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MOSL: AVIATION-Domestic airport infrastructure to glide by 2024

AVIATION: Domestic airport infrastructure to glide by 2024

 

We met senior management of GMR Group to understand how Indian airport infrastructure development could pan out in future. Key highlights:

 Indian aviation market on path to become #3 globally

• In India, consumer choices are changing favor of air travel. Also, cheaper airline tickets are driving preference for air travel over luxury railway travel.
• Domestic passenger traffic is expected to increase at a CAGR of 8% over the next decade, led by a growing fleet size, increasing penetration into tier II/III cities, an increase in middle-class income, and rising international tourism spends.
• Indian airline fleet addition CAGR is estimated at ~15% (Indigo and SpiceJet to take a leap) over the next 3-5 years. Aircraft fleet size is expected to increase to 1,000 in the next three years (v/s ~650 planes in FY20 YTD).
• Increase in UDAN scheme route connectivity is likely to support development of tier-II/III airports, boosting domestic passenger growth. The number of routes covered by Indian airlines is also increasing and crossed 1,000. 

Number of domestic airports to double by 2024

• Five private airports handle ~52% of the country’s traffic (GMR handles 25% of the country’s traffic from airports of Delhi and Hyderabad), which is indicative of the growing traction of private players in the airport sector.
• India is planning to start additional 100 airports (from ~97 operational currently) by 2024 and the government has committed capital of INR1t for the same.
• The GoI has granted ‘in-principal’ approval for setting up 16 greenfield airports (at cost of ~INR320b). These airports are in Andhra Pradesh (3), Arunachal Pradesh (1), Goa (1), Gujarat (2), Karnataka (3), Madhya Pradesh (1), Maharashtra (2), Puducherry (1) and Uttar Pradesh (2).
• GMR is expanding Delhi airport (passenger capacity to 100m from 64m) and Hyderabad airport (passenger capacity to 50m from 25m), and also building an airport in Goa (Mopa).