Civil aviation in India has ushered in a new era of expansion, driven by factors such as low-cost carriers (LCCs), modern airports, Foreign Direct Investment (FDI) in domestic airlines, advanced information technology (IT) interventions and growing emphasis on regional connectivity. According to the International Air Transport Association (IATA), India will displace the UK for the third place in 2025.
India is flying high with Domestic Air Passenger Traffic crossing the 100 million mark in 2017. Delhi’s Indira Gandhi International (IGI) airport alone handled about 64 million passengers, making it to the Top 20 busiest airports in the world, surpassing airports in Singapore, Seoul and Bangkok. The Airports Authority of India, Airports Council International and International Air Transport Association, said that Delhi airport is the first in the country to make its mark in the top 20 club.
India’s aviation industry is largely untapped with huge growth opportunities, considering that air transport is still expensive for a majority of the country’s population, of which nearly 40% is the upwardly mobile middle class.
Airports face potential “threats” to their revenue streams due to a conflation of technological innovations and regulation. Biometrics are set to create a seamless travel experience and obliterate the physical barriers faced by travellers at all major touchpoints such as check in, immigration and security.
Meanwhile, tougher regulations are putting downward pressure on aeronautical revenue, as airports face measures to curb their airport charges.
Airport retail is a highly lucrative source of revenue for many airports. Many brands have their own independent airport retail strategy in order to capitalise on the airport’s monopoly access to a captive audience of millions with high disposable incomes.
Airport building and modernisation projects worth over Rs 19,300 crore ($2.99 billion) have been recommended green clearance, in line with the Government of India’s focus on improvement in regional air connectivity.
Airport traffic forecasts are crucial for airport planning and the determination of future capacity requirements. Since infrastructure projects are costly and often disruptive, a data-driven understanding of future demand gives airport planners and investors the necessary information for effective decision-making.
There are several impediments that pose risks to the continued rise in demand, potentially hampering growth prospects over the short- and medium-term.
With the growth of highly disposable incomes among the upwardly mobile population in towns and cities, clearly air transport seems to be the favoured choice, gathering increasing pace in cities and towns.
Delhi and Mumbai airports will continue to be major popular connectors for the airlines, making a strong business case for further investments.