Source: : Ministry of Civil Aviation
27 Aviation
The policy covers 22 areas of the civil aviation sector.
Regional Connectivity Scheme (RCS) has been launched under the policy.
Airlines can commence international operations and have to deploy 20 aircrafts or 20 per cent of total
capacity (whichever is higher) for domestic operations.
In the Union Budget for FY18, Government of India, has earmarked US$ 100.4 million for Air India Limited.
Also, an amount of US$ 11.32 million has been allocated to Airports Authority of India for 2018-19.
The government has allocated a sum of US$ 32.44 million to Directorate General of Civil Aviation to
implement various schemes.
The government has also supported the Bureau of Civil Aviation Security with US$ 10.81 million to meet
their expenditure.
Allocation to Civil Aviation ministry has been tripled to Rs 6,602.86 crore (US$ 1,019.9 million) under Union
Budget 2018-19.
100 per cent tax exemption for airport projects for a period of 10 years
Indian aircraft Manufacture, Repair and Overhaul (MRO) service providers are exempted completely from
customs and countervailing duties
29

30. AAI LEADS THE WAY
INVESTMENT
IN AIRPORTS INFRASTRUCTURE
Metro airports
Non-metro airports
Northeast India
Over 30 airport development projects are under progress across various regions in Northeast India
AAI plans to develop over 20 airports in tier II and III cities in next 5 years
The AAI plans to develop Guwahati as an inter-regional hub and Agartala, Imphal and Dibrugarh as
intra-regional hubs
The AAI plans to spend US$ 1.3 billion on non-metro projects over the 5 years (2013–17); mainly focusing
on the modernisation and upgradation of airports; New airports at Itanagar, Kohima and Gangtok are also
planned.
The Government of Andhra Pradesh is to develop greenfield airports in six cities-Nizamabad, Nellore,
Kurnool, Ramagundam, Tadepalligudem and Kothagudem under the PPP model.
Upfront subsidy has been proposed through which non-metro airports would be funded by imposing 2 per
cent levy on both domestic and international airfares.
About 22 airports to get connected under regional connectivity scheme of AAI.
The AAI aims to bring around 250 airports under operation across the country by 2020
The AAI has developed and upgraded over 23 metro airports in the last 5 years
30

31. PRIVATE SECTOR INVESTMENT IN AIRPORTS RISING
… (1/2)
Recourse to the Public Private Partnership (PPP) model has boosted private sector investments in airports
PPP route for five international airports (Delhi, Mumbai, Cochin, Hyderabad, Bengaluru) most noteworthy
Increasing share of private sector in equity component of major airports –
• 74 per cent private share holding in IGI Airport (Delhi) - owned majorly by GMR (54 per cent), Fraport AG (10 per cent), Eraman Malaysia (10
per cent); rest of the shares owned by AAI
• 74 per cent private shareholding in CSI Airport (Mumbai) - owned majorly by GVK (50.5 per cent), Bid Services Division (Mauritius) Ltd. (13.5
per cent), ACSA Global (10 per cent); rest of the shares owned by AAI
• 74 per cent private shareholding in RGI Airport (Hyderabad) - owned majorly by GMR (63 per cent), Malaysia Airports Holdings Berhad (11 per
cent); rest of the shares owned by Government of India (13 per cent) and Government of Andhra Pradesh (13 per cent)
• 74 per cent shareholding in Kempagowda International Airport (Bengaluru) – owned majorly by Siemens Project Ventures, Germany (40 per
cent), Unique (Flughafen Zurich AG) Zurich Airport, Switzerland (17 per cent), L&T, India (17 per cent); rest of the shares owned by AAI (13 per
cent) and KSIIDC, which is an agency owned by the state of Karnataka, India (13 per cent)
• In March 2017, by selling off 2 offshore bonds, GMR plans to raise US$250-300 million for refinancing their debt. In June 2017, GMR
announced plans to refinance loans and divest assets in road and power sectors to cut debt so as to invest up to Rs. 7,400 (US$ 1.15 billion)
crore to expand Delhi and Hyderabad airports.
Source: Notes: KSIIDC – Karnataka State Industrial and Infrastructure Development Corporation Ltd.
31

32. PRIVATE SECTOR INVESTMENT IN AIRPORTS RISING
… (2/2)
Delhi
(Modernisation,
Terminal 3)
Bijapur Airport
Shimoga Airport
Mumbai
(Modernisation) Hassan Airport
Gulbarga Airport
Hyderabad Mopa Airport, Navi
Mumbai Airport, Shirdi
and Sindhudurg
Airports, Kannur and
Aranmula Airports,
Durgapur Airport, Dabra
Airport, Pakyong
Airport, Karaikal Airport
and Kushinagar Airport
Bengaluru
In May 2016, US$ 2.23
billion of investments
were approved
byAirports Authority of
India (AAI) for
upgrading Indian
airports, over a period
of four years
Terminal 3 - Total cost
US$ 2.7 billion
(including Terminal 3
and 1- D)
Participation in
international
airport projects
15 greenfield projects with
private sector participation
has been approved in May
2015
Terminal 3
construction in Delhi
completed in 2010
PPP format likely to
continue
32

