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AIRPORTS AUTHORITY OF INDIA

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CORPORATE PLAN
2017-26

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MISSION
“To be the foundation of an enduring Indian aviation network, providing
high quality, safe and customer-oriented airport and air navigation services,
thereby acting as a catalyst for economic growth in the areas we serve”.

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VISION
AAI's Vision till 2026 is:
“To be the principal aviation services provider in the country, AAI shall
adopt and facilitate the use of contemporary air navigation services;
upgrade and develop airport infrastructure;
support improving air connectivity at unserved and under-served airports;
have a restructured organization;
focus on profitable operations at major airports through continuing
efforts on cost reduction and enhancing non-aeronautical revenue.”
Contents
Foreword by Chairman, AAI 12
Preface by Member Planning, AAI 14

1. Introduction 17
1.1. Background 17
1.2. Corporate Plan 2017-26: The Context 17
1.3. Objective and Approach 18
1.4. This Document 19
2. Internal Assessment 21
2.1. AAI’s Mandate and Services Provided 21
2.2. Resource Assessment 26
2.3. AAI’s Performance 31
2.4. Summary of Internal Assessment 39
3. External Assessment 41
3.1 PEST Framework 41
3.2. Summary of External Assessment 53
4. Market Assessment 55
4.1. Existing Market Constituents 56
4.2. Allied Services 68
4.3. Understanding and Managing Customer Expectations 77
5. SWOT Analysis 81
5.1. Key Strengths 81
5.2. Key Weaknesses 83
5.3. Major Opportunities 84
5.4. Major Threats 85
5.5. Summarizing the SWOT 86
6. Setting the Vision and Mission 89
6.1. Setting the Mission Statement 89
6.2. Setting the Vision Statement 90
7. Corporate Agenda: Priorities, Action Areas and Strategies 95
7.1. Introduction 95
7.2. Framework 95
7.3. Priorities for AAI 96
7.4. Action Areas for the Plan Period 99
7.5. Strategies 100
8. Corporate Plan Monitoring and Review 119
8.1. Corporate Plan Monitoring and Review 119
8.2. Summary 123

4 AAI Corporate Plan 2017-26


List of Exhibits
Exhibit 1: Overarching framework for preparation of Corporate Plan for AAI 19
Exhibit 2: Framework for conducting internal assessment 21
Exhibit 3: AAI's Mandate and Services being offered 22
Exhibit 4: AAI initiatives to modernize air traffic services in India 25
Exhibit 5: City-side developments to be undertaken by AAI (under DPR stage) 27
Exhibit 6: Airports under AAI: operational vs. non-operational 27
Exhibit 7: Average terminal capacity utilization for AAI and other airports 28
Exhibit 8: Organizational pyramid, AAI 29
Exhibit 9: Organizational structure for AAI 30
Exhibit 10: Revenue sources for AAI 32
Exhibit 11: Revenue mix for AAI (2008-16) 33
Exhibit 12: Composition of expenses (2008-16) 33
Exhibit 13: Expected funding sources for proposed capital expenditure over 2016-20 34
Exhibit 14: Contribution to PBT by profitable airports under AAI in 2015-16 35
Exhibit 15: Growth trend of passenger traffic in India 36
Exhibit 16: Airports operating beyond capacity 37
Exhibit 17: PEST framework for external assessment 41
Exhibit 18: Implications of the NCAP, 2016, for AAI 43
Exhibit 19: Unutilized / Under-utilized AAI airports 44
Exhibit 20: Growth in domestic air passenger traffic and India’s economy 47
Exhibit 21: Projected growth in key drivers of air passenger growth 49
Exhibit 22: Framework for internal assessment 55
Exhibit 23: Approach to market analysis 56
Exhibit 24: Growth of passenger traffic in India 57
Exhibit 25: Growth of domestic and international traffic 58
Exhibit 26: Correlation between growth of domestic traffic and GDP 59
Exhibit 27: Passenger growth forecast 60
Exhibit 28: Additional capacity and investment requirement 61
Exhibit 29: Evolution of airport ownership in India 62
Exhibit 30: Traffic distribution between AAI and PPP airports 63
Exhibit 31: International and Domestic cargo growth 64
Exhibit 32: International and Domestic cargo growth 65
Exhibit 33: Sector wise growth in air cargo 66
Exhibit 34: NTDPC forecast for cargo infrastructure growth 67
Exhibit 35: Potential disciplines for international consulting for AAI 69

AAI Corporate Plan 2017-26 5


Exhibit 36: Assessment for international consulting business 71
Exhibit 37: Airports with MRO facilities 72
Exhibit 38: Evolution of Ground Handling policy in India 74
Exhibit 39: Porter's assessment for ground handling business 75
Exhibit 40: Assessment for in-flight catering business 77
Exhibit 41: Land available at select airports 82
Exhibit 42: Comparison of non-aeronautical revenues of AAI with a comparable private
airport 83
Exhibit 43: Summary of SWOT analysis for AAI 87
Exhibit 44: Framework of review mechanism 89
Exhibit 45: Framework for preparation identifying vision statements 91
Exhibit 46: Key inputs for vision 92
Exhibit 47: Framework for setting priorities 95
Exhibit 48: Action Plans for the plan period 99
Exhibit 49: Phases for implementation of ATFM 100
Exhibit 50: Approach for infrastructure planning 101
Exhibit 51: Focus on airport marketing 102
Exhibit 52: Usage of social media by airports 103
Exhibit 53: Potential Social Media Platforms for AAI 104
Exhibit 54: Strategy on new greenfield airports 105
Exhibit 55: Development Models for Fuel Farms 107
Exhibit 56: Approach to provide value added services 108
Exhibit 57: Options to improve energy efficiency 109
Exhibit 58: Strategies to develop green airports 110
Exhibit 59: Strategies/Plan for SMS implementation level 3-4 111
Exhibit 60: Strategies to increase non-aeronautical revenue from terminals 112
Exhibit 61: Strategy for city-side development 113
Exhibit 62: Potential development options to be assessed 114
Exhibit 63: Possible development models 114
Exhibit 64: Three step approach to MRO business 115
Exhibit 65: Examples of MRO business (Representative list) 116
Exhibit 66: Modes of entering international consulting business 116
Exhibit 67: Strategy for brand building 117
Exhibit 68: Corporate Planning Monitoring and Review framework 120
Exhibit 69: Key steps to be undertaken in the annual monitoring and review exercise 121
Exhibit 70: Steps for revising strategies by AAI 123

6 AAI Corporate Plan 2017-26


List of Annexures
Annexure 1: List of expansion works planned by AAI 125
Annexure 2: Cargo handling capacity and volume handled by AAI airports 130
Annexure 3: Airports selected for City side development 131
Annexure 4: Stakeholder consultation 132
Annexure 5: Questionnaires used for feedback on Mission and Vision statements 133
Annexure 6: Vision statements of international airports 134
Annexure 7: Action plans provided by select Directorates of AAI 135
Annexure 8: Potential coverage of MIS for AAI 145
Annexure 9: City side development by international airports 146

AAI Corporate Plan 2017-26 7


List of Abbreviations
Abbreviations Expansions
AAI Airports Authority of India
AAICLAS AAI Cargo Logistics and Allied Services Company Ltd
ACI Airports Council International
ACLPB Air Cargo Logistics Promotion Board
ACS Air Cargo Community System
ADS Automatic Dependent Surveillance
ADS-B Automatic Dependence Surveillance – Broadcast
AEO Authorized Economic Operator
AERA Airports Economic Regulatory Authority of India
AIATSL Air India Air Transport Services Limited
AIESL Air India Engineering Services Limited
AIMS Airport Information Management System
AISATS Air India SATS Airport Services Private Limited
ANSP Air Navigation Service Provider
ANS Air Navigation Services
AOCC Airport Operation Control Centre
AODB Airport Operational Data Base (AODB)
ASBU Aviation System Block Upgrades
ASEAN Association of Southeast Asian Nations
ASMGCS Advanced Surface Movement Ground Control Systems
ASQ Airport Service Quality
ATC Air Traffic Control
ATF Aviation Turbine Fuel
ATFM Air Traffic Flow Management System
ATFMSG Air Traffic Flow Management Steering Group
ATM Air Traffic Management
ATS Air Traffic Services
AVSEC Aviation Security
BCAS Bureau of Civil Aviation Security
BIAL Bangalore International Airport Limited
BSF Border Security Forces
CAG Changi Airport Group
CAGR Compound Annual Growth Rate
CAPA Centre for Asia Pacific Aviation  

8 AAI Corporate Plan 2017-26


C-ATFM Centralized Air Traffic Flow Management
CATC Civil Aviation Training College
CBP Customs and Border Protection
CE Civil Enclave
CHQ Central Headquarters
CNS Communications, Navigation and Surveillance
CP & MS Corporate Planning & Management Services
CPC Centre for Perishable Cargo
CSI Customer Satisfaction Index
CUDCT Common User Domestic Air Cargo Terminals
DAEP Dubai Aviation Engineering Projects
DGCA Directorate General of Civil Aviation of India
DIAL Delhi International Airport Limited
DPR Detailed Project Report
DRDO Defence Research and Development Organisation
DVOR Doppler VHF Omni Directional Range
ECIL Electronics Corporation of India Limited
E&M Electrical & Mechanical
EPoS Electronic Point of Sale
F&B Food and Beverage
FIDS Flight Information Display System
FIU Flight Inspection Unit
FTC Fire Training College
FSC Full Service Carrier
GoI Government of India
GAGAN GPS Aided GEO Augmented Navigation
GBAS Ground-Based Augmentation System
GDP Gross Domestic Product
GH Ground Handling
GHA Ground Handling Agencies
GHIAL GMR Hyderabad International Airport Limited
GRIHA Green Rating for Integrated Habitat Assessment
G2G Government – to – Government
HOD Heads of Department
HR Human Resources
IAA Indian Aviation Academy
IAAI International Airports Authority of India
IAF Indian Airforce

