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AIRPORTS

APRIL 2017 (As of 21 April 2017) For updated information, please visit www.ibef.org 1
AIRPORTS

Executive Summary.3
Advantage India... 5
Market Overview & Trends........ 7
Porter Five Forces Analysis ...20
Strategies Adopted.. 22
Growth Drivers......... 24
Opportunities.....36
Success Stories.... 38
Useful Information.........................41

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AIRPORTS
EXECUTIVE SUMMARY (1/2)

CAGR: 17.14%
421 By 2020, passenger traffic at
Third largest aviation market by Indian airports is expected to
2020 increase to 421 million from
223.61
223.61 million in 2016

2016 2020

CAGR: 6.75% The travel & tourism industry is


Travel & tourism to contribute 280.51 forecast to grow at a CAGR of
USD280.51 billion to GDP by 6.75 per cent to USD280.51
2026 146.02
billion in 2026 from USD146.02
billion in 2016

2016E 2026F

Spending on business travel is


203.5
estimated to increase to
96.2 USD39.88 billion in 2026 from
Business & leisure travel to 39.88
boost growth 19.9 USD19.9 billion in 2016, while
on leisure travel is forecast to
2016E 2026F rise to USD203.5 billion in 2026
Leisure Travel Spending (in USD Billion) from USD96.20 billion in 2016
Business Travel Spending (in USD Billion)

APRIL 2017 Source: World Travel and Tourism Council, Airport Authority of India, TechSci Research 3
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AIRPORTS
EXECUTIVE SUMMARY (2/2)

CAGR: 0.33% Working population (aged


900
between 15 & 64 years) is
By 2030, Indias working
estimated to increase from 860
population to be thrice the total
860
million in 2016 to 900 million by
population in the US
2030, almost 3 times the US
population
2016 million 2030
Indias middle income population
CAGR: 10.8%
267 is expected to increase from 160
By 2016, Indias middle income million (over 50 per cent of the
class to be triple the total 160 total population in the US) in
population in Germany 2011 to 267 million by 2016
equivalent to over 3 times
Germanys population
2011 2016
million

Source: World Travel and Tourism Council, Asian Development Bank, TechSci Research

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AIRPORTS

ADVANTAGE INDIA
AIRPORTS
ADVANTAGE INDIA

Robust demand
FY2000
Growing
Rising working group & demand
widening middle
Opportunities in MRO FY2020E
class demography is expected to boost Growth in aviation accentuating
demand demand for MRO facilities
No of India plans to increase the number of No of
operational airports to 250 by 2030 to cater to growing Expenditure in MRO accounts for 13- operational
airports: 50 leisure & business travel 15 per cent of total revenues; it is the airports: 95
Freight traffic also likely to go up as trade second-highest expense after fuel cost
with the rest of the world increases
By 2020, the MRO industry is likely to
grow over USD1.5 billion from USD0.5
billion currently

Advantage
India Policy support
Increasing investments
Investments totaling USD12.1 billion in The government has been encouraging
the airport sector are likely to be made private sector participation
during the 12th Five Year Plan (2012-17);
of these, private investments are Foreign investment up to 49 per cent is
expected to total USD9.3 billion allowed under automatic route in
scheduled air transport service, regional
Growing private sector participation air transport service & domestic
through the Public - Private Partnership scheduled passenger airline.
(PPP) route

Source: Ministry of Civil Aviation, MRO India, TechSci Research


Notes: FDI Foreign Direct Investment, MRO Maintenance, Repair and Overhaul; FY Indian Financial Year (April March)

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AIRPORTS

MARKET OVERVIEW AND TRENDS


AIRPORTS
EVOLUTION OF THE INDIAN AVIATION SECTOR
India is the 9th largest civil aviation market in the world, In FY17, civil aviation sector witnessed a growth rate of around 20-
25 per cent
As of FY16, airports in India witnessed a domestic passenger traffic of about 168.89 million people.
Investments worth USD 6 billion are expected in the country's airport sector in 5 years
Indias civil aviation market is set to become the worlds 3rd1 largest by 2020 and expected to be the largest by 2030

Scheduled airlines: distance


flown (mn km) 199 1,071.10 (2016)

Non-scheduled airlines in
39 121 (FY16)
operation

Number of aircrafts 225 1,657 (FY16)

Cargo Handled 703,000 724,000 (FY16)

Number of airports 50 125 (FY16)

Source: Airports Authority of India, Ministry of Statistics and


Programme Implementation, Ministry of Civil Aviation, TechSci Research
Notes: 1 India ranks after the US and China
FY Indian Financial Year (April March), mn km Million Kilometers

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AIRPORTS
INDIA HAS 464 AIRPORTS AND AIRSTRIPS, OF WHICH 125 AIRPORTS ARE OWNED BY AAI

Non-operational Domestic airports


AAI managed (9) (66)
(125)

Airports and
airstrips in India Customs airports
Operational (90) (7)
(464)
Non-AAI airports
& airstrips (339)
Civil enclaves International (17)
(26)

