Where Will India's Airlines Land All Their Shiny New Jets?

1468569138_india airport traffic lede

Airplanes prepare for take-off at Chhatrapati Shivaji International Airport. As an air-travel boom heats up in the world’s fastest-growing major aviation market, chronically poor infrastructure has failed to keep pace with traffic growth.

Photographer: Hindustan Times via Getty Images
  • Carriers expanding fleets as infrastructure fails to keep pace
  • Modi’s policy overhaul seeks foreign investment in airports

At last week’s Farnborough Air Show, an Indian carrier placed a $7.7 billion order while an additional $72 billion of contracts are in the offing. The next challenge: Finding landing and parking slots for these planes.

As air travel heats up in the world’s fastest-growing major aviation market, infrastructure has failed to keep pace with traffic growth fueled by rising incomes and affordable fares. The average time an aircraft spends circling before it can land in Mumbai during peak hours is about 45 minutes to an hour, versus 25 minutes for Singapore and zero for Qatar, according to Dubai-based Martin Consulting LLC.

India plans to invest $5 billion to improve airport infrastructure, which is "inadequate" compared with China’s proposal for $130 billion in 15 years, a June research paper by KPMG and the Associated Chambers of Commerce of India said. A proposal for a new airport in the outskirts of Mumbai has languished on the drawing board since 1997 even as Boeing Co. estimates Indian carriers need 1,740 aircraft over the next two decades.

Huge Issue

“We need to move fast,” Sanjiv Kapoor, chief commercial officer of Vistara, a local unit of Singapore Airlines Ltd., said in an interview. “That’s a huge issue. You cannot have a commercial capital and a political capital that do not have slots available for growth,” he said, referring to Mumbai and New Delhi.

Sanjiv Kapoor
Sanjiv Kapoor
Photographer: Anindito Mukherjee/Bloomberg

Out of the nation’s 450 airstrips and airports, only 75 handle commercial airlines, with the rest remaining idle or rarely used because of weak demand, according to the government. The lack of facilities may force carriers to defer deliveries, hurting planemakers including Boeing and Airbus Group SE.

Scores of airlines struggle to manage as many as 2,000 flights a day, and none of the Indian carriers, barring AirAsia Bhd.’s local unit, could touch the 90 percent on-time performance, a key for low-cost models, data from the Directorate General of Civil Aviation show.

The air-travel market in Asia’s third-biggest economy grew 20 percent in 2015, compared with about 10 percent in China and less than 5 percent in the U.S., according to the International Air Transport Association. Last week, AirAsia group Chief Executive Officer Tony Fernandes said he was “very, very bullish” on India.

The potential for further growth is spurring operators to scale up their fleets. At least 709 planes are on order for the next few years. Go Airlines India Pvt. said it will buy 72 A320neos from Airbus at Farnborough last week. SpiceJet Ltd. is in talks for 150 aircraft and IndiGo, the nation’s top budget carrier, has ordered 430 Airbus narrow-body jets on top of the 108 it already flies.

The problem is not just limited to India. There has often been a gap between intention and infrastructure delivery for Asian airport, according to a 2015 research paper by OAG Aviation Worldwide.

“Infrastructure has to catch up as dynamics of aviation have changed,” said Mark D. Martin, founder Martin Consulting. “Countries must make sure that airports are built not just for bigger jets, but also for smaller, 5-10 seater planes to connect its people.”

Terminal 2 of the Chhatrapati Shivaji Airport opened in Jan. 2014.
Terminal 2 of the Chhatrapati Shivaji Airport opened in Jan. 2014.
Photographer: Dhiraj Singh/Bloomberg

It isn’t the case that India hasn’t done much in the past 10 years. It spent $2.7 billion to upgrade the airport in New Delhi and added a new terminal in 2010, while it plowed $885 million to modernize the Mumbai airport in 2014.

Though the facilities in New Delhi and Mumbai were named the world’s No. 1 in the 25-40 million passengers-a-year segment by the Airport Council International for 2015, the nation’s busiest airports don’t even figure in the top 20 globally by traffic.

As much as $40 billion in investment is needed in the next 15 years to improve India’s airport infrastructure, according to estimates by Sydney-based CAPA Centre for Aviation.

In an effort to attract capital, Prime Minister Narendra Modi in June eased norms for foreigners, who can now fully own existing airports without government approvals.

To make the airports more attractive, Modi is promising tax incentives for companies providing maintenance, repair and overhaul services. The government estimates Indian carriers alone generate MRO business worth 50 billion rupees ($745 million) annually, and most of that is spent in countries like Sri Lanka, Singapore and Malaysia as India lacks MRO facilities.

Modi is also seeking to revive many of the idle airports to enhance regional connectivity. Weak demand have made many of them unviable for commercial single-aisle jets. His government last month said it would compensate for losses if states cut taxes on jet fuel and offer free parking and landing, in a step that may encourage carriers to fly to the so-called “ghost” airports.

"Ghost airports are ghosts for a reason -- not enough business potential currently," Vistara’s Kapoor said in a Twitter post on July 12, "Yet hundreds of A320s on order. Where will they all fly, am really curious!"

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