AAI Corporate Plan 2017-26 9


IATA International Air Transport Association
IBEF India Brand Equity Foundation
ICAO International Civil Aviation Organization
IFS Instant Feedback System
ILS Instrument Landing System
IMF International Monetary Fund
INR Indian Rupee
INSPIRE Indian Ocean Strategic Partnership to Reduce Emissions
IP Internet Protocol
ISMS Information Security Management System
ISRO Indian Space Research Organisation
I.T Information Technology
JV Joint Venture
JVC Joint Venture Company
KPI Key performance Indicators
LCC Low Cost Carrier
LED Light Emitting Diode
MAG Minimum Annual Guarantee
MGAE MAS GMR Aerospace Engineering Company Limited
MGAT MAS - GMR Aero Technic Ltd
MIAL Mumbai International Airport Limited
MIS Management Information System
MMT Million Metric Tonne
MoCA Ministry of Civil Aviation
MoEF Ministry of Environment and Forests
MoU Memorandum of Understanding
MPPA Million Passengers Per Annum
MRO Maintenance and Repair Organizations
MT Metric Tonnes
NAA National Airports Authority
NCAP National Civil Aviation Policy
NOCAS No Objection Certificate Application System
NTDPC National Transport Development Policy Committee
OECD Organisation for Economic Co-operation and Development
O&M Operations and Management
PBN Performance Based Navigation
PBT Profit Before Tax
PEST Political, Economic, Social and Technological

10 AAI Corporate Plan 2017-26


PPP Public Private Partnerships
PMC Project management consultancy
RBI Reserve Bank of India
RCS Regional Connectivity Scheme
R&D Research and Development
RFID Radio Frequency Identification
RNFC Route Navigation Facilities Charges
SAARC South Asian Association for Regional Cooperation
SATCOM Satellite Communications
SARP Standards, Recommended Practices and Procedures
SBAS Satellite based Augmentation System
SCA Scheduled Commuter Airlines
SEZ Special Economic Zone
SID Standard Instrument Departures
SMS Safety Management System
SOW Statement of Work
SPV Special Purpose Vehicle
SRM Safety Risk Management
SSP State Safety Programme
STAR Standard Terminal Arrival Routes
SWOT Strength, Weakness, Opportunity, Threat
TMI Traffic Management Initiatives
TNLC Terminal Navigational Landing Charges
UAE United Arab Emirates
UN United Nations
USD US Dollar
VFR Visual Flight Rules
VHF Very High Frequency

AAI Corporate Plan 2017-26 11


Foreword by Chairman, AAI
I’m pleased to provide some introductory
thoughts to this document, which arrives at
an important turning point in history of Indian
Aviation, especially at a time when Government
of India has released the new National Civil
Aviation Policy 2016 (NCAP), as also, when
India is going through a phase of high economic
growth and is poised to be the 3rd largest
aviation market in the world in near future.

In today’s world, airports are operating in a


competitive environment and it has become
critical to adjust its business strategies in paramount importance to an organization as it
the ever-evolving aviation scenario to ensure dictates the shared philosophy, practices and
sustainable growth in the future. Airports culture of an organization and its employees. An
Authority of India (AAI) is very conscious organization without a system of a Corporate
of its responsibilities and is making sincere Plan is often regarded as a body without a
endeavour to sustain and propel the growth soul or conscience. Deciding which type of
story in the aviation sector, which is experiencing Corporate Plan is the best for any organisation
drastic changes since the recent past. While can be a challenging task.
AAI’s traditional businesses are growing at
a healthy rate, there is potential for AAI to Since its inception in 1995, AAI has been
foray into new businesses and new markets already participating in globally accepted
which complement the existing businesses. benchmarking programmes to assess our
International aviation business fosters rapid own standing and understand the areas for
growth to meet huge demands of relatively improvement in future. It is in this context that
higher standards. As such, organisations are AAI has undertaken the preparation of this
pushed to expand and invest in the best tools Corporate Plan document to communicate
and technologies to keep up, and Corporate with its stakeholders. This Corporate Plan,
Planning is one such tool. Corporate Plan is of developed for the period 2017 to 2026 is in

12 AAI Corporate Plan 2017-26


harmony with the NCAP and presents the Vision the strategic planning process. Throughout the
and Mission statements that AAI envisages next few months, we will engage to specify the
for itself along with the targets and strategies detail of the project work that will deliver our
to meet them during the next 10 years. The vision and feed into an operating plan. We will
Corporate Plan of AAI is a strategic plan, which ensure that we have appropriate supporting
places greater emphasis on using internal strategies for each of our priorities. We will
resources and streamlining operations to review our plan on an annual basis to ensure
achieve expected goals. It has been structured that we respond appropriately to external and
by first introducing a grand overall vision of internal drivers. Our performance is on an
growth and development, then laying out a plan upward trajectory and we have invested in both
of action on a microscopic level to meet its end current and future research leaders to continue
goal. It consists of a vision statement, mission improvement. We want to position ourselves as
statement, strength, weakness, opportunity, one of the leading global air service provider in
threat (SWOT) analysis, market assessment, a fiercely competitive environment.
identifying available resources and then listing
objectives and strategies to be used to meet While concentrating on development, AAI
those objectives is committed to ensure safety, security and
sustainability. Several measures have been
Our Corporate Plan is ambitious. It defines adopted and strategies deployed which have a
how we will be successful within a challenging greater probability of success as the same is
and changing aviation environment. The plan based on a better understanding of the direction
has been devised to enrich the experience of the economy will take. This Corporate Plan
our stakeholders, and has been developed brings together in one document the key work
with their involvement and support through an which Airports Authority will be doing in the next
extensive consultation programme that has 10 years in meeting stakeholders’ expectations
also engaged with our internal and external and making air travel a delight for passengers.
stakeholders, as also, influencers. AAI has
exciting aspirations as it moves into a new era I would like to thank all my fellow Board
of development. This plan, which will guide our Members and colleagues, as also, Deloitte
work over the next few years, captures five key Touche Tohmatsu India LLP for their persistent
priorities – NCAP, RCS, AAICLAS, UAH & MRO efforts in finalizing the Corporate Plan document.
that will enhance our reputation and position
on a global platform. Our culture of support
and collaboration will benefit the communities
in which we operate and address global Dr. Guruprasad Mohapatra, IAS
challenges. This document is only the start of Chairman, AAI

AAI Corporate Plan 2017-26 13


Preface by Member
Planning, AAI
For an organisation to be
competitive, it needs to
achieve goals;
To achieve its goals, we need
strategic plans

The corporate plan of Airports Authority of India


(AAI) for the period from 2017 to 2026 has taken
its shape at the right time, when our prestigious As a responsible industry stakeholder,
organisation is blossoming, with the scope to AAI is engaging & collaborating with policy
excel in its current scheme of functioning. The makers to implement the various policies of
coherent latitude is seconded earnestly by the Government efficiently, with an objective
tremendous growth in Civil Aviation Sector in to boost India's civil aviation sector. In this
India, with the combination of ever increasing current transformational phase, clearly defined
traffic demand, mainstay support from the strategic action plans, optimal utilisation of
Government of India and concentrated efforts internal resources, streamlined operations and
of the stakeholders. At the national level, performance evaluation parameters are the
aviation business has been a major driver of definite ways to achieve the envisaged goals
growth and development in the last 10 years. over short, medium & long term.
Civil aviation industry has ushered into an era
of expansion and connectivity driven by factors I am happy to present the "Corporate Plan"
such as Low Cost Careers, modern airports, of AAI on behalf of our Corporate planning &
Foreign Direct Investment (FDI), advanced Management Services Department. The plan
Information Technology interventions with which would be supporting the NCAP provides
growing emphasis on regional connectivity, as for special focus on resource assessments
part of New Civil Aviation Policy (NCAP)-2016. (both internal and external) and market

14 AAI Corporate Plan 2017-26


assessment. A brief introductory of the subject and supported and how committed are we in
area of Corporate Plan is provided with SWOT implementing the plan to take our organisation
analysis on the strengths and opportunities forward. I am happy that we are moving in a
which may go in favour of implementation positive direction to make this Plan a success,
of Corporate Plan vis-à-vis the probable key teaming-up in an efficient manner in achieving
weaknesses and major threats, which might the common goal of 'excellence'
prove to be challenging. The plan also analyses
dimensions involving current & future issues
and primary determinants of evaluating
performance in a comprehensive way, relating
to various steps for realizing the Corporate S.Raheja
Plan. The plan also clearly defines the specific Member (Planning)
action stages that must be taken-up to achieve
the desired objectives and which can, as well be
used as markers to check on a periodic basis
to determine whether or not sufficient progress
is being made. The objectives set forth are
flexible allowing for mid-course amendments
and adjustments as the time progresses, so
that we learn from our first such proactive and
qualitative step.

I must appreciate the enormous efforts put


in, both by my colleagues in AAI and by M/s.
Deloitte TT India, in framing the modalities,
in surveying applicable action areas for the
Plan period and in bringing out a workable
formulation and implementation of policies. I
also take this opportunity to thank the Chairman,
AAI and the Board Members for their guidance
and help, from time to time, in completing the
Corporate Plan.