Aircraft Movement 20.93% 79.07% Activity in AAI


airports - shares (%) Airports Authority of India (AAI) was
FY16 Established in 1994 under the Airports
Authority Act
Responsible for developing, financing,
Passenger Traffic 24.47% 75.53%
operating & maintaining all government
airports
Basic facts The Aircraft Act (1934) governs remaining
airports
Freight Traffic 61.32% 38.68%

Source: Airports Authority of India, TechSci Research


International Domestic Notes: AAI Airports Authority of India, JV Joint Venture,
FY Indian Financial Year (April March)

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AIRPORTS
SIX MAJOR AIRLINES OPERATE IN THE COUNTRY

94.00%

92.00%
Spicejet
Market share: 12.8%
Passenger Load Factor

Passenger load traffic: 93.5%


90.00%

88.00%
Air India
Market share: 15.3%
86.00% Passenger load traffic: 84.7%
Indigo
GoAir Market share: 38.6%
Market share: 8.3% Passenger load traffic: 87.2%
84.00%
Passenger load traffic: 88.6%
Jetlite
82.00% Market share: 3%
Passenger load traffic: 80.9% Jet Airways
Market share: 16%
Passenger load traffic: 82.6%
80.00%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Market Share

Note: Market Share as on May16 and Load Data for the month of May16
as published by Directorate General of Civil Aviation
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AIRPORTS
THE SIX MAJOR AIRPORTS IN THE COUNTRY

Delhi
Passenger traffic handled in
FY16: 48 million;
FY171: 52,5 million

Kolkata
Passenger traffic handled in
FY16: 12.4 million;
FY171: 14.35 million

Mumbai
Passenger traffic handled in;
FY16: 41.7 million;
FY171: 41.4 million

Hyderabad
Passenger traffic handled in
FY16: 12.4 million
Bengaluru FY171: 13.79 million
Passenger traffic handled in
FY16: 19 million;
FY171: 21.1 million
Chennai
Passenger traffic handled in
FY16: 15.2 million;
FY171: 16.7 million

Source: AAI, TechSci Research


Note: FY Indian Financial Year (April March)
1Data for April 2016 February 2017

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AIRPORTS
PASSENGER TRAFFIC HAS EXPERIENCED HEALTHY GROWTH (1/2)

Witnessing a growth of 17.62 per cent over the previous Passenger traffic in FY16 (million)
year, total passenger traffic stood at a 223.6 million in
FY16, which was recorded at 190.1 million in FY15 in 250 35.00%
India. 30.00%
200 25.00%
Growth in passenger traffic has been strong since the
new millennium, especially with rising incomes & low- 20.00%
150
cost aviation; during FY06-16, passenger traffic grew at a 15.00%
CAGR of 11.8 per cent in the country. 10.00%
100
5.00%

116.87

108.88

123.76

143.43

162.31

169.03
50 0.00%

73.35

96.49

159.4

190.1

223.6
-5.00%
0 -10.00%
FY06FY07FY08FY09FY10FY11FY12FY13FY14FY15FY16

Passenger Traffic Growth rate

Source: Association of Private Airport Operator, Airports Authority of India, TechSci Research,
Notes: CAGR Compound Annual Growth Rate,
FY Indian Financial Year (April March)

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AIRPORTS
PASSENGER TRAFFIC HAS EXPERIENCED HEALTHY GROWTH (2/2)
Domestic passenger traffic expanded at a CAGR of 11.46 per cent Growth in domestic passenger traffic has been robust
over FY0617 200 50.00%
According to Directorate General of Civil Aviation, domestic 180
40.00%
passenger traffic witnessed growth at a rate of 22 per cent, till

187.84
160

168.89
February 2017, in comparison 21.24 per cent in FY16. 140 30.00%

139.3
122.41
International passenger traffic registered growth at a CAGR of 120

121.51

116.97
20.00%

105.52
8.33 per cent over FY06-17. 100

89.39
10.00%

87.06
80

77.3
During February 2017, domestic airlines carried over 8.23 million

70.62
passengers, showing a growth of more than 23 per cent compared 60

22.37 50.98
0.00%
to the same period last year. 40

54.72

54.14
46.62

50.8
43.03
37.91
-10.00%

34.37

40.8
31.58
29.81
25.87
20
Growth in passenger traffic set to remain strong in future 0 -20.00%
1
12th Plan Period

60
International Domestic

11th Plan Period Growth-International Growth-Domestic

41
10th Plan Period
209 During FY17, domestic passenger traffic increased by
26
122 22 per cent in comparison with growth rate of 21.24
14 71 per cent in FY16.
26 During FY16, international passenger traffic increased
FY02 FY07 FY12 FY17E by 7.72 per cent
International Passenger Throughput International (million) Source: Airports Authority of India, Ministry of Civil Aviation, TechSci Research
Notes: YoY Year on Year, FY Indian Financial Year (April March)
Domestic Passenger Throughput Domestic (million) 1Data for April 2016 February 2017

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AIRPORTS
FREIGHT TRAFFIC GREW AT A CAGR OF 6.8 PER CENT DURING FY06 TO FY16 (1/2)

Total freight traffic registered a CAGR of 6.8 per cent over International freight traffic was 61.3 per cent of
FY06-16 the total in 2016

