In order to provide better air connectivity in under-serviced areas of the country, the Civil Aviation Ministry’s announcement that the Airports Authority of India (AAI) will develop five no-frills airports is a welcome initiative. The five no frills airports which have been shortlisted from 50 cities and towns in remote areas across the country, will be built in Teju in Arunachal Pradesh, Jharsuguda in Orissa, Krishna Nagar in Rajasthan and Hubli and Belgaum in Karnataka.
Almost 70 per cent of the population residing in smaller towns in the country does not have air connectivity. There is a large number of people who could afford to pay for air travel if the facility is made available. The new government appears to be very enthusiastic in reviving the aviation sector and cater to the needs of these people.
Cost of no-frills airports
These ‘no-frills airports’ means that each of the airport will be built with a small budget of Rs 55-85 cr spent as compared to say Rs 2,500 cr needed for constructing any state-of-the-art airport. They will be built in the form of modules, which means a block can be added once there’s an increase in demand. Presently, there are over 125 functional airports and another 400 air strips, of which many can be developed as full-fledged airports.
Civil Aviation Minister Ashok Gajapathi Raju during a conference to share his Ministry’s achievements in the first 100 days said that “AAI has developed a model for these no-frills airports, which will provide essential services needed to operationalise the airports, without in any way compromising safety and security. This will result in low cost of operation and make it viable for the airlines with smaller aircraft to run their services.”
The budget airport will have air-strips catering to small aircraft like ATR and Bombardier made Q-400, no conveyer belts and no aero bridges. Only the security hold areas at these airports will be air-conditioned. These budget airports will improve regional connectivity and work on them will commence this fiscal.
Connectivity for regional and remote areas
Recently, the Minister had in his presentation to Prime Minister Narendra Modi last month included plans for the development of 50 no-frill airports in several States and greenfield airports which are in the pipeline for Navi Mumbai, Juhu, Goa, Kannur, Pune, Sriperumbudur, Bellary and Raigarh. During the 12th Plan (ending March 31, 2017) alone, about Rs 1,500 crore is being earmarked to develop non-metro airports. The idea is to connect tier-2 and tier-3 cities and enhance air traffic beyond metros.
In all fairness, the government’s move should be appreciated as the operational costs of the domestic as well international flights is becoming costlier day by day and hence unsustainable. The draft policy on remote and regional connectivity being evolved by the new government is a welcome imitative as the government is discussing it with all the stakeholders including airlines and air operators.
It is also aimed at giving a boost to the air cargo and MRO (Maintenance, Repair and Overhaul) sectors. It also aims at granting concessions and incentives to airlines to fly to remote areas. It is also proposed to create a synergy between scheduled and non-scheduled airlines for better penetration and connectivity. Once the policy guidelines are finalized various measures like tax concessions and regulatory steps will also be reviewed.
Needless to emphasize that the role of the Airports Authority of India (AAI) is paramount as it is a major body for building strong airport infrastructure and operation. Currently, AAI handles over 122 million domestic and 47 million international passengers. It is poised to handle 217 million domestic as well as 76 million international passengers in the country by 2020.
Lower ticket rates and higher passenger volume
In India the advent of the low cost carriers (LCCs) has led to huge opening up of the aviation sector leading to boost in tourism besides higher frequency of services in smaller towns and cities. It has also led to an exponential growth of air traffic. It has also helped the airlines to operate at lower airport related costs. Hence, low cost airports due to low operational investments – both in terms of maintaining grandiose buildings and international terminal like facilities would help in bringing lower airline fees paid to airport. This benefit can be passed on to the passenger in terms of lower ticket price. The low cost carriers also can be mutually beneficial to the airport as well as airline. They can forge an agreement where the airline creates jobs and commits a minimum passenger guarantee; thereby changing the dynamics of carrier operator.
Today, the cost of operation of the airports and airlines has increased drastically, and thus their viability is a major concern. Hence, the no-frills airports are also urgently needed in the tier-2 and tier-3 towns and small remote areas to strengthen connectivity and exploit the huge potential.
Due to lower infrastructure and operational costs, no-frills airports would help incentivize lower ticket rates resulting in higher air passenger volume. The government needs to act fast on the idea of no-frills airport connectivity to help boost tourism, increase economic development and boost the fortunes of the low cost carriers (LCCs). It has to be a collaborative approach by the State and Central governments as well as airlines for the no-frills airports to succeed.