Aircraft purchases spell boom for tier II, III airports

The expansion plans of domestic carriers and limited infrastructure at major airports could well be a blessing in disguise for tier II and III cities such as Coimbatore, Madurai, Guwahati, Jaipur and Chandigarh, as they could see enhanced aircraft movement in the coming years.

Airlines will also look at other options like operating late night domestic flights between tier II and III cities and metros. Further, they could look at launching night flights from tier II or III cities to international destinations such as Dubai and Sharjah.

Some airlines — such as Scoot, the low-cost, medium-haul arm of Singapore Airlines — are already targeting smaller cities.

Scoot recently started a tri-weekly service between Amritsar and Singapore and is set to launch services from Jaipur later this year.

A cross-section of industry that BusinessLine spoke with felt that more airlines will start looking at tier II and III cities as a number of carriers have placed large orders for new aircraft.

These will be difficult to park at the major airports for two reasons — dearth of infrastructure and the fact that these airports are reaching saturation point as far as slots are concerned. (A slot is a landing and take-off position for the aircraft).

At the recent Farnborough airshow in London, GoAir announced an order for 72 A320neo aircraft and AirAsia announced an order for 100 A321 aircraft. Air India plans to induct 14 A320neo from 2017 onwards, while Jet ordered 75 Boeing 737 MAX at the Dubai airshow in November 2015. IndiGo ordered 250 A320neo aircraft in August 2015.

Grim situation Senior officials in a number of airlines who spoke on condition of anonymity — as they are not authorised to speak to the media — said the situation at Mumbai airport is grim. “Airlines can forget parking at Mumbai. The airport not only requires a new runway (at present there’s just one runway) but the city is in need of another airport if the problem of parking aircraft there is to be solved,” said one official.

Private airlines declined to speak on record, but there is near unanimity that while the Delhi, Bengaluru, Kolkata and Chennai airports are in a position to provide parking space, the situation is only slightly better in Pune, Jammu and Srinagar.

Incidentally, the Centre for Asia Pacific Aviation, in a recent study on airport infrastructure, said that India is about to face a severe crisis as planned investments in upcoming and existing airports are only a fraction of the $40 billion investment that is required. According to the report, India’s airport capex pipeline of around $4.9 billion is completely inadequate to meet the kind of expansion required.

Inadequate capex Emerging markets such as China plan to invest $130 billion in airports over the next 10-15 years, while the UAE has airport capex plans of $46 billion, it said.

The report added that States that face particularly serious challenges include Tamil Nadu, Gujarat, Bihar, Madhya Pradesh and Uttar Pradesh.

Among the 30 largest non-metro airports operated by the Airports Authority of India, 40 per cent are already estimated to be operating over their design capacity, it further said.

The report also said Jammu, Pune, Kozhikode, Mangaluru and Tiruchi are among the airports that will reach saturation immediately, while Thiruvananthapuram and Madurai will face saturation later in FY17.