During FY06-16, domestic freight traffic increased at a 3000 30.00%


CAGR of 8 per cent, while international freight traffic grew at
a CAGR of 6.1 per cent during the same period. 25.00%
2500

1045.92
20.00%
In FY16, domestic freight traffic stood at 1045.92 million
2000

852

812
tonnes, while international freight traffic was at 1658.35

840
15.00%

784

986
689
million tonnes.
1500 10.00%

568

552
530
484
During FY16, domestic freight traffic increased at 6.08 per

1468
5.00%

1407
cent while international freight traffic increased at 7.55 per 1000

1658.35
1542
1496
cent in comparison with FY15. 0.00%

1271
1147
1023

1440
920
500

1149
-5.00%
By 2023, total freight traffic is expected to touch 4.14 million
tonnes exhibiting growth at a CAGR of 7.27 per cent 0 -10.00%
between FY2016 & FY23. In addition, international freight
traffic is expected to grow at a CAGR of 7.13 per cent while
domestic freight traffic is expected to grow at a CAGR 7.50
per cent between FY2016 and FY23. International('000 Tonnes) Domestic ('000 Tonnes)
Growth-International(%) Growth-Domestic(%)

Source: Airports Authority of India, TechSci Research

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AIRPORTS
AND IS POISED TO GROW FURTHER (2/2)
Freight traffic on airports in India is expected to cross 11.4 Freight traffic (million tonnes)
million tonnes by 2032.

2.68
2.7
2.53
2.35
Growth in import & export in India will be the key driver for

2.28

2.28
2.19
growth in freight traffic as 30 per cent of total trade is

1.96
undertaken via airways

1.72

1.7
1.55
1.4
Airports across the globe are planning on increasing their
spending on new technology to keep up with surging
passenger traffic, which is expected to double to 370
million by 2020. The anticipated double digit growth would
make India as the worlds 3rd largest aviation market by
2020.

Fliers would soon be able to use biometric details for


1
security checks at airports after good feedback from a pilot FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
project.

Source: Airports Authority of India, TechSci Research


Note: FY Indian Financial Year (April March)
1Data for April 2016 February 2017

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AIRPORTS
GROWTH IN AVIATION HAS ALSO LED TO HIGHER AIRCRAFT MOVEMENT (1/2)

Total aircraft movement (million)


25.00% 2
During FY07-17, growth in aircraft movement was 1.8
20.00%
recorded at a CAGR of 5.59 per cent 1.6
15.00% 1.4
In FY17, total aircraft movement increased at a 1.2
YoY of 3.91% per cent, as compared to FY16. 10.00%
1
5.00% 0.8
In FY17, total aircraft movement stood at 1.86
million 0.00% 0.6
0.4
-5.00%

1.08

1.31

1.31

1.33

1.39

1.54

1.48

1.54

1.79

1.86
0.2

1.6
-10.00% 0
1

Source: Association of Private Airport Operators,


Airports Authority of India, TechSci Research
Notes: CAGR Compound Annual Growth Rate
FY Indian Financial Year (April March)
YoY Year on Year
1Data for April 2016 February 2017

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AIRPORTS
GROWTH IN AVIATION HAS ALSO LED TO HIGHER AIRCRAFT MOVEMENT (2/2)

During FY07-17, domestic aircraft movement Aircraft movement growth


increased at a CAGR of 5.59 per cent, while
25.00% 2000
international aircraft movement expanded at 5.39
per cent CAGR over the same period. 1800
20.00%
1600
15.00% 1400

1502.41
1481.28
In FY17, domestic aircraft movement increased at
10.00% 1200
a YoY of 1.43 per cent, while international aircraft

1260
1201
1235
1000

1165
1094
movement declined at a YoY of 0.68 per cent, in

1049
1036
1059
5.00% 800
comparison to FY16.

862
0.00% 600
400

375.33

365.23
During FY17, the total number of domestic aircraft -5.00%

346
336
314
309
300
200

282
270
249
216
movement increased to 1.86 million, as compared
-10.00% 0
to FY16 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1

International ('000) Domestic ('000)


In FY16, the total number of international aircraft
Growth-International(%) Growth-Domestic(%)
movement increased to 0.365 million, in
comparison to FY16
Source: Association of Private Airport Operators, TechSci Research
Notes: YoY Year on Year; FY Indian Financial Year (April March)
CAGR Compound Annual Growth Rate
1Data for April 2016 February 2017

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AIRPORTS
AAI DOMINATES, BUT PRIVATE SECTOR PARTICIPATION IS RISING
Until 2013, AAI was the only major player involved in developing & upgrading airports in India

Post liberalisation, private sector participation in the sector has been increasing

Private sector investment is expected to increase to USD9.3 billion during the 12th Five Year Plan from USD5.5 billion in
the previous plan

Development of Hyderabad International Airport; modernisation


of Delhi International Airport

Modernisation of Mumbai International Airport

Development of Bengaluru International Airport


Major private
sector players
Development of Bengaluru International Airport

Development of Bengaluru International Airport

Development of Simoga and Gulbarga airports in Karnataka

Note: AAI Airports Authority of India

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AIRPORTS
NOTABLE TRENDS IN THE AIRPORTS SECTOR
Currently, 5 international airports have been completed successfully under PPP mode
Investment made by the private sector during the 12th Five Year Plan (201217) is
expected to increase by 69.1 per cent to USD9.3 billion over that during the 11th Five Year
Rising private Plan
participation & 4 existing airports & 2 greenfield projects will be offered on PPP basis which is expected
Investments to attract investments from private players
Delhi International Airport (P) Ltd, a GMR led consortium, signed a land license agreement
with Airbus for setting up Indias first full flight simulator at the Aerocity - Terminal District
of Indira Gandhi International (IGI) Airport.