Now in executing the Corporate Plan, we


have to identify issues that surround the key
question as to who manages and monitors
the Plan and how the plan is communicated

AAI Corporate Plan 2017-26 15


Chennai Airport

Amritsar Airport
1. Introduction
1.1. Background Indian airspace extending beyond
The Airports Authority of India (AAI) was the territorial limits of the country,
constituted by an Act of Parliament and as accepted by International Civil
came into being on 1st April 1995 by Aviation Organization (ICAO).
merging the erstwhile National Airports ¾¾ Provision of visual aids.
Authority (NAA) and International ¾¾ Provision of communication and
Airports Authority of India (IAAI). navigation aids, viz., instrument
The merger brought into existence a landing system (ILS), doppler VHF
single organization entrusted with the omni directional range (DVOR),
responsibility for creating, upgrading, radar etc.
maintaining, and managing civil 1.2. Corporate Plan 2017-26:
aviation infrastructure both on the The Context
ground and in air space in the country. As mentioned above, since its inception
AAI manages 125 airports, which in 1995, the Airports Authority of India
include 21 international airports (3 civil (AAI) has been at the helm of affairs in
enclaves), 8 customs airports (4 civil the development of airport infrastructure
enclaves), 77 domestic airports, and and management and control of airport
19 domestic civil enclaves at defence operations and air navigation services
airfields and provides air navigation in India. Over the past two decades, AAI
services for over 2.8 million square has been at the forefront of modernizing
nautical miles of air space. In terms of and developing airside & terminal side
administrative control, AAI has divided infrastructure, air navigation services,
its airports under five regions, namely and improving its services at airports
Northern, Eastern, Western, Southern to deliver a better travel experience
and the North-East. to passengers. These measures have
AAI’s functions are as follows1: resulted in improved air safety and
¾¾ Design, development, operation and passenger satisfaction as is reflected in
maintenance of international and passenger experience survey results.
domestic airports and civil enclaves. There have been remarkable changes
¾¾ Construction, modification and in the Indian aviation sector since the
management of passenger terminals. inception of the AAI. Various policy
¾¾ Development and management of measures in the late 1990s, such as
cargo terminals at international and the repeal of the Air Corporation Act,
domestic airports. Open Skies Policy & and the promotion
¾¾ Provision of passenger facilities and of foreign direct investment in aviation
information systems at the passenger and airport infrastructure allowed the
terminals at airports. flow of private investments in aviation in
¾¾ Expansion and strengthening of the form of the emergence and active
operational areas, viz., runways, participation of new airlines. Other
aprons, taxiway, etc. factors such as economic growth and the
¾¾ Control and management of the influx of foreign tourists also supported
1
http://www.aai.aero

AAI Corporate Plan 2017-26 17


the aviation industry by keeping demand The preparation of the Corporate Plan
buoyant. The emergence of the low cost for the period 2017-26 involved the
carrier (LCC) model, which followed an following:
established trend in western countries, ¾¾ Information gathering and analyses:
also boosted demand. Passenger traffic • Internal assessment
grew by ~2.6 times at a compound • External &market assessment
annual growth rate (CAGR) of 11.6% ¾¾ Identification of key strengths and
over the last decade, creating an acute weaknesses
need for further capacity development. ¾¾ Review of Mission Statement and
Although the spurt in air traffic brought development of the Vision Statement
new opportunities for AAI, it also posed ¾¾ Development of priorities, action
a major challenge in terms of expanding areas and strategies
ground infrastructure and air navigation 1.3. Objective and Approach
services.
While the Corporate Plan document
The period from 2007-16 also presents the organization’s priorities and
witnessed private sector participation proposed strategies as a culmination
in airport infrastructure development of the present exercise, management
and management in India, with the re- activity around Corporate Planning
structuring of two major AAI airports would need to be institutionalized in
at Delhi and Mumbai. Few green the context of a changing business
field airports, like at Bangalore and environment to ensure its relevance in
Hyderabad, were also developed with coming years.
funding from private sector. Besides,
several state governments, like those in Operational strategies and plans
Maharashtra, Goa, Telangana, etc., are formulated for 10 years would tend to
planning to develop primary / second be ineffective as planning tools because
airports in certain cities to cater to they are likely to be based on present
growing air traffic. In 2008, the Airport expectations of possible changes in the
Economic Regulatory Authority (AERA) business environment. Institutionalizing
was constituted through the Airport corporate planning by setting up a
Economic Regulatory Authority of India separate corporate planning unit with a
Act, 2008. The Authority was given the well-defined framework within AAI will
mandate to regulate tariff and other provide insights into the organization’s
charges for the aeronautical services strengths, weaknesses, opportunities
rendered at major airports and also and threats in a dynamic and rapidly
to monitor performance standards at changing business environment and
major airports. enable AAI to plan and respond
effectively.
The Indian aviation industry is likely to
face challenges arising from the rapid Aligned to this requirement, a multi-
growth and global integration of the tiered approach is required beginning
Indian economy and from policy and with an assessment of environmental
regulatory changes. In a bid to inform trends and analyses of the organization’s
stakeholders within and outside the strengths and weaknesses, development
organization of its priorities and proposed of a statement of the organization’s
future strategies over the next decade, mission and vision for the future, and
AAI has undertaken the preparation of identification of priorities and strategies
this Corporate Plan document. to achieve the identified vision.

18 AAI Corporate Plan 2017-26


This framework is shown in Exhibit 1.

Exhibit 1: Overarching framework for preparation of Corporate Plan for AAI

Multiple
Internet External Market Management Secondery
Assessment Assessment Assessment Research
Workshops

Aspirations of
SWOT Management other Airport
Aspirations Authorities

Mission

Vision

Priorities & Targets

Strategies

A SWOT analysis and the drawing up towards adopting a dynamic planning


of a vision statement takes time when model which can respond to the evolving
done once in ten years. A periodic Indian aviation sector.
review should be taken at shorter 1.4. This Document
intervals if there are major changes
in the organization or the business The various sections of this Corporate
environment. Plan document address the following
key areas:
AAI accordingly envisages moving
away from a static corporate planning

Section Number Content Page Number


2 Internal Assessment 21
3 External Assessment 41
4 Market Assessment 55
5 SWOT Analyses 81
6 Setting the Vision and Mission 89
7 Corporate Agenda: Priorities and Strategies 95
8 Corporate Plan Monitoring and Review 119

AAI Corporate Plan 2017-26 19


Dehradun Airpot

Indore Airport
2. Internal Assessment
The internal assessment undertaken as itself, data from other/secondary sources, and
part of preparation of this Corporate Plan from interaction and consultation within the
document has focused on three key aspects organisation and with stakeholders outside the
– understanding of the mandate and services organisation.
delivered by AAI, analysing resources available The focus of this assessment was to identify
with AAI to discharge its mandate, and analysing AAI’s potential strengths / areas of comparative
AAI’s performance on certain parameters. To advantage as well as potential weaknesses /
do so, AAI has used primary data collected by areas of vulnerability.

Exhibit 2: Framework for conducting internal assessment

Mandate and
Services
Under this head, an
assessment of the
current service portfolio
has been undertaken
- airport services; ATC/
CNS services; cargo
operations

Resources Performance
Under this head, an Under this head,
assessment of resources the financial
has been undertaken and operational
- physical resources, performance of
manpower and AAI over the past
organizational few years has been
resources analysed

2.1. AAI’s Mandate and Services Provided are summarized along with the extent
As per the provisions of the AAI Act, the to which AAI is currently providing these
gamut of services to be provided by AAI services.

AAI Corporate Plan 2017-26 21


Exhibit 3: AAI's Mandate and Services being offered
Mandate as per AAI Act Services being
provided currently
Manage airports, civil enclaves and aeronautical communication sta- Yes
tions
Provide air traffic service and air transport service at any airport and Yes
civil enclaves
Plan, develop, construct and maintain runways, taxiways, aprons and Yes
terminals and ancillary buildings at airports and civil enclaves
Plan, procure, install and maintain navigational aids, communication Yes
equipment, beacons and ground aids at airports and at such locations
as may be considered necessary for safe navigation and operation of
aircraft
Provide air safety services and search and rescue facilities in co-ordina- Yes
tion with other agencies
Establish schools or institutions or centres for the training of its officers Yes
and employees in regard to any matter connected with the purposes of
this Act
Construct residential buildings for its employees Yes
Establish and maintain hotels, restaurants and restrooms at or near the Partially – only at
airports select airports
Establish warehouses and cargo complexes at airports for the storage Partially – only at
or processing of goods select airports
Arrange for postal, money exchange, insurance and telephone facili- Yes
ties for the use of passengers and other persons at airports and civil
enclaves
Develop and provide consultancy, construction or management ser- Yes. Consultancy
vices, and undertake operations in India and abroad in relation to has been limited in
airports, air navigation services, ground aids and safety services or any scope.
facilities thereat
Allow for airport operations on public private partnerships (PPP) basis Yes
Source: Based on stakeholder consultations and AAI (Amendment) Act 2003

The extent and coverage of AAI’s 2.1.1. Airport development, operations


provision of these services varies across and management
its airports – primarily with respect AAI undertakes structural design
to the nature of services and traffic of passenger and cargo terminals,
quantum at a given airport. Therefore, aircraft hangars, runways and other
while AAI provides air navigation pavements, technical buildings for
services across all airports, its services installation of airport ground aids
around establishing and operating etc. through its Civil Engineering
warehouses and cargo complexes are Department. A separate wing under
limited to certain airports. the Civil Engineering Department
looks after maintenance requirements

22 AAI Corporate Plan 2017-26


/ civil engineering aspects of airport several existing airports, including
operations and management. AAI Jaipur, Dehradun, Srinagar, Lucknow,
also has a specialized department of Chennai, Vijayawada, Surat,
electrical engineering looking after Vadodara, etc. The list of ongoing
electrical and mechanical (E&M) expansion works at existing AAI
services for airport terminal buildings airports is presented in Annexure 1 of
and airfield lighting works. this document. Recently, AAI appointed
2.1.1.1. Passenger facilities project management consultants to
AAI is currently in the process of improve efficiency in development
expanding terminal buildings at works across 14 airports.

Over the years, AAI has gained significant expertise in planning, designing and
developing airports. AAI has successfully completed the modernization of airports in
both tier I and tier II cities. AAI’s expertise in development works have been used by
other government enterprises like Air India, Bureau of Civil Aviation security (BCAS),
Border Security Forces (BSF), Defence Research and Development Organisation
(DRDO), etc., in the form of deposit works.

