In an interview with ET Now, Guruprasad Mohapatra, Chairman, AAI explains the growing significance of aviation sector and also talks about how much the sector needs investment to succeed with the big dream.
Domestic aviation has been clocking double digit traffic growth for 40 months now. How airports are coping if such a growth continues and how is it that airports and the industry will cope up with this kind of investment flow. Do you think capex be needed for both greenfield as well brown-field projects?
As you rightly stated, amongst all the sectors of the Indian economy, aviation is one of the sector that is witnessing the fastest rate of growth i.e. more than four years of double digit growth rate. This growth itself brings all the challenges for us as most of the Indian airports are pre-World War II or post World War II period when it was not a priority sector. Hence, the land planning and availability posed serious problems. But now, with the current growth the need to boost investments into the infrastructure sector have tremendously increased.
Airport Authority of India at present manages more than 125 airports. In the top 20-30 airports we are looking into ways to optimise the air space management, the city side management as well as the terminal side management. Also, the authority have identified that in the coming five years, the Indian airports will be pumping in more than Rs 20,000 crore. Keeping that in mind, it is really imperative that investment both from public and private industries must increase.
What kind of growth investments and airport infrastructure do you think is needed to achieve the big dream in next decade?
There are several areas in which we need to work upon. First is the air space management. Our basic need currently is to optimise landings and arrivals per hour in congested metro airports, be it Delhi, Mumbai, Chennai, Kolkata, Hyderabad, Bangalore etc. Therefore, our focus is on investing new technologies and bringing more qualified manpower. Second, our focus is on building new terminals and aprons, bays and extending runways or building parallel runways.
As mentioned earlier, in most of our big cities there is absolutely no land available around the airports to do all this so now Ministry of Civil Aviation is consistently pushing up the state governments for construction of second airports. For example, Delhi will have a Jewar, Mumbai will have a New Mumbai. And Similarly, we are pushing Chennai, Kolkata, Bangalore and Hyderabad to build parallel runways and second airports for Pune, Goa, Bhubaneshwar and Ahmedabad.
Third, is the city side development.
What is the plan in place for the new airport, will they be managed by Airport Authority of India or will there be more public private sector partnership and like the metro model has been successful in smaller cities, we have not seen this kind of a partnership in the aviation sector, do you think this is largely because of lack of returns because if the returns were strong then private sector money would have already come in by now?
Well, all the big airports in India i.e. the airport in six metro cities except that of Chennai and Kolkata are privatised. So, it is more about the choice as out of the 127 airports that we manage , only 15 airports make some returns and other airports are more for strategic necessity i.e. for connecting India within India. Therefore, in other words, there is nothing that prevents the private sector from coming in and there is even a policy in that regard. Now coming to why Airport Authority of India is bidding for those private airports, you know, Airport Authority of India has as much right to bid for any airport as any other private investor.
Why is Airports Authority of India being only an authority is getting into airport construction?
It is an open competition and nothing prevents us from going in .We actually construct the airports,run, manage and then if we are investing in it. Also in the four PPV bids that have taken place recently, wherever the AAI has joined in the bid, the promoter even got higher returns. Regarding the ancillary, all the aerobridges and many things that we use in the airports are imported now and here we are trying to achieve as much as domestic investment possible especially since Make in India is gaining a lot of attention now.
What do you think could be the projected capex which airports authority is likely to do in the next three years, what kind of capital commitment and capital outlay are you likely to have in the next three years?
We are going to spend more than 15,000 crores in the next three years, out of which we will be borrowing significantly through borrowings and around 60 per cent through bonds.
How many new airports you would be able to get up in the next three years and how many amortisation plans have been approved?
The first major challenge is UDAN, there are 70 odd airports in round one and round two of UDAN respectively.
Most of the airports where nothing exists except a historical strip have to be built afresh and kept ready for flying. So this is one of the major challenge we are handling now. The good news is that from the first round of UDAN, 18 new airports have already come into the mainstream and it is expected that hundred more airports will be added to the network in the next one or two years.