Rising business activity leading to higher demand for non-scheduled airlines


Greater use of non-
scheduled airlines As on June 2016, there are 121 operators (NSOP)

Increasing use of development fees by airport developers & operators


User development fees Airport Development Fee: Delhi, Mumbai airports to fund expansion
User Development Fee: Hyderabad, Bengaluru airports for maintenance
Indian airports are emulating the SEZ-aerotropolis model to enhance revenues; focus on
revenues from retail, advertising, vehicle parking, etc.
Focus on non- With the initiative of displaying Art for a cause, Nagpur airport became Indias 1st airport
aeronautical revenue to take up the cause of empowering the girl child in a unique way.
Absence of complementary meals in low-cost airlines have boosted the food & beverages
retail segment at airports

Source: DGCA
Note: FY Indian Financial Year (April March)
NSOP Non Schedule Operators Permit
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AIRPORTS

PORTER FIVE FORCES ANALYSIS


AIRPORTS
PORTERS FIVE FORCES ANALYSIS

Competitive Rivalry1

Competition among major players is very high, especially in LCCs (Low cost
carrier) section because the airlines compete for the middle income group
customers and passengers of air-conditioning segment of railways. This group Threat of New
has low brand loyalty & is highly price sensitive Entrants
Competition might intensify further in LCC segment with Air Asia India being (Low)
granted DGCAs operator license

Threat of New Entrants1 Substitute Products1

Threat remains low because of the Threat remains low in this sector Bargaining Competitive
nature of the industry (Regulatory Substitute
also as no other means of Power of Rivalry Products
hurdles, Capital-intensive) transport is as swift & convenient Customers (High) (Low)
Air Asia India has been granted as airlines (Low)
DGCA approval (Price War) It saves time
Air Asia started services to
Bagdogra & Srinagar from Delhi.

Bargaining Power of Suppliers1 Bargaining Power of Customers1


Bargaining
Power of
Bargaining power of suppliers Bargaining power of customers
Suppliers
remain high as there are only few remains low as the demand for low
fuel & aircraft suppliers cost air travel is quite high (High)
Talent pool of pilots, engineers & The costs of switching airplanes &
other staff is also limited services offered hardly differ with
each other
Source: Central Asia-Pacific Aviation, TechSci Research
Note: 1 Notes w.r.t airlines

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AIRPORTS

STRATEGIES ADOPTED
AIRPORTS
STRATEGIES ADOPTED1
Expansion of CAPA; further, rise of LCCs was also supported by the exit of Kingfisher, which is on the verge of
insolvency
Capacity will also increase with new terminals coming up in Mumbai, Bengaluru, Chennai & Kolkata
Expansion Indian carriers to double their fleet capacity by 2020 to around 800 aircrafts
To fund 4 Boeing 787 aircrafts, Air India is planning to raise short term loans worth USD470 million in the period July &
October 2017.
Indian LCCS are looking forward to increase their ancillary services, without tampering their business models. This
includes services like lounge access, priority boarding, customer loyalty memberships & customer meals
The Airports Authority of India (AAI), has allowed the city & the BRTS buses to foray in the airport premises in Surat.
Ancillary This initiative will allow the passengers to reach airports on time, in accordance with their flight schedules & allow
services smoother transit.
Both Indigo & GoAir are eyeing a larger share of corporate market
On April 9, 2017, Indigo Airlines entered the record books by registering a record breaking 900 flights a day, most by
any Indian Airline.
Indian LCCs are looking forward to increase their low cost products on routes which will take up to 4 hours (shorter
international routes)
Increasing This will allow deleveraging of domestic fleet, increasing aircraft utilisation & improving commercial performance
Chennai, with its strategic location in South India has a strong potential to become a hub, with connecting flights to
operations
Gulf & across South East Asia
Indigo, one of the largest airlines in India, has announced Sharjah as its 6th international destination. From March
2017, the airline plans to operate its daily non-stop flights between Kozhikode and Sharjah.
NIAMAR (National Institute of Aviation Management & Research) has been developed to bridge the supply gap of
aviation personnel
4 new greenfield airport projects are coming up in the smaller towns of Andhra Pradesh & Telangana, as part of
India's overall aim to improve airport infrastructure & regional connectivity in the country.
Governments As on October 2016, government has launched regional connectivity scheme named UDAN (Ude Desh ka Aam
push Nagrik) to make flying affordable for common man
Under Regional Connectivity Scheme (RCS), the government plans to increase the total number of operational
airports in India from 75 to 118
For improving the regional air connectivity, the government received as many as 45 initial proposals from 11 bidders,
under the scheme UDAN. In this scheme, the government has proposed to cap the fares of 1 hour flights at US$37.18
The government has approved to revive 50 airports which are being under served or un-served in 2017-18. The
estimated project cost is USD669.34 million, which will enhance the connectivity of small cities/towns & boost
economic development
APRIL 2017 Source: Central Asia-Pacific Aviation, TechSci Research For updated information, please visit www.ibef.org 23
Note: 1 Notes w.r.t airlines, LCC Low Cost Carrier
AIRPORTS

