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Airport Infrastructure Industry

Airport Infrastructure Industry

Hemika Gala | 31/12/2021


 

 

Global Airport Infrastructure

The Global airport infrastructure that plays a vital role in the economic
development of the country has been growing over the past few years, aiding in
the long term development of the Country and thus making it paramount to
invest in the aviation sector. Around $1.2-1.5 trillion is forecasted to be globally
spent on airport infrastructure development by 2030.

 

Financial Overview
• The Airport Authority of India (AAI) reports a fall of 92% in its revenue from Rs.
2,973 crores April-June 2019 to Rs. 239 crores during April-June 2020. Yet the
Aero Revenue of Kannur International Airport has increased Y-o-Y at the rate of
~950% to INR 80.5 crores in FY20 from INR 7.67crores in FY19.

 

Demand Drivers
• Tourism: India ranks 10th in the world in terms of the nation’s travel and
tourism sector contributing to the GDP that is worth $121.90 billion of the total economy as of 2020. The quality of the airport infrastructure contributes
directly to the country’s international competitiveness and the ow of foreign
investment. The industry is expected to see a revival as the impact of the
Covid-19 eases down and lockdown restrictions across the world are lifted.
• Rise in trade: Between FY16 and FY21, exports made by India has increased at
a CAGR of 2.09%.
• Hub and Spoke Model: Using the hub & spoke model benefits airlines and
optimizes network coverage. In order to make India a robust aviation hub, the
government is planning to take an initiative.
• Improved Connectivity: Currently the penetration of the aviation market in
India stands at 7%. This indicates that there is potential for India to be among
the global top nations in terms of domestic and international passenger traffic.
Government Initiatives
• Greater Focus on Infrastructure: The Indian government also plans to invest
US$ 1.83 billion in the development of airport infrastructure along with aviation
navigation services by 2026. Example Kannur International plans on the
expansion of Runway – 4000 m, expansion of Terminal Building – 2500 peak
hour capacity
• Encouragement to FDI: The government has allowed 100% FDI under the
the automatic rule for greenfield projects, whereas 74% FDI is allowed under the
automatic route for brownfield projects.Example: Cochin International airport
is the first greenfield airport in the country built with a public-private
partnership, Kannur International is the second greenfield airport in Kerala.
This new greenfield airport in South India is expected to handle 4.67 million
passengers, 39,638 aircraft movements and 60,758t of cargo by 2036.