India’s aviation infra seeks a rupees 2.4 trillion dose over the next decade to match demand

In order to create infrastructure commensurate to the projected growth in passenger traffic, the aviation segment is need of a hefty dose of INR 2.4 trillion investment over the next decade. As per an aviation report published by ICRA, the country would have to treble the airports capacity at an estimated capital expenditure of INR 2.4 trillion in the next ten years. India has already invested around INR 52,000 crore over the last decade at various airports. 

Interestingly, the projected investment required is more than four times the amount envisaged by the national airports operator AAI (Airport Authority of India) at INR 65,000 crore. AAI has finalised capital expenditure this sum, with over 20000 crores of investment in, each, Greenfield and Brownfield projects, but this may not enough to fill in the gaps.  The sector is in dire need of private investments. Much of it, in the recent years, has been stemmed by growing liquidity constraints of major infra players, NPAs (Non-performing assets) with public sector banks and regulatory uncertainties.

On the contrary, growth in air traffic numbers has been exponential in in the past five years. Such has been ferocity of growth that India has emerged as the fastest growing aviation market in the world.  Buoyed by the double-digit passenger growth, airline companies have expanded their networks and boosted their frequencies. This unprecedented surge in numbers, however, has choked the available infrastructure. As per the, new airports in New Delhi and Mumbai and other key cities have already crossed their projected traffic for 2020 by many millions. Among major Indian aviation centres, only Hyderabad and Bengaluru are yet to cross their installed capacity. During the period between FY14 and FY17, the passenger traffic has grown by 57 per cent while the aircraft traffic has grown by 33 per cent. 

Policy makers would do well to use innovative mediums to generate funds. Leasing out available land near airports for commercial usage could be one of the many ways the government could generate resources. Railways has gone the same route, eyeing a major revamp of its ageing infra. It will be interesting to see how the mismatch between passenger volume and infra is addressed in the days to come. 

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