GROWTH DRIVERS
AIRPORTS
STRONG DEMAND AND POLICY SUPPORT DRIVING INVESTMENTS

Increasing
Growing
Growing demand
demand Policy support
Strong investments
government
support
AAI driving large
Greater modernisation,
Expanding middle
government focus development
income group and
on infrastructure projects; expansion
working population
and upgradation of
existing airports;
Inviting Resulting in development of
Rising domestic low-cost airports
Increasing
and foreign
liberalisation, Open
tourists and Increasing private
Sky Policy
travellers sector
participation,
increasing
greenfield projects
Strong growth in Policy sops, FDI
external trade encouragement Strong projected
demand making
returns attractive

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AIRPORTS
PASSENGER TRAFFIC SPIKES UP AS DEMAND FOR AIR TRAVEL SOARS (1/2)
GDP growth and per capita income
Rising per capita income and growing working
population 7,000 12.00%
6,000 10.00%
Per capita income is expected to increase at a CAGR 5,000 8.00%
of 7.4 per cent during 2006-2016E. 4,000
6.00%
The population belonging to the working age group 3,000
4.00%

3,227

3,587

3,748

4,041

4,445

4,749

5,003

5,352

5,758

6,162

6,599
2,000
(1564 years), at 65.7 per cent of the total population 2.00%
1,000
currently, is expected to grow; this indicates the 0 0.00%
employee base and the frequency of business travel
are expected to increase

Gross domestic product based on purchasing power parity (PPP)


per capita GDP (in USD)
Real GDP Growth Rate (%)

Source: IMF, World Travel and Tourism Council, TechSci Research


Note: E - IMF estimates

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AIRPORTS
PASSENGER TRAFFIC SPIKES UP AS DEMAND FOR AIR TRAVEL SOARS (2/2)
Travel and tourism spending (USD billion)
Rising domestic and foreign tourists
CAGR: 15.74% CAGR: (7.30%)

Improving tourism infrastructure

181.65
180
Successful ad campaigns abroad
160
The share of travel & tourism in Indias GDP is likely to 140

96.01
90.16

96.2
depict YoY growth of over 15 per cent per cent in 120

77.87
2017E; and is expected to grow at a CAGR of 7.2 per 100

69.3

68.7
60.9
cent per annum between 2017E-2027 80

48.7
46.2
42.1
60

26.4

17.78
25.5
24.4

22.3
22.1

20.8

19.1

19.1
18.8

10.36
40
Growing travel & tourism spending 20
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E
India is one of the fastest growing economies
Business Travel and Tourism Spending (in USD Bn)
Overall, Leisure travel & tourism spending inclined at a
Leisure Travel & Tourism Spending (in USD Bn)
CAGR of 15.74 per cent between 2007-17E.
Emergence of business hubs like Mumbai (Finance), Source: World Travel and Tourism Council,
Make in India, Global Business Travel Association, TechSci Research
Bengaluru (IT), Chennai (IT), Delhi (Manufacturing, IT) Notes: IT Information Technology, E Estimated
is likely to boost business travel as well.
Leisure travel spending grew to USD181.65 billion in
2017E from USD96.20 billion in 2016.

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AIRPORTS
MORE PASSENGERS AND RISING TRADE AIDING HIGHER AIRCRAFT MOVEMENT

Growing trade benefits of freight movement Rising exports and imports (USD billion)

489.32

490.74
Over FY09-16, 600

447.52
450.2

380.60
369.77
Indias exports expanded at a CAGR of 5.08 500

314.41

309.56
305.96
303.69
per cent to USD262.03 billion in FY16.

288.37

300.4

262.03
400

249.82
Imports registered a CAGR of 3.28 per cent

185.29

178.75
which reached to USD380.60 billion in FY16 300

Growing trade augurs well for airports as they handle 200


about 30 per cent of Indias total trade (by value)
100

0
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
FDI in aviation and
Increasing airline Exports Imports
liberalised aviation
operators
policy
Source: Ministry of Commerce, TechSci Research
Notes: CAGR Compound Annual Growth Rate,
FY Indian Financial Year (April March)

Higher aircraft
movement

Growth in passenger
Rise in freight traffic
traffic

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AIRPORTS
POLICY SUPPORT AIDING GROWTH IN THE AIRPORTS SECTOR (1/2)
GOI envisions airport infrastructure investment of USD11.4 billion under the 12th Five Year
Plan (2012-17)
Greater focus on
infrastructure The Indian government is planning to invest USD1.83 billion for development of airport
infrastructure along with aviation navigation services by 2026.