33. SUCCESSFUL PPP AIRPORTS IN INDIA
Presently India has 5 PPP airports each at Mumbai, Delhi, Cochin, Hyderabad and Bengaluru, which together handle over 55 per cent of country’s
air traffic.
Government of India has approved 15 greenfield PPP projects which are expected to increase the air traffic in India. These pr ojects would be
setup in Goa, Navi Mumbai, Maharashtra, Bijapur, Gulbarga, Karnataka, Kerala, West Bengal, Madhya Pradesh, Sikkim, Puducherry and Uttar
Pradesh.
Government of Maharashtra has approved development of Nagpur airport on a PPP basis and allocated Rs 100 crore (US$ 15.45 million) for it in
State Budget 2018-19. The airport will be upgraded on a DBFOT basis with a private player operating it for 60 years.
PPP structure
shared with AAI
shared with AAI
their 26 per cent of equity capital
Notes: BOOT - Build Own Operate Transfer; BOO - Build Own Operate , DBFTO – Design Build Finance Operate Transfer
Source: Association of Private Airport Operators
Name of airport Operator
Type of project/
Revenue sharing
Chhatrapati Shivaji
International Airport
Mumbai International Airport Ltd (MIAL) Brownfield/BOOT 38.7 per cent of gross revenue to be shared with AAI
Indira Gandhi
International Airport
Delhi International Airport Ltd (DIAL) Brownfield/BOOT 45.9 per cent of gross revenue to be shared with AAI
Rajiv Gandhi
International Airport
GMR Hyderabad International Airport Ltd
(GHIAL)
Greenfield/BOOT
Concession fees - 4 per cent of gross revenue to be
Bengaluru
International Airport
Bengaluru International Airport
Ltd (BIAL)
Greenfield/BOOT
Concession fees – 4 per cent of gross revenue to be
Cochin
International Airport
Cochin International Airport Ltd (CIAL) Greenfield/BOO
Payment of dividend to the Government towards
33

34. FOREIGN PLAYERS ARE SHOWING INCREASING
INTEREST IN THE SECTOR
Major foreign players Airport Stake (%) Description
Airports Company South Africa Global Mumbai International Airport Pvt Ltd 10
Operates and owns 9 airports in South
Africa
Malaysia Airports Holdings Berhad
Delhi International Airport Pvt Ltd 10 Operates and manages 5 international
gateways, 16 domestic airports, to 18 short
take-off and landing ports (Short Take-off
and Landing ports) that serves the rural and
remote areas in Malaysia
Hyderabad International Airport Pvt Ltd 11
Frankfurt Airport Services Worldwide Delhi International Airport Pvt Ltd 10
Global airport operator that offers airport
management services including terminal
and traffic management, baggage and
cargo handling and aviation ground
handling
AirAsia
Joint venture with Tata sons and
Arun Bhatia
49
AirAsia is a Malaysian low-cost carrier. It
has formed a JV AirAsia (India) Pvt Ltd with
Tata Sons (30 per cent stake) and Arun
Bhatia via Telestra Tradeplace (21 per cent
stake) in March 2013. Tata Sons planning
to raise its stake to 41.06 per cent as on
August 14, 2015
Jet Airways Aeromexico Signed a MoU
Partnered with Aeromexico for codeshare
flights and frequent flyers programme
34

35. OPPORTUNITIES
35

36. OPPORTUNITIES
like ‘Project Gagan’ which is in
in May 29, 2015 by Air India Engineering
Notes: ‘Project Gagan’ is directed towards transitioning from a ground-based navigation system to a satellite-based one. AAI and ISRO are jointly working on this. A Space Based
Augmentation System (SABS) will be operational by 2013,MRO – Maintenance, Repair and Overhaul
Leverage on non-aeronautical
revenues, improved technology
Airport developers can now draw on
wider revenue opportunities such as
retail, advertising and vehicle parking
Future operators will benefit from
greater operational efficiency due to
satellite based navigation systems
development phase
Huge potential to develop India as an
MRO hub
The Indian Aviation Industry aims to boost
MRO business in India, which is worth US
500 million as of FY2016 and is estimated
to grow over US1.5 billion by 2020
Indian airline companies spend over 13–
15 per cent of their revenues on
maintenance, which is the 2nd highest
cost component after fuel
Inauguration of MRO facility at Hyderabad
Services Limited (AIESL) which is a 100
per cent owned subsidiary of Air India
Policy support and demand growth
unlocking large investment potential
The Indian Aviation sector likely to see
investments totalling US$ 12.1 billion
during the 12th Five Year Plan
Of the total investment, US$ 9.3 billion is
expected to come from the private sector
Success of PPP formats will raise
investment in existing and greenfield
airports
Private sector participation in 6 existing
airports operated by AAI is likely to
increase investment opportunities for
airport sector
36

37. CASE STUDIES
37

38. IGI AIRPORT, DELHI - A COMPELLING SUCCESS
STORY
Awarded at the Skytrax World Airport Awards 2015 for the “Best Airport in Central Asia region” and for the “Best Airport Staff”. Also, they were
felicitated with the prestigious Golden Peacock National Quality Award’ 2015 for their continuous efforts in building a culture across IGI Airport
IGI airport ranked 1st at the ACI Annual Service Quality Awards in 2016, across the globe (category: handling 25-40 million passengers), up from
2nd position in 2012.
Delhi International Airport Ltd became the 1st in the world to receive the ISO 22301:2012 certification for its robust busine ss continuity
management system.
Delhi International Airport Ltd is also India’s 1st airport to cross 50 million passenger mark, in 2016.
In 2017, Delhi Airport was adjudged as the "Best Airport in India and Central Asia" by Skytrax at the World Airport Awards.
Phase 1 of modernisation of IGI International Airport (at a cost of INR86 billion) involved renovation of terminals 1A, 1B, 1C and Terminal 2. It also
included construction of a new domestic terminal along with an integrated passenger terminal (Terminal 3)
Passenger handling
capacity per annum
Area (acres)
Operational status
Notes: ACI – Airports Council International , mn - Million
Source: Delhi International Airport Ltd, Association of Private Airport Operators, Airports Authority of India
Completed on Mar-2010 Ongoing 20-year project
1,907 5,106
34 million
100 million (by 2020)
(62 million as of April
2017)
Phase I FinalFacts and features:
Passenger Traffic: 57.7 million (FY17)
Aircraft movement: 0.39 million (FY17)
Cargo: 0.85 million tonnes (FY17)
Terminal 3
Retail space: 0.3 million square feet
Apron area: 6.7 million square feet
Multi level car park: 4,300 cars/day
38

39. CSI INTERNATIONAL AIRPORT, MUMBAI -
HARNESSING THE POWER OF PPP
During the World Travel Awards, 2015, CSI International Airport, Mumbai’s GVK Lounge at Terminal 2 was felicitated with “Asia’s Leading Airport
Lounge “ Award. Also, the Architizer A+ Award for the “Best Architectural Structures in the World” was bagged by CSI International Airport in the
Transportation-Airports category, 2015.
In 2017, CSIA also secured top award for 'Best Airport Staff Service' in India and Central Asia at the World Airport Awards organised by Skytrax.
In FY17, CSIA became the world’s busiest airport amongst single runway facilities with 45.2 million passengers flying in and out in this fiscal and
by handling 837 flights per day or 1 in 65 seconds on an average.
In FY17, CSI handled 45.2 million of passenger traffic and 0.78 million tonnes of cargo movement.
Passenger handling
capacity per annum
Cargo handling capacity
per annum
Notes: ACI – Airports Council International
Source: Airports Authority of India, Mumbai International Airport Ltd.
7.8 million tonnes
45 million
Modernisation of the Mumbai International Airport will entail investments
worth US$ 1.3 billion over a period of 20 years
Government of India to provide US$ 1.1 billion
Parts of the project completed till now:
• Phase I (2008): New airport lounges, retail outlets, duty-free shops,
temporary cargo facilities and multilevel car parks
• Phase II (2010): Involved construction of a new terminal at Sahar, a
parallel runway and new cargo facilities
39

40. INDUSTRY
ASSOCIATIONS
40

41. INDUSTRY ORGANISATIONS
Airports Authority of India (AAI)
Address: Rajiv Gandhi Bhawan, Safdarjung Airport,
New Delhi –110 003
Phone: 91 11 24632950
Directorate General of Civil Aviation (DGCA)
Address: Aurbindo Marg, Opp. Safdarjung Airport,
New Delhi –110 003
Phone: 91 11 24622495
Fax: 91 11 24629221
E-mail: dri@dgca.nic.in, dfa@dgca.nic.in
41

42. USEFUL
INFORMATION
42

43. GLOSSARY
AAI: Airports Authority of India
ACI: Airport Council International
CAGR: Compound Annual Growth Rate
FDI: Foreign Direct Investment
FY: Indian Financial Year (April to March)
So FY10 implies April 2009 to March 2010
GOI: Government of India
INR: Indian Rupee
MRO: Maintenance, Repair and Overhaul
PPP: It could denote two things (mentioned in the presentation accordingly) –
• Purchasing Power Parity (used in calculating per-capita GDP – slide 12, GROWTH DRIVERS)
• Public Private Partnership (a type of joint venture between the public and private sectors)
43

44. EXCHANGE RATES
Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)
Source: Reserve bank of India, Average for the year
42
Year INR Equivalent of one US$
2005 43.98
2006 45.18
2007 41.34
2008 43.62
2009 48.42
2010 45.72
2011 46.85
2012 53.46
2013 58.44
2014 61.03
2015 64.15
2016 67.21
2017 65.12
Year INR INR Equivalent of one US$
2004–05 44.81
2005–06 44.14
2006–07 45.14
2007–08 40.27
2008–09 46.14
2009–10 47.42
2010–11 45.62
2011–12 46.88
2012–13 54.31
2013–14 60.28
2014-15 61.06
2015-16 65.46
2016-17 67.09
Q1 2017-18 64.46
Q2 2017-18 64.29
Q3 2017-18 64.74
44