New Delhi India plans to build new airports with integrated metro rail connectivity to facilitate passenger transport and rail tracks to nearest sea ports for faster freight movement, said an official aware of discussions within the government.
Such multi-modal connectivity hubs are expected to boost mobility as well as trade, the official said on condition of anonymity. The move comes at a time when air travel has resumed post-Covid, and airline capacity utilization has crossed 80% across all major airlines.
The government plans to increase the number of airports from the current 130 to 220 by 2025, and the improved prospects for the sector have accelerated the project’s viability.
“As part of the airport capacity expansion, there will be helipads in the Northeast and some islands and in the hill states. Some of the new airports to be added are projects to convert existing airstrips into full-fledged airports. In some of them, massive infrastructure like a metro city may not be required, but a small functional airport facility will offer air connectivity and boost economic activities.
According to the person, new airports built before the pandemic have contributed to the improvement in air traffic in recent months, giving policy makers new confidence to undertake new projects. In addition, improvements in this area have helped ease some concerns about the financial viability of airports, although high jet fuel prices pose a risk to traffic. Given its multiplier effect, building infrastructure is a key element of the Narendra Modi government’s economic reform strategy.
Earlier this month, the Union Cabinet had approved a 1,305 crore airport project at Dholera in Gujarat, which is expected to serve as a cargo hub in the industrial area.
An email sent to the Civil Aviation Ministry spokesperson on Saturday did not elicit any response till press time.
Experts say increasing airport capacity will contribute to the growth of the aviation sector, but in some cases at least airlines may have to be encouraged. Rajeshwar Burla, Group Head, Corporate Ratings, Icra Ltd said, “Once you have an airport in a small town (under the UDAN scheme), it is also important to encourage airlines to start operations.” Cities have contributed to the faster recovery of post-Covid domestic air traffic and is helping the industry as a whole, he said.
When it comes to the question of airlines’ fleet expansion, high capacity utilization is not the only deciding factor.
“Fleet expansion by airlines will largely depend on profitability and not just on the extent of capacity utilization. Airlines are currently facing constraints due to high cost of jet fuel and improvement in profit margins will be a factor in deciding on fleet expansion as operations have to be remunerated to make new investments. Another challenge for the aviation sector could be the impact of the sharp increase in airfares seen in the recent past on the traffic volume,” Burla said.
State-run airports are included in the government’s asset monetization plan to raise resources for fresh investments in the infrastructure sector. Advance payments received from developers for redevelopment of the airport in a public-private partnership will be used by the Airports Authority of India to make fresh investments.