With the opening of the airport sector to private participation, 6 airports across major cities
are being developed under the PPP model
Currently, 60 per cent of airport traffic is handled under the PPP model, while the
Liberalisation, Open remaining 40 per cent is managed by the AAI
Sky Policy
Increased traffic rights under bilateral agreements with foreign countries
India has signed its 1st open skies agreement with Greece

The GOI has allowed 100 per cent FDI under automatic route for greenfield projects,
whereas, 74 per cent FDI is allowed under automatic route for brownfield projects.
100 per cent FDI is allowed under automatic route in scheduled air transport service,
Encouragement to FDI regional air transport service & domestic scheduled passenger airline, however, FDI over
49 per cent would require government approval.
Approval of 49 per cent FDI in aviation for foreign carriers.

Notes: India currently has bilateral air service agreements with 104 countries. These include Brazil, 27 members of the EU, and
China. In 2008 traffic rights were been enhanced with Mexico, Saudi Arabia, Netherlands, Qatar, Iran, Japan and Turkey,
FDI Foreign Direct Investment, GOI Government of India

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AIRPORTS
POLICY SUPPORT AIDING GROWTH IN THE AIRPORTS SECTOR (2/2)

100 per cent tax exemption for airport projects for a period of 10 years
Taxes and duties
Indian aircraft Manufacture, Repair & Overhaul (MRO) service providers are exempted
completely from customs & countervailing duties

In the Union Budget for FY17, Government of India, for the purpose of equity infusion has
earmarked USD255.86 million for Air India Limited.
Also, a budget of about USD14.98 million has been allocated to Airports Authority of India,
Budgetary support of which USD4.29 million has been attributed towards Pakyong, Sikkim project.
The government has planned to allocate a sum of USD11.80 million to Directorate
General of Civil Aviation to implement various schemes.
The government has also supported the Bureau of Civil Aviation Security with USD9.71
million to meet their expenditure.

Source: Ministry of Civil Aviation


Notes: AAI Airports Authority of India,
DGCA Directorate General of Civil Aviation,
FY Indian Financial Year (April March)

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AIRPORTS
AAI LEADS THE WAY IN AIRPORTS INFRASTRUCTURE INVESTMENT

The AAI aims to bring around 250 airports under operation across the country by 2020
Metro airports
The AAI has developed & upgraded over 23 metro airports in the last 5 years

The Airports Authority of India (AAI) is planning to spend USD1.3 billion on non-metro
projects over the 5 years (201317); it is mainly focusing on the modernisation & up
gradation of airports; New airports at Itanagar, Kohima & Gangtok are also planned

The Government of Andhra Pradesh plans to develop greenfield airports in 6 cities


(Nizamabad, Nellore, Kurnool, Ramagundam, Tadepalligudem & Kothagudem) under the
Non-metro airports PPP model

Upfront subsidy has been proposed through which non-metro airports would be funded by
imposing 2 per cent levy on both domestic & international airfares

About 22 airports to get connected under regional connectivity scheme of Airports


Authority of India (AAI)

Over 30 airport development projects are under progress across various regions in
Northeast India

AAI plans to develop over 20 airports in tier II & III cities in next 5 years
Northeast India
The AAI plans to develop Guwahati as an inter-regional hub & Agartala, Imphal &
Dibrugarh as intra-regional hubs

Source: TechSci Research


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AIRPORTS
PRIVATE SECTOR INVESTMENT IN AIRPORTS RISING (1/2)
Recourse to the Public Private Partnership (PPP) model has boosted private sector investments in airports
PPP route for 5 international airports (Delhi, Mumbai, Cochin, Hyderabad, Bengaluru) most noteworthy
In Union budget 2017, Government of India has decided to develop select airports in tier 2 cities under PPP model in order
to attract investments from private players.

Increasing share of private sector in equity component of major airports


74 per cent private share holding in IGI Airport (Delhi) - owned majorly by GMR (54 per cent), Fraport AG
(10 per cent), Eraman Malaysia (10 per cent); rest of the shares owned by Airports Authority of India
74 per cent private shareholding in CSI Airport (Mumbai) - owned majorly by GVK (50.5 per cent), Bid
Services Division (Mauritius) Ltd. (13.5 per cent), ACSA Global (10 per cent); rest of the shares owned
by Airports Authority of India
74 per cent private shareholding in RGI Airport (Hyderabad) - owned majorly by GMR (63 per cent),
Malaysia Airports Holdings Berhad (11 per cent); rest of the shares owned by Government of India (13
per cent) & Government of Andhra Pradesh (13 per cent)
74 per cent shareholding in Kempagowda International Airport (Bengaluru) owned majorly by Siemens
Project Ventures, Germany (40 per cent), Unique (Flughafen Zurich AG) Zurich Airport, Switzerland (17
per cent), Larsen & Tourbo, India (17 per cent); rest of the shares owned by Airports Authority of India
(13 per cent) and KSIIDC, which is an agency owned by the state of Karnataka, India (13 per cent)
In March 2017, by selling off 2 offshore bonds, GMR plans to raise US$250-300 million for refinancing
their debt.

Source: TechSci Research


Note: KSIIDC Karnataka State Industrial and Infrastructure Development Corporation Ltd.
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AIRPORTS
PRIVATE SECTOR INVESTMENT IN AIRPORTS RISING (2/2)

Bijapur Airport
Delhi PPP format likely to
(Modernisation, Terminal 3 continue
Terminal 3) construction in Shimoga Airport
Delhi completed in
Mumbai 2010 15 greenfield
(Modernisation) projects with Hassan Airport
Participation in private sector
international participation has
airport projects been approved
Terminal 3 - Total in May 2015 Gulbarga Airport
Hyderabad
cost
USD2.7 billion Mopa Airport, Navi
(including Terminal 3 Mumbai Airport, Shirdi
Bengaluru In May 2016,
and 1- D) and Sindhudurg
USD2.23 billion of Airports, Kannur and
investments were Aranmula Airports,
approved byAirports Durgapur Airport,
Authority of India Dabra Airport,
(AAI) for upgrading Pakyong Airport,
Indian airports, over Karaikal Airport and
a period of four Kushinagar Airport
years

Source: TechSci Research


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AIRPORTS
SUCCESSFUL PPP AIRPORTS IN INDIA

Presently India has 5 PPP airports each at Mumbai, Delhi, Cochin, Hyderabad & Bengaluru, which together handle over 55
per cent of countrys air traffic.
Government of India has approved 15 greenfield PPP projects which are expected to increase the air traffic in India. These
projects would be setup in Goa, Navi Mumbai, Maharashtra, Bijapur, Gulbarga, Karnataka, Kerala, West Bengal, Madhya
Pradesh, Sikkim, Puducherry & Uttar Pradesh.

Type of project/
Name of airport Operator Revenue sharing
PPP structure
Chhatrapati Shivaji Mumbai International Airport Ltd 38.7 per cent of gross revenue to be
Brownfield/BOOT
International Airport (MIAL) shared with AAI

Indira Gandhi Delhi International Airport Ltd 45.9 per cent of gross revenue to be
Brownfield/BOOT
International Airport (DIAL) shared with AAI

Rajiv Gandhi GMR Hyderabad International Concession fees - 4 per cent of


Greenfield/BOOT
International Airport Airport Ltd (GHIAL) gross revenue to be shared with AAI

Bengaluru Bengaluru International Airport Concession fees 4 per cent of


Greenfield/BOOT
International Airport Ltd (BIAL) gross revenue to be shared with AAI
Payment of dividend to the
Cochin Cochin International Airport Ltd Greenfield/BOO Government towards their 26 per
International Airport (CIAL) cent of equity capital

Source: Association of Private Airport Operators, TechSci Research


Notes: BOOT - Build Own Operate Transfer; BOO - Build Own Operate

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AIRPORTS
FOREIGN PLAYERS ARE SHOWING INCREASING INTEREST IN THE SECTOR

Major foreign players Airport Stake (%) Description

Airports Company South Mumbai International


10 Operates & owns 9 airports in South Africa
Africa Global Airport Pvt Ltd

Delhi International Airport


10 Operates and manages 5 international gateways,
Pvt Ltd
Malaysia Airports Holdings 16 domestic airports, to 18 short take-off &
Berhad landing ports (Short Take-off & Landing ports)
Hyderabad International
11 that serves the rural & remote areas in Malaysia
Airport Pvt Ltd

Global airport operator that offers airport


Frankfurt Airport Services Delhi International Airport management services including terminal & traffic
10
Worldwide Pvt Ltd management, baggage & cargo handling &
aviation ground handling

AirAsia is a Malaysian low-cost carrier. It has


formed a joint venture AirAsia (India) Pvt Ltd with
Joint venture with Tata Tata Sons (30 per cent stake) & Arun Bhatia via
AirAsia 49
sons and Arun Bhatia Telestra Tradeplace (21per cent stake) in March
2013. Tata Sons planning to raise its stake to
41.06 per cent as on August 14, 2015

Source: TechSci Research

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AIRPORTS

OPPORTUNITIES
AIRPORTS
OPPORTUNITIES

Policy support and demand Huge potential to develop Leverage on non-


growth unlocking large India as an MRO hub aeronautical revenues,
investment potential improved technology

The Indian Aviation sector likely to The Indian Aviation Industry aims to Airport developers can now
see investments totalling USD12.1 boost MRO business in India, which draw on wider revenue
billion during the 12th Five Year is worth US500 million as of FY2016 opportunities such as retail,
Plan and is estimated to grow over US1.5 advertising & vehicle parking
billion by 2020
Of the total investment, USD9.3 Future operators will benefit
billion is expected to come from the Indian airline companies spend over from greater operational
private sector 1315 per cent of their revenues on efficiency due to satellite
maintenance, which is the 2nd based navigation systems like
Success of PPP formats will raise highest cost component after fuel Project Gagan which is in
investment in existing & greenfield development phase
airports Inauguration of MRO facility at
Hyderabad in May 29, 2015 by Air
Private sector participation in 6 India Engineering Services Limited
existing airports operated by AAI is (AIESL) which is a 100 per cent
likely to increase investment owned subsidiary of Air India
opportunities for airport sector

Notes: Project Gagan is directed towards transitioning from a ground-based navigation system to a satellite-based one. AAI and ISRO are
jointly working on this. A Space Based Augmentation System (SABS) will be operational by 2013,
MRO Maintenance, Repair and Overhaul

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AIRPORTS

SUCCESS STORIES
AIRPORTS
IGI AIRPORT, DELHI - A COMPELLING SUCCESS STORY
Awarded at the Skytrax World Airport Awards 2015 for the Best Airport in Central Asia region & for the Best Airport Staff.
Also, they were felicitated with the prestigious Golden Peacock National Quality Award 2015 for their continuous efforts in
building a culture across IGI Airport
IGI airport ranked 1st at the ACI Annual Service Quality Awards in 2016, across the globe (category: handling 25-40 million
passengers), up from 2nd position in 2012.
Delhi International Airport Ltd became the 1st in the world to receive the ISO 22301:2012 certification for its robust business
continuity management system
Delhi International Airport Ltd is also Indias 1st airport to cross 5 crore passenger mark, in 2016.

Phase I Final
Facts and features
Passenger Traffic: 48.4 mn (FY16) Passenger handling 100 million (by 2020)
34 million
capacity per annum (60 million as on October
Aircraft movement: 0.34 mn (FY16) 2013)
Cargo: 0.79 mn tonnes (FY16) Area (acres) 1,907
5,106
Terminal 3
Retail space: 0.2 mn sq feet
Operational status Completed on Mar-2010
Ongoing 20-year project
Apron area: 6.7 mn sq feet
Multi level car park: 4,300 cars/day Phase 1 of modernisation of IGI International Airport (at a cost of INR86 billion) involved
(mn: million; sq: square) renovation of terminals 1A, 1B, 1C & Terminal 2. It also included construction of a new
domestic terminal along with an integrated passenger terminal (Terminal 3)
Source: Delhi International Airport Ltd, Association of Private Airport Operators,
Airports Authority of India, TechSci Research;
Note: ACI Airports Council International , mn - Million
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AIRPORTS
CSI INTERNATIONAL AIRPORT, MUMBAI - HARNESSING THE POWER OF PPP

During the World Travel Awards, 2015, CSI International Airport, Mumbais GVK Lounge at Terminal 2 has been felicitated
with Asias Leading Airport Lounge Award. Also, the Architizer A+ Award for the Best Architectural Structures in the
World was bagged by CSI International Airport in the Transportation-Airports category, 2015
Plans to increase the handling capacity at the airport from 36 to 48 flights/hr & to increase the passenger capacity to 40
million annually

Facts and features Modernisation of the Mumbai International Airport will


entail investments worth USD1.3 billion over a period of
In FY16, CSI handled
20 years
Passenger traffic: 41.67 million Government of India to provide USD1.1 billion
Parts of the project completed till now:
Cargo movement: 0.7 million tonnes
Phase I (2008): New airport lounges, retail outlets,
duty-free shops, temporary cargo facilities &
Passenger handling multilevel car parks
40 million
capacity per annum
Phase II (2010): Involved construction of a new
terminal at Sahar, a parallel runway & new cargo
facilities
Cargo handling capacity
per annum 1.5 million tonnes
Source: Airports Authority of India, Mumbai International Airport Ltd, TechSci Research
Note: ACI Airports Council International

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AIRPORTS

USEFUL INFORMATION
AIRPORTS
INDUSTRY ASSOCIATIONS

Airports Authority of India (AAI)


Rajiv Gandhi Bhawan, Safdarjung Airport,
New Delhi 110 003
Phone: 91 11 24632950

Directorate General of Civil Aviation (DGCA)


Aurbindo Marg, Opp. Safdarjung Airport,
New Delhi 110 003
Phone: 91 11 24622495
Fax: 91 11 24629221
E-mail: dri@dgca.nic.in, dfa@dgca.nic.in

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AIRPORTS
GLOSSARY
AAI: Airports Authority of India

ACI: Airport Council International

CAGR: Compound Annual Growth Rate

FDI: Foreign Direct Investment

FY: Indian Financial Year (April to March)

So FY10 implies April 2009 to March 2010

GOI: Government of India

INR: Indian Rupee

MRO: Maintenance, Repair and Overhaul

PPP: It could denote two things (mentioned in the presentation accordingly)

Purchasing Power Parity (used in calculating per-capita GDP slide 12, GROWTH DRIVERS)

Public Private Partnership (a type of joint venture between the public and private sectors)prop

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AIRPORTS
EXCHANGE RATES

Exchange rates (Fiscal Year) Exchange rates (Calendar Year)

Year INR equivalent of one USD Year INR equivalent of one USD
200405 44.81 2005 43.98
200506 44.14
2006 45.18
200607 45.14
2007 41.34
200708 40.27
2008 43.62
200809 46.14

200910 47.42 2009 48.42

201011 45.62 2010 45.72


201112 46.88
2011 46.85
201213 54.31
2012 53.46
201314 60.28
2013 58.44
2014-15 61.06 2014 61.03

2015-16 65.46 2015 64.15

2016-17 (E) 67.23 2016 (Expected) 67.22


Source: Reserve bank of India,
Average for the year
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AIRPORTS
DISCLAIMER

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