2.1.1.2. Cargo facilities AAI currently manages3 international


AAI has the mandate to develop air cargo terminals at eight airports
and manage air cargo terminals at viz., Kolkata, Chennai, Amritsar,
international and domestic airports Guwahati, Coimbatore, Trichy, Lucknow
in India under the provisions of the and Mangalore and domestic cargo
AAI (Amendment) Act 2003 and operations at four airports, namely
Airports Authority of India (Storage Port Blair, Jaipur, Coimbatore and
and processing of Cargo, Courier Lucknow. Cargo facilities at certain
and Express Goods and Postal Mail) other airports are being managed
Regulations 2003. AAI also acts as through outsourced agencies/state
a custodian of import cargo under government organizations on an O&M
section 45 of Customs Act 1962. AAI basis. AAI is also in the advanced stages
has developed several common user of commissioning international air
cargo terminals both for international cargo handling facilities at Madurai and
and domestic cargo. Visakhapatnam airports.
AAI’s cargo business has been AAI had appointed a consultant to
administered through a departmental advise it on its air cargo business plan.
structure within the overall AAI The consultant had recommended that
administration. Over the years, AAI separate its cargo department from
115,000 sq. m of warehouse capacity the main organization by corporatizing
was developed across the country with the department. Based on these
an estimated cargo handling capacity recommendations, AAI has decided
of 1,600,000 MT2. Depending on the to form a 100% AAI owned Cargo
size of operations, either an airport has Subsidiary - AAI Cargo Logistics and Allied
a separate cargo department or the Services Company Limited (AAICLAS) in
cargo function is managed as part of August 2016. AAICLAS will undertake all
the commercial activities of the airport. the activities that were previously carried
Source: Air Cargo Business Plan for AAI, 2016
2

Source: Air Cargo Business Plan for AAI, 2016


3

AAI Corporate Plan 2017-26 23


out by the Cargo Department of AAI and based equipment and the adoption
it is envisioned that it will becomes the of satellite based communication,
foremost integrated logistics network in navigation and surveillance systems. AAI
India. AAICLAS would provide cargo has a dedicated team to deliver the ANS
handling and related value added and air traffic services (ATS), respectively.
services at airports in India and or 2.1.2.1.
Communication, Navigation &
abroad including ground handling Surveillance (Planning)
services, documentation, transport The CNS Planning Department within
services for carriage of bonded & non- AAI is responsible for planning, procuring
bonded cargo and screening services. and commissioning all CNS facilities
It will promote, represent, organize, and support systems for air navigation
undertake, establish, conduct, handle, based on short- term and long-term
arrange, own, operate, participate, requirements. To meet the guidelines
facilitate, sponsor, encourage, and laid down by ICAO and to further the
provide the business as Cargo Terminal CNS ATM transition plans for SATCOM
Operator, Free Trade Zone, Air Freight based air traffic management, the CNS
Station and Inland container depot for Planning Department had undertaken
cargo and passengers. the following initiatives:
2.1.2. Air Navigation Services ¾¾ Installed automatic dependent
AAI provides air navigation services surveillance (ADS) at Chennai,
(ANS) across all civil airports in India. AAI Kolkata, Delhi and Mumbai airports
manages Indian air space measuring and successfully tested for operations
over 2.8 million square nautical miles, ¾¾ Implemented a dedicated
which includes a land area measuring SatCom network in 80 airports
1.05 million square nautical miles and all over India to support data and
oceanic airspace measuring 1.75 million voice communication, including
square nautical miles, extending beyond remote controlled air ground VHF
the territorial air space into the Arabian communication to provide VHF
Sea, Indian Ocean and Bay of Bengal.4 coverage over the entire Indian air
Air navigation services are also provided space, networking of radars and ATS
by AAI at joint venture airports (e.g. data communications
Delhi, Mumbai, Nagpur), green field ¾¾ Taken up an area augmentation
airports (e.g., Bengaluru, Hyderabad system using GPS Aided GEO
and Cochin), state government airports Augmented Navigation (GAGAN),
(e.g., Lengpui) and private airports (e.g., a space based augmentation
Mundra, and Durgapur) as per the terms systems for airspace, which has
and conditions of communications, been developed in collaboration with
navigation and surveillance (CNS)/ air Indian Space Research Organisation
traffic management (ATM) agreements (ISRO)
between AAI and the concerned airport 2.1.2.2. Air Traffic Management (ATM)
operators.
This department is responsible for
AAI has laid major emphasis on managing air traffic within the country.
developing communication, navigation AAI envisages further upgrade of the
and surveillance (CNS) infrastructure in ATM infrastructure in the country both
the country. The emphasis has been on in terms of conditional provision of
providing reliable and efficient ground automation systems and upgrade of
Source: AAI Annual Report 2014-15
4

24 AAI Corporate Plan 2017-26


technology, which also involves shifting several initiatives to modernize air traffic
from ground based navigation to services in the country, as summarized
satellite based navigation. AAI has taken in Exhibit 4:

Exhibit 4: AAI initiatives to modernize air traffic services in India


Location Initiatives for improving ATS

Mumbai, New Delhi • The upgrade of automation systems to (Auto Track-Ill) with new air
traffic controller assistance features such as arrival manager, depar-
ture manager etc. at Mumbai and New Delhi airports
• Advanced surface movement ground control systems (ASMGCS)
to improve efficient handling of aerodrome traffic (at Mumbai and
New Delhi airports)
• Automatic dependent surveillance to enhance the surveillance of
suitably equipped aircraft over the entire flight information region (at
Mumbai and New Delhi airports)
Hyderabad, • Advanced integrated automation systems that integrate state-of-the-
Bangalore art radars, flight data processors, air situation display, advanced
surface movement ground radars, have been installed by SELEX
Integreti for providing effective air traffic management
Chennai, Kolkata • An ATS modernization project is underway for replacing old radars,
surveillance systems by the latest state-of-the-art technology on par
with Mumbai/Delhi to provide a common platform for integration of
entire systems over Indian airspace, which will effectively increase air
traffic capacity and bring synergy in ATS operations
Nagpur/ Vara- • Integration of radar with flight data processors has been completed
nasi/ Ahmedabad/ by Electronics Corporation of India (ECIL) in collaboration with AAI
Trivandrum/ for providing indigenous automation solutions for effective air traffic
Mangalore management within the designated airspace
• Initiatives to enhance the standards of ATS
Mumbai, Chennai • Established a number of ATS connector routes in airspace to facili-
tate performance based navigation (PBN) operations
Delhi, Mumbai, • Introduced PBN, standard instrument departures (SIDs) and standard
Ahmedabad and terminal arrival routes (STARs) to reduce delays to aircraft
Chennai
Source: AAI website5

2.1.2.3. Flight Inspection Unit by AAI throughout the country as


The Flight Inspection Unit (FIU) well as at some Indian Air Force and
of AAI is a critical resource of the Indian Navy bases. The calibrations
CNS department. It is responsible are required to be done on a regular
for conducting flight checks and basis, so that the equipment may be
calibration of CNS facilities installed certified for use. Considering the vast

Source: http://www.aai.aero/public_notices/aaisite_test/airtraffic_management.jsp
5

AAI Corporate Plan 2017-26 25


geographical reach of the country and ¾¾ Airport master planning
the range of installed CNS equipment ¾¾ Designing, evaluating and
to be tested, the FIU is an important constructing passenger terminals/
service to ensure flight safety. The need air cargo terminals.
for expanded FIU operations is critical ¾¾ Planning, installation, operation
given the increase in the number of and maintenance of radars,
airports, and the expansion of existing navigational-aids, visual &
facilities, e.g., extended or new non-visual landing aids and
runways. Currently, the FIU has three communication facilities.
fully equipped aircraft, one B-300 ¾¾ Air space and air traffic
and two Do-228s, to undertake flight management, air route re-
inspections with support crew. The unit structuring
suffers from a shortage of flight crew ¾¾ Airport management on turnkey
with only one captain and three co- basis.
pilots. This is an important resource ¾¾ Computerization
that needs to be augmented in this ¾¾ Training
plan period. ¾¾ Flight calibration of airport ground
2.1.3. Consulting facilities
AAI provides consulting services 2.2. Resource Assessment
across various domains of airport
development and operations. AAI AAI’s resources can be categorized as
has undertaken consultancy and ¾¾ Physical – tangible assets owned
construction projects in India and and deployed to provide various
abroad. Over the years, AAI has services: for example, passenger
developed a large number of specialists and cargo terminals, land holdings
in almost every aspect of airport etc.; and
planning, construction, maintenance ¾¾ Manpower and organization.
and operations. The consultancy 2.2.1. Physical Resources
division of AAI can co-ordinate and From the perspective of a corporate
provide inputs leveraging the skills of planning exercise, the key physical
airport planners, designers, aviation resources AAI considered were ones
ground equipment specialists, and that could have a substantial impact
civil, electrical, and electronics on its ability to deliver services over the
engineers besides specialists in long term.
navigational aids, communications, air
traffic control, air traffic management, Land assets
airport terminal operations, air safety, AAI has substantial land assets across
security and audit functions. The its airports and has the potential to
expertise available within AAI can be leverage its land holdings for city-
used to provide consulting services side development. Exhibit 5 shows
across the following areas: land identified across various airports
¾¾ Airport feasibility studies - site for potential city-side development
selection/technical feasibility in different phases. Currently, AAI
¾¾ Airport development services - is in the process of undertaking
concept to commissioning service feasibility studies and preparing
for green field airports detailed project reports (DPRs) for city-
¾¾ Airport commercial viability side development at these airports.
studies/airport audit services Besides, AAI has engaged consultants

26 AAI Corporate Plan 2017-26


to assess the potential to develop Chennai, Kozhikode, Jaipur, Amritsar,
multi-level car parking facilities at Ahmedabad and Pune.6

Exhibit 5: City-side developments to be undertaken by AAI (under DPR stage)


Airport Land Airport Land Airport Land
Identified Identified (in Identified
(in Acres) Acres) (in Acres)
Phase I Phase II Phase II
Lucknow 217 Hyderabad Planning Stage Guwahati 46
Raipur 80 Trivandrum 2 Gaya 62
Tirupati 117 Bengaluru Planning Stage Patna 10.5
Kolkata 105 Visakhapatnam Planning Stage Phase III
Varanasi 60 Coimbatore Planning Stage Trichy Planning
Stage
Bhubanesh- 80 Ahmedabad Planning Stage Bhopal 2.5
war
Jaipur 40 Indore Planning Stage Dehradun 2.4
Amritsar 60 Chandigarh 30 Madurai Planning
Stage
Source: AAI presentation to MoCA titled ‘Planning of works – an overview’, 2016
2.2.1.1. Airside and Terminal Assets airports (4 civil enclaves), 77 domestic
AAI operates a large network of airports and 19 domestic civil enclaves.
airports, consisting of 21 international Of these, some of its domestic airports
airports (3 civil enclaves), 8 customs are non-operational.

Exhibit 6: Airports under AAI: operational vs. non-operational

19
20
15
12
9 8
10 7 7
6 6 5
4 3 4
2 2
1 0 0 1 1 0 0 0 0 0 0 0 0 0 0
0
Domestic International Custom Domestic International Custom

Operational Non-Operational

North East North East West South


Source: AAI
Source: AAI presentation to MoCA titled ‘Planning of works – an overview’, 2016
6

AAI Corporate Plan 2017-26 27


AAI is in a position to leverage its For instance, Chennai Airport has a
assets to cater to air traffic growth displaced threshold for the runway
in the country as well as to enhance 12-30 and Kolkata Airport has
regional air connectivity in the parallel runways with separation of
country in future, including through approximately 200m, which is not
potential operationalization of its non- adequate for simultaneous operations.
operational airports. Besides, AAI operates 26 civil enclaves
However, it will need to continue that are generally not amenable for
to focus on appropriate expansion flexible capacity expansion to cater
of airside infrastructure to be able to traffic growth. This has resulted
to sustain traffic growth at existing in some state governments taking
operational airports as well as up green field airport development
rehabilitate / upgrade infrastructure at projects (for instance Mopa and
some of its non-operational airports to Bhogapuram in Goa and Andhra
be able to cater to regional operations Pradesh respectively).
in the future. In terms of passenger terminals, AAI’s
Based on data as well as interactions average terminal capacity utilization,
with stakeholders, it is evident that as presented in Exhibit 7, is ~68%
enhanced airside infrastructure would of the available capacity. While high
be required at a number of airports utilization levels are typically preferred
to cater to future traffic / growth from an efficiency / profitability
requirements. perspective,7 AAI needs to ensure that
capacity planning and enhancements
are in sync with expected traffic growth
rates across airports.

Exhibit 7: Average terminal capacity utilization for AAI and other airports

Terminal Capacity Utilization in the Indian


Airport Sector

100%
90%
80%
70%
60%
50%
40% 70% 69% 81% 78% 68% 66% 92% 86%
30%
20%
10%
0%
AAI JV/Pvt./SG Delhi (DIAL) Mumbai
(MIAL)

2014-15 2015-16(Till Jan)

7
A comparative analysis with other airports in the country shows that some of these airports are operating at higher
utilization levels.

28 AAI Corporate Plan 2017-26


AAI’s cargo terminals, under its and other support functions such as
departmental control, have a current finance and human resources.
utilization level of ~17%. A list of While AAI has an advantage in terms
AAI managed airports with their of the wide variety of professional
cargo holding capacities and volume experience among its employees
of cargo handled in 2015-16 is across key areas, most departments
presented in Annexure 2. within AAI reported manpower
2.2.2. Manpower and Organisational shortage. However, as the HR Strategic
Resources Plan 2013-17 noted, manpower cost
2.2.2.1. Manpower – Numbers and Key is the highest proportion of AAI’s
Issues revenue expenditure and effective
management of human resources is
AAI's employee strength exceeds required.
17,000 personnel across various
grades and functions. Its employees An employees’ satisfaction survey,
are predominantly organized by cited in the HR Strategic Plan 2013-
major job functions within a largely 17 indicated satisfaction with aspects
function-based organizational like compensation and facilities
structure. As shown in Exhibit 8, ~44% extended; however, the satisfaction
of the employees are in the lower scores indicated that aspects such
management to top management as ‘working style of management’,
(executive) cadre. working conditions/environment, etc.,
which affect efficiency and productivity,
AAI employees have experience in the needed to be addressed.
areas of airport planning, engineering
development, ANS, airport operations, 2.2.2.2. Training
The share of training expenses as a
percentage of AAI’s gross expenses
have reduced from ~2% in 2007-08
Exhibit 8: Organizational pyramid, AAI
to <0.1% in 2014-15 (in absolute
terms, training expenses have fallen
184 from Rs 21 crore in FY07 to Rs 2 crore
Top (1%) Board, ED, in FY15), indicating a potential gap
GM
in this area. Stakeholder interactions
2,474
Middle during the preparation of the
(14%)
Management JGM, DGM, AGM, Corporate Plan also identified this
Senior Manager as a key focus area. In this context,
5,030
Lower
Manager the HR Strategic Plan 2013-17 noted
(29%) Assistant.
Management Manager, Junior that there was need to take up skill
Executive development as a planned effort in
line with AAI’s requirements and that
9,690 employees needed to be enabled –
Non-Executive
(56%) especially at the non-executive level
– to take up higher responsibilities
before elevation.

AAI Corporate Plan 2017-26 29


2.2.2.3. Organizational Structure various functions and bringing a
HR Strategic Plan 2013-17 noted: unified structure was very slow. Even
at this stage, the unified structure is yet
“After the merger of two erstwhile to emerge. In order to bring out an
organizations i.e. IAAI and NAA, the optimum organization structure, the
organization continued to function with pending issues related to merger are
two separate and parallel divisions required to be addressed and resolved
for over 18 years. The pace to merge at a faster pace.”
Exhibit 9: Organizational structure for AAI

Chairman

Aviation safety Company Secretary

Member Member Member


Member ANS Finance Member HR Vigilance Planning Operations

Source: AAI website

It accordingly noted a key action plan bring out an alternative structure


item as follows: in line with emerging priorities.
“To realize an optimum organization Rationalization will involve assessment
structure, a three-step activity will of manpower requirement based
be carried out i.e. restructuring, on the existing level of activity. This
rationalization and redeployment. will be followed by redeployment of
Restructuring will involve the study of personnel as per the plan evolved.”
existing organization structure and

Given the diversity of various activities / businesses at airports requiring specialized


skills, airport companies across the world respond by identifying separate teams and
executives who can lead such teams. For Example: Changi Airports Group has dedi-
cated teams focusing on:
• International endeavours led by an Executive Vice President
• Airside Concessions led by a Senior Vice President
• Landside Concessions led by a Senior Vice President

AAI has recently taken up an undertaking. The key objectives of the


Organizational Restructuring and study have been articulated as follows:
Capability Enhancement study to a. Providing of world class infrastructure
facilitate and expedite achievement and services to the users of airports
of desired results on various initiatives
that the Authority is in the process of b. Tapping the potential from the city
side land areas of airports

30 AAI Corporate Plan 2017-26


c. Increasing commercial revenue by An updated MIS will enable the top
restructuring existing infrastructure management to focus and monitor
and by creation of additional progress on a number of aspects:
infrastructure ¾¾ Operations – Improve passenger
d. Creating air cargo infrastructure experience by increasing efficiencies
and facilities for taking air cargo across touch points through regular
volumes to new heights monitoring and analytics
e. Excelling in airport performance ¾¾ Finance – Enhance profitability
and building airport’s image, through better controls
especially in the Asia and Asia ¾¾ Commercial – Increase non-
Pacific region aeronautical revenues through
The first phase of the study focuses on better utilization of retail space
the following: within the airport terminal, car
a. Developing an in-depth park, advertisement and other
understanding of the organizational rentals
priorities and objectives as well as ¾¾ Airline Marketing – Identify trends
the current organizational structure and opportunities to attract more
to outline the key objectives for the airlines at airports
new organizational design ¾¾ Infrastructure – Monitor projects
b. Defining roles, responsibilities and as well as proactively maintain
key performance indicators (KPIs) assets for better efficiency and
for the new organizational structure serviceability
c. Diagnosing internal capability ¾¾ Environment and Sustainability –
issues that need to be addressed Improve safe and energy efficient
on a priority basis. business operations
¾¾ Business development – Identify
The first phase of this study has and develop opportunity pipeline
been completed and the consultant within India / overseas
has already submitted its report. The ¾¾ Engineering – Track and improve
consultant has already commenced the maintenance activities at the
second phase in which it will develop airports
a time bound capability building
programme with detailed roles and 2.3. AAI’s Performance
responsibilities, key performance AAI’s financial and operational
indicators (KPI) outline etc., for capacity performance is discussed in detail
deficient areas/unit/functions. below.
2.2.2.4. Management Information System 2.3.1. Financial Performance
(MIS) 2.3.1.1. Revenues
As can be seen, AAI’s is focusing AAI’s revenues can be broadly
on identifying KPIs for the new categorized into aeronautical, non-
organizational structure. Hence, it will aeronautical, cargo, airport lease
be necessary to develop an institutional revenues and others from allied
framework for the development and services such as consultancy projects.
co-ordination of a robust Management Sub-heads under each of these
Information System (MIS) for AAI’s top revenue categories are highlighted in
management. Exhibit 10:

AAI Corporate Plan 2017-26 31


Exhibit 10: Revenue sources for AAI

AAI revenues

Aeronautical Non-Aeronautical Cargo Airport lease


Others
Revenues revenues revenues revenues

ANS Trading concessions Self Operated DIAL Airport Consultancy


• RNFC charges and
• TNLC charges Rent & services outsourced MIAL Airport
• Non-residential cargo
Airport Services buildings terminals
• LPH Charges • Hangars
• PSF • Land rent
• UDF • Other services
• Other airport • Light, power &
services water
• Service hours
extension
• Ground Other airport services
handling • Admission fee
• Oil Commercial Passes
Throughput • Car Parking
• Royalty on • Other
CUTE

Source: AAI Financial Statements

As shown in Exhibit 11, AAI’s revenues contributed (on an average)


aeronautical revenues have doubled about 10% of total revenues for AAI
between 2008 and 2016, contributing between 2008 and 2016.
more than 50% of AAI’s overall Lease revenues from major airports
revenues. However, aeronautical like Mumbai and Delhi accounted for
revenues are dominated by ANS ~31% of AAI’s revenues in 2016. As
charges (route navigation facilities tariffs at these airports are regulated
charges and terminal navigational by the Airports Economic Regulatory
landing charges), which have Authority of India (AERA) with reference
approximately 24.1% share in the to traffic growth and investment plans
overall revenues of AAI. of these airports, AAI has no control
Non-aeronautical revenues for AAI over this revenue stream.
come from commercial operations at The contribution of cargo revenues
airports like retail, F&B, car parking, to AAI’s total revenues was hitherto
other concessions and rentals in marginal at about 2%. The overall
terminals and city side premises. As revenue mix for AAI over 2008, 2012
shown in Exhibit 11, non-aeronautical and 2016 is shown in Exhibit 11.

32 AAI Corporate Plan 2017-26


Exhibit 11: Revenue mix for AAI (2008-16)
Revenue Mix for AAI (INR Crore)
10,824
5%
10000 2%

31%
8000
5,879
Revenue

6000 4% 11%
4,273 4%
21%
9%
4000 4% 13% 27%
17%
10% 22%
2000 24%
36% 24%
36%
0
2008 2012 2016
Others Cargo Airport Lease Non-Aero Aero ANS

Source: AAI Annual Reports

2.3.1.2. Expenses costs and depreciation.


AAI’s key expense categories include As shown in Exhibit 12, employee
employee costs (comprising employee costs for AAI have increased by about
salaries, allowances and contributions 12 percentage points between 2008
to provident fund), operating and 2016, contributing to about 49%
expenses including aviation security, of total expenses.
administrative expenses, financing

Exhibit 12: Composition of expenses (2008-16)

8000 Cost Mix for AAI (INR Crore)


7,127
2%
7000
13%
6000
4,378 20%
5000
Costs

1%
4000 4% 18%
2,469 23%
3000 2,469
2% 26%
2000 22% 10%
49%
1000 29%
46%
37%
0
2008 2012 2016
Gross expenses Finance Costs
Administrative & Other expenses Depreciation
Operating expenses Employee Benefits

Source: AAI Annual Reports

AAI Corporate Plan 2017-26 33


AAI plans to fund the creation of airport five years. The key sources of funding
infrastructure and ANS equipment this proposed capital expenditure have
worth Rs. 14,746 crore and Rs. 2,646 been shown in Exhibit 13.
crore respectively also over the next

Exhibit 13: Expected funding sources for proposed capital expenditure over 2016-20
in INR Crore

Year FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Total

Opening Cash 2,827 4,493 3,503 746 67 11,636


Balance
Internal Re- 3,903 2,319 2,323 2,917 3,105 14,568
sources
Accretion to (350) (350) (350) (350) (350) (1,750)
Debtors
NEC Grant 21 76 100 100 100 397

Govt. Bud. 81 100 100 90 70 442


Support
CAPEX for (1,486) (2,056) (3,919) (4,218) (3,068) (14,746)
Engg / IT
works
Capex for (271) (284) (734) (578) (779) (2,646)
ANS Equip-
ment
Term Loans/ 68 15 158 1,360 1,000 2,600
Borrowings
Bond Repay- (300) (810) (435) 0 0 (1,545)
ment
Closing Cash 4,493 3,503 746 67 146 8954
Balance
Source: AAI

2.3.1.3. Profitability Ahmedabad, Bagdogra, Chandigarh,


Only 13 out of 80 operational AAI Goa, Guwahati, Juhu, Leh, Lucknow,
airports have profitable operations. Port Blair, Pune and Tiruchirapalli
Kolkata and Chennai Airports are Airports are the other profitable
the most profitable airports for AAI, airports contributing approximately
contributing approximately Rs 559 Rs. 302 crore to PBT.
crore to profit before tax (PBT).

34 AAI Corporate Plan 2017-26


Exhibit 14: Contribution to PBT by profitable airports under AAI in 2015-16

Profit before Tax for Profitable Airports, in INR Crore

Ahmedabad
Bagdogra
Chandigarh
Chennai
Goa
Guwahati
Juhu
Kolkatta
Leh
Lucknow
Portblair
Pune
Tiruchirapalli

0 50 100 150 200 250 300 350 400 450 500

Source: AAI

2.3.2 Operational Performance 2.3.2.1. Airport development, operations


AAI’s operational performance and management
across certain key service areas – ¾¾ Passenger volumes
airport development, operations and A key operational performance
management, ANS and consulting indicator for airports is the passenger
services – is discussed in the sub- volumes handled. The total air
sections below. passenger traffic in India reached
223 million in 2015-16, of which
AAI airports handled about 42%. The
overall passenger growth trend has
been presented in Exhibit 15

AAI Corporate Plan 2017-26 35


Exhibit 15: Growth trend of passenger traffic in India
Growth of Passenger traffic in India, 2008-16

250
Passengers in millions

200

150

100

50

0
2008 2009 2010 2011 2012 2013 2014 2015 2016

AAI Traffic PPP Traffic Total Traffic


Source: AAI data

¾¾ Passenger satisfaction online user-generated feedback) to


Passenger satisfaction is a key parameter effect continuous improvement in
of operational performance. AAI has various services.
enrolled eleven of its airports in the ¾¾ Cargo volumes
international passenger satisfaction Indian airports handled 2.70 million
measurement exercise carried out by metric tonnes (MMT) of cargo in 2015-
Airports Council International (ACI). 16. Of this, AAI airports handled only
ACI conducts the “Airport Service 0.79 MMT. Even though AAI has a
Quality (ASQ)” survey annually large number of airports under its
covering more than thirty parameters management, the bulk of the air cargo
that affect passenger experience is handled at private/joint venture (JV)
during their journey – from the time airports. This can partly be attributed
they enter the terminal building to the to the fact that private/JV airports are
time they board the flight. Currently, located in large metro cities – catering
ASQ surveys indicate an average to buoyant local catchments.
rating of 4.31 out of 5 for the 11 AAI
airports that participate in the survey. ¾¾ Capacity enhancement
In 2015, Jaipur and Lucknow airports AAI’s last plan period saw economic
ranked first and second respectively in growth, privatization of major airports
the ASQ ratings for airports in the 2-5 and the entry of low cost carriers in the
million passengers category globally. Indian aviation sector. This led to a spurt
On the lines as the ASQ survey, AAI also in passenger numbers, necessitating
conducts the Customer Satisfaction capacity expansion. AAI undertook a
Index (CSI) survey, at 53 airports large capital expenditure programme
that have scheduled operations, to to develop infrastructure across the
ascertain passenger satisfaction levels. country. Under this programme, 35
Along with monitoring passenger non-metro airports were identified for
satisfaction scores, AAI will need to development to meet future demand.
leverage user feedback (including AAI was successful in meeting its

36 AAI Corporate Plan 2017-26


capacity enhancement targets and has already operating at traffic levels in
completed development/expansion of excess of their existing design capacities.
32 airports by the end of its last plan This has led to situations where new
period (2007-2016). capacity addition by airlines has to be
Going forward, designing and deferred due to terminal congestion. In
planning of terminals will require order to pro-actively cater to growing
inputs from all departments, including traffic, it will be important to ensure
operations and commercial, to ensure that planning and development of
passenger comfort and optimum additional infrastructure / capacities is
space utilization to generate non- undertaken in a manner that ensures
aeronautical revenues at airports. that growth is not hindered by capacity
constraints. This is critical since AAI
Further, as shown in Exhibit 16, of the aspires to build an enduring aviation
20 airports where AAI has planned network to connect businesses and
capacity additions, ten airports are people.

Exhibit 16: Airports operating beyond capacity

Airport Current Current Airport Current Current


Capacity Demand Capacity Demand
(MPPA) (MPPA) (MPPA) (MPPA)
Calicut 1.71 2.58 Agartala 0.5 0.88

Guwahati 1.6 2.23 Dehradun 0.4 0.47

Jaipur 2.07 2.20 Mangalore 1.0 1.31

Lucknow 2.18 2.54 Trichy 0.5 1.19

Pune 2.24 4.19

Srinagar 2.00 2.04

Source: AAI estimates, presented to MoCA

¾¾ Safety and security safety. DGCA, the safety regulator,


Passenger safety and security are is a member of ICAO’s State Safety
among AAI’s prime concerns. AAI Programme (SSP). In order to manage
complies with the regulations set the SSP and to implement a safety
by the Directorate General of Civil management system (SMS), a special
Aviation of India (DGCA) in matters division has been formed by the
of aviation safety and by the Bureau DGCA.
of Civil Aviation Security (BCAS) in The SMS identifies safety hazards,
matters of aviation security. ensures implementation of corrective
AAI has taken steps in the past to measures to maintain agreed levels
improve safety at its airports and in of safety, monitors and assesses
the air. The ANS strategic plan, 2014, the efficacy of safety measures and
highlights the steps taken to improve improves SMS on a continuous basis.

AAI Corporate Plan 2017-26 37


Following the setting up of the SMS environmental sustainability measures
implementation department by the and cost control at airport facilities.
DGCA, AAI in 2005 developed its However, the introduction of new
first Corporate Safety Management technologies to directly address
System Manual for ANS operations. passenger satisfaction services is not
The manual was subsequently revised in the forefront of the technological
and the latest version (2013) was introductions.
accepted by the DGCA. In the CNS and ATC disciplines, the
AAI has also developed safety introduction of technologies that link
performance indicators to monitor the primary and secondary radars
and improve safety performance. The through ATC automation systems are
main areas of focus are a reduction a major benefit to tower and area
in bird strike incidents, reduction in controllers. Further the introduction of
separation minima infringement, automatic dependence surveillance
reduction in runway incursion/ – broadcast (ADS-B) at 21 airports
excursion and reduction in flight level has resulted in improved surveillance
bursts. using GPS technology to determine
Although AAI takes all necessary steps the location and airspeed and other
to ensure passenger safety and security, aircraft related data.
there have been some instances in the The indigenous GAGAN system,
recent past where minor and major once commissioned in the next few
incidents were reported. Cases of years during this Corporate Plan
animal intrusion were reported at period, will further enhance the
Jabalpur, Nagpur and Surat airports, surveillance capability of aircraft in
in some cases leading to damage Indian controlled airspace and in
to aircraft. In 2015, an airline bus neighbouring countries. This will be
crashed into an aircraft at Kolkata a further step ahead in improving air
Airport. There was also an aerobridge traffic management procedures.
related incident in Chennai in 2015. AAI has taken steps to increase and
Given the priority attached to safety improve communication data links
and security, AAI intends to initiate with aircraft and between airports and
measures to eliminate the recurrence will attempt to expand these links to
of such events. neighbouring countries too.
2.3.2.2. Air Navigation Services To improve and enhance co-ordination
¾¾ Technology at AAI Airports between airport operators, airlines,
ATC and other major service providers
New technologies have been at the airports, Airport Operations
introduced recently at various levels Control Centres have been introduced
in Air Navigation Services. Essentially at 10 airports and more are on the
they have been towards increasing way. The airport operation control
capacity, safety, and providing for centre (AOCC) is key in providing a
savings in flight time and fuel costs to real-time co-ordinated, collaborative
airlines, in addressing issues related to decision making platform to key service
air space use, and towards introducing providing stakeholders, the airlines

38 AAI Corporate Plan 2017-26


and airport operators, enabling safe infrastructure at existing airports or
airport operations and enhancing its airstrips.
capacity utilization. This service needs For the year 2014-15, the total
to be expanded to all airports as revenue earned from consulting
traffic volumes grow. The level of the services was INR 52 lakh. For the year
airport operational data base (AODB) 2015-16, the revenue from consulting
to be introduced varies depending on services jumped to INR 4 crore. The
the volume of traffic to be handled. revenue earned from these services is
Discussions with users indicate that modest but AAI can increase revenue
AODB should atleast be introduced at from consulting if it actively looks out
airports as they approach an annual for opportunities in India and abroad.
load of 5 million passengers or about
150 movements per day.
¾¾ Air Traffic Flow Management 2.4. Summary of Internal Assessment
System Based on the internal assessment
The air traffic flow management outlined in this section, certain
system (ATFM) system is a forward strengths and weaknesses have been
looking technology application by identified. These have been presented
which a real-time link of all the in section 5 along with opportunities
surveillance and navigation systems and threats identified that are based
will show aircraft operating throughout on external and market assessments.
the Indian airspace on a large screen
display at AAI’s air traffic management
(ATM) centre. Along with the aircraft
and routes, etc., the display will present
weather systems and concentrations
of flight operations throughout the
airspace. The data available will
enable guidance to be provided to
controllers throughout the country.
It will allow flexible routing of flights
and improve on-time performance
and safety, besides helping maximize
utilisation of airspace capacity.
2.3.2.3. Consulting services
AAI has in the past carried out
consulting assignments for various state
governments and private operators. A
majority of these assignments were
pre-feasibility studies or techno-
economic feasibility studies for new
airport projects. In some cases, AAI
has offered services to develop new

AAI Corporate Plan 2017-26 39


Srinagar Airport

Bhopal Airport

Ahmedabad Airport

40 AAI Corporate Plan 2017-26


3. External Assessment
The objective of undertaking an or threats to AAI’s working / growth in
external assessment as part of the the future.
Corporate Plan was to identify / assess 3.1. Policy and Regulatory, Economic,
possible changes and trends in the Social, Technology (PEST)
environment external to the AAI that Framework
could have an impact on it over the
plan period. To ensure that the exercise The various factors / trends that could
is meaningful, the focus has been to affect AAI have been outlined under
identify only those changes that could certain broad categories as shown in
have a significant impact on the AAI Exhibit 17.
and which could present opportunities

Exhibit 17: PEST framework for external assessment

Technology

Social Trends in Air


Environment & Transportation
Safety

EXTERNAL
ASSESSMENT
Economic
& NCAP
Industrial Policy &
growth Regulatory

Tariff
Regulation

Economic

AAI Corporate Plan 2017-26 41


3.1.1. Policy and Regulatory airports are dependent on tariff
Policies and regulations are an integral determination by the Airports Economic
part of an aviation industry’s ecosystem Regulatory Authority of India (AERA).
and can significantly influence its Further, tariffs for non-major airports,
evolution. most of which are AAI airports, continue
to be determined by the Ministry of Civil
The National Civil Aviation Policy Aviation (MoCA). As can be expected
(NCAP), recently issued by the Ministry in a regulated infrastructure sector,
of Civil Aviation, Government of India, economic regulation has a major
is a comprehensive policy blueprint bearing on AAI’s financial outlook.
that will have a significant bearing on Agencies like the Directorate General
the functioning of airports in general of Civil Aviation (DGCA) and Bureau
and of AAI in particular. of Civil Aviation Security (BCAS) also
As mentioned earlier, the Corporate regulate aspects of AAI’s operations.
Planning exercise should have a 3.1.1.1. National Civil Aviation Policy, 2016
mechanism to review any future
changes in policies and regulations The National Civil Aviation Policy
that may affect the aviation sector (NCAP), 2016, aims to provide a
in the country in general and AAI in thrust to the sector and envisions the
particular. creation of an ecosystem that enables
50 crore domestic ticketing and 20
An important aspect to be considered is crore international ticketing by 2027.
the fact that AAI revenues from airport The NCAP has attempted to address a
leases (Delhi International Airport whole host of issues with implications
Limited and Mumbai International for AAI.
Airport Limited) and its own major

42 AAI Corporate Plan 2017-26


Exhibit 18: Implications of the NCAP, 2016, for AAI

Key Features of the NCAP that impact AAI

Regional Connectivity Cargo Airline Operations MRO Operations


• RCS aims to tap • Air Cargo Logistics • Modification of • Tools and tool kits
potential markets Promotion Board 5/20 rule to ease used by MRO have
within India; revive (ACLPB) formed commencement been exempted from
unviable airtstrips / earlier; to submit of international customs duty.
developing 'no frills' detailed action plan operations for • Provision of
airports; effective to reduce dwell airlines adequate land
April 1, 2016 time of "air cargo • Single-window for MRO services
• Separate fund set up in truck" and shift to system for all providers in all
to enhance financial paperless processing aviation related future airports with
support • Encourages transaction queries potential for MRO
• State support in development of and complaints services
providing free cargo village near • Promotes growth • Allows import of
land and multi- airports of airlines through unserviceable
modal hinterland • Provision of space ease of regulations parts by MROs for
connectivity on 10 year lease to such as no airport providing exchange/
• Provides tax rebates; operators of express charges on airlines advance exchange
airport charges cargo and freighters having operations • Allows foreign
exemptions; excise • Implementation of under the RCS aircraft to stay for
duty exemption advanced air cargo scheme, Permission up to 6 months for
on ATF (from RCS information system to Scheduled maintenance
airports for RCS by Apr 2016 to Commuter operators • Airport royalty and
routes); utility improve efficiency/ to have code share additional charges
concessions faster processing agreements with will not be levied
other airlines on MRO service
providers for 5 years

New Airlines Propels


Boost to traffic Boost to traffic
and Routes MRO business

Cost of infra Increase


Boost to traffic Airport royalty loss
for airstrip in Efficiency

THREAT OPPORTUNITY OPPORTUNITY OPPORTUNITY

Source: National Civil Aviation Policy, 2016

AAI Corporate Plan 2017-26 43


3.1.1.2.
Regional Connectivity Scheme cause concerns about the financially
(RCS) viability of such infrastructure in the
The Regional Connectivity Scheme future, it could also initiate / increase
aims to facilitate additional connectivity traffic to some of the existing unutilized
within the country – potentially / under-utilized AAI airports as well as
requiring the revival and upgrade of to the rest of the airport network in the
airport infrastructure or creating new country.
aviation infrastructure in cities having AAI anticipates the airports listed
unviable airstrips/airports. in Exhibit 19 to be candidates for
As a public sector entity with a specific connectivity under the RCS, although
mandate, AAI may end up bearing it recognises that the actual origin /
a significant part of the responsibility destination points will be identified by
for infrastructure upgrading / the market in future:
creation. While this may increase the
requirement for additional funds and

Exhibit 19: Unutilized / Under-utilized AAI airports

Under-utilized Under-utilized Unutilized Unutilized Airports under


airports civil enclaves airports Civil enclaves construction/
upgradation
Agatti Agra Akola Jaisalmer Belgaum

Dimapur Allahabad Behala Bikaner Hubli

Kangra Bhuj Gondia Bhatinda Kishangarh

Khajuraho Gorakhpur Jalgaon Pathankot Jharsuguda

Kullu Gwalior Kandla Kanpur Tezu

Lilabari Jodhpur Keshod

Ludhiana Tezpur Kolhapur

Mysore Kotaw

Pantnagar Salem

Pondicherry Shimla

Porbander Sholapur

Surat

Shillong

Source: AAI

44 AAI Corporate Plan 2017-26


Since airlines are to be exempted from the newly formed Air Cargo Logistics
paying airport charges for the first Promotion Board (ACLPB) to submit
10 years from the start of flights on a detailed action plan to reduce the
RCS routes under the scheme, it will dwell time of air cargo to less than 24
affect the generation of aeronautical hours. This could help promote growth
revenues at such airports. Also, as in air cargo by creating the requisite
terminal navigational landing charges infrastructure and improving efficiency
(TNLC) charges for such flights are in cargo operations.
to be waived off and lower route 3.1.1.5. Maintenance, Repair and Overhaul
navigation facilities charges (RNFC) (MRO)
charges have been stipulated, there
may be lower ANS revenues accruing The policy aims to lower input costs
to AAI from these routes. Further, of MRO by lowering taxes on aircraft
given the typical catchment size and spare parts, storage and import
possible traffic at these locations, the restrictions, as well as providing
scale (passenger traffic) is likely to be longer stay for flights undergoing
inadequate to generate substantial maintenance. This, in turn, will
non-aeronautical revenues. AAI will encourage the development of the
have to actively manage investment MRO business in India. At present
requirements stemming from this Indian carriers spend close to Rs 5,000
scheme while closely monitoring what crore in MRO activities of which 90% is
spill-over benefits it can maximize spent outside the country in Sri Lanka,
– especially in terms of traffic and Singapore, Malaysia, United Arab
associated non-aeronautical revenues Emirates (UAE) as airlines primarily
at the major airports that such flights go to these destinations for MRO
connect. services.8

3.1.1.3. Fillip to airlines 3.1.1.6. Economic Regulation


NCAP, 2016 had outlined policy AERA regulates aeronautical tariffs
measures to facilitate airline operations for major airports in the country (with
in terms of code share agreements, more than 1.5 million passengers
bilateral traffic rights, scheduled per annum), while tariffs for non-
commuter airlines, etc. These major civil airports are determined /
measures may facilitate coverage approved by MoCA.
of new routes and enhancement of Eleven of AAI’s operational airports9
air traffic – positively impacting AAI are major airports, whose aeronautical
airports. tariffs are regulated by AERA. Of these
3.1.1.4. Air Cargo AERA has approved tariffs for the first
control period (2011-12 to 2015-16)
NCAP, 2016 emphasizes for Chennai, Guwahati, Kolkata and
implementation of the advanced cargo Lucknow. For the other seven major
information system to facilitate faster airports, existing tariffs will continue
processing of cargo and encourages and will be revised as and when AERA
8
Draft civil aviation policy looks to make flying affordable”, Oct 30, 2015, Forbes
9
India Source: http://aera.gov.in/content/airport.php; Major AAI airports include Ahmedabad, Calicut, Chennai,
Goa, Guwahati, Jaipur, Kolkata, Lucknow, Pune, Srinagar, and Thiruvananthapuram
10
Charges for Airports & Air Navigation Services, 2015-16, Airports Authority of India

AAI Corporate Plan 2017-26 45


approves the revised tariffs.10 Over For tariffs of non-major airports,
the next decade, based on traffic MoCA acts as the economic regulator.
projections for various airports, more Given the background of airport
airports will come under the purview tariff determination in the country –
of AERA as their traffic crosses the 1.5 nascent regulatory activity, unresolved
million passengers per annum mark. aspects around some of these
Besides, as mentioned earlier, AAI determinations (appeals by airport
earns ~31% of its revenues from its operators), and certain aspects
leased airports – Delhi International proposed in the NCAP (hybrid till) –
Airport Limited (DIAL) and Mumbai there is uncertainty surrounding future
International Airport Limited (MIAL) – tariff determination for AAI airports.
whose tariffs are also determined by
AERA.

The International Civil Aviation Organization (ICAO)


ICAO is a specialized United Nations (UN) agency, established in 1944 to manage
the administration and governance of the Convention on International Civil Aviation
(Chicago Convention). ICAO works with the Convention’s 191 Member States and
industry groups to reach a consensus on international civil aviation standards and
recommended practices (SARPs) and policies in support of a safe, efficient, secure,
economically sustainable and environmentally responsible civil aviation sector. These
SARPs and policies are used by ICAO Member States to ensure that their local civil
aviation operations and regulations conform to global norms, which in turn permits
more than 100,000 daily flights in global aviation network to operate safely and reli-
ably in every region of the world.

3.1.1.7. Safety and Security Regulation procedures by, in the case of India, the
In India, safety standards for airport DGCA, through its “universal safety
operations are set by the Directorate oversight audit programme”.
General of Civil Aviation (DGCA) on the The Bureau of Civil Aviation Security
basis of the standards, recommended (BCAS) is another regulatory agency
practices and procedures (SARP) whose main responsibility is to lay
developed by the International down standards and measures in
Civil Aviation Organization (ICAO). respect of the security of civil flights at
DGCA acts as the regulating agency international and domestic airports in
responsible for adopting the standards India. BCAS’s functions include laying
set by ICAO and incorporating down aviation security standards
recommended practices and in accordance with the Chicago
procedures shared by ICAO. Convention of ICAO for airport
AAI needs to adhere to the safety operators, airlines operators, and
standards and regulations laid down their security agencies responsible
by the DGCA. Further, ICAO regularly for implementing AVSEC measures.
monitors safety trends and indicators It also monitors the implementation
and audits the implementation of its of security rules and regulations and
standard, recommended practices and carries out surveys of security needs.

46 AAI Corporate Plan 2017-26


Further, it ensures that persons fundamental drivers of air travel
implementing security controls are demand. As can be seen from the
appropriately trained and possess all Exhibit 20, pan-India air traffic growth
the competencies required to perform exhibits a correlation with the growth
their duties. It also engages in planning of the Indian economy.
and co-ordination of aviation security Economic growth has translated
matters. into higher passenger numbers on
AAI will need to continue to maintain account of a number of attendant
its strong focus on the safety and factors (see Exhibit 20) like greater
security aspects of airport operations urbanization, growth in domestic
and continue to respond to regulatory and international business that boost
requirements / implement best demand for business travel, and
practices in aviation safety and security growth in disposable incomes that has
at its airports. generated higher demand for leisure
3.1.2. Economic aspect related travel.

Economic growth is one of the

Exhibit 20: Growth in domestic air passenger traffic and India’s economy
Traffic growth maps GDP growth closely

12% 40.00%
10% 30.00%
8%
20.00%
6%
10.00%
4%
2% 0.00%
0% -10.00%
FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

India's GDP growth rate, % (LHS) Passenge traffic growth, % (RHS)

Passenger traffic has increased with increase in


incomes per person
100000 200

80000 150
60000
100
40000
50
20000

0 0
FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

Per Caipta GDP, LHS Passenger traffic (in millions), RHS

AAI Corporate Plan 2017-26 47


Increase in consumption by households
exhibits similar trend as in passenger numbers

80000 250
200
60000
150
40000
100
20000 50
0 0
FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16
Private Final consumption expenditure (INR billion), LHS
Passenger traffic (in millions), RHS

Passenger traffic has increased with growth in


business activity

15% 40.00%
30.00%
10%
20.00%
10.00%
5%
0.00%
0% -10.00%
FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

Industry GDP Growth rate, %


Service GDP Growth Rate, %
Passenger traffic growth, % (RHS)

Source: RBI, IMF and Annual Review of Traffic, 2015-16, AAI

According to the International on account of the “Make in India”


Monetary Fund (IMF), the Indian campaign of the Government of India.
economy will continue to grow at an Both sectors are expected to grow at
average 7.5% per annum till 2020, robust rates over the next few years, as
making India a US$ 3.4 trillion presented in the adjacent exhibit.
economy.11 Much of the thrust is Macroeconomic indicators such
expected to come from the services as GDP per capita and disposable
sector, which accounts for over half incomes per head are also expected
the country’s gross domestic product to grow in the next few years. As
(GDP). The manufacturing sector is per a study by Oxford Economics,
also expected to gain momentum household consumption is expected
IMF, October 2015
11

48 AAI Corporate Plan 2017-26


Exhibit 21: Projected growth in key drivers of air passenger growth

Manufacturing Disposable
11.3% Industry Personal
6.0 % Income
2015-20
2015-20 Rs
10.8%
Services 11.0% GDP per
Industry capita (PPP 2015-20
2015-20 basis)

Source: IBEF, BCG, Trading Economics


to increase further with the tripling growth but also their pattern and
of the number of Indian households dynamics. These aspects have been
with a discretionary income above discussed in further detail below.
$7,500 per annum from 66 million
3.1.3. Social Aspects
households today to 180 million
households by 2030. According to 3.1.3.1. Environment
Airbus, this significant increase in Key environmental issues for airports
disposable incomes will contribute are air quality, ground water and
to greater demand for both domestic noise pollution. In India, airports are
and international travel in the future.12 allowed to be set up after the requisite
Along with domestic economic growth, environmental clearances granted
growth in the global economy between by the Ministry of Environment and
2000-01 and 2006-07 encouraged Forests (MoEF). Further, each state
greater demand for international sets its requirements on environmental
travel for both business and leisure. aspects for (airport) operations.
In the case of India, the Middle East,
As urbanization is increasing, cities are
the Asia-Pacific and Europe are
growing and airports will no longer
predominant regions with the highest
remain on the periphery of the city.
ratio of inbound and outbound traffic.
This may result in the emergence of
Further growth in business linkages
stricter norms around noise abatement
with these countries will influence
by airports, night curfews, and other
passenger traffic growth.
such aspects. These stricter norms may
Apart from the demand side factors affect the operational cost of airlines,
mentioned above, supply side since airports might be required to
drivers in terms of the evolution and impose noise charges. This will need
predominance of the LCC model, the setting up of a process to respond
have not only influenced air passenger to these changing norms.
12
Flying by Numbers 2015-2034, Airbus

AAI Corporate Plan 2017-26 49


AAI is recognized for its efforts to reduce its impact on the environment.
In July 2011, AAI signed a partnership agreement with Air Services Australia and Air
Traffic and Navigation Services South Africa (ATNS) to form the Indian Ocean Strategic
Partnership to Reduce Emissions (INSPIRE) to improve the efficiency and sustainability of
aviation in airspace over the Indian Ocean and Arabian Sea.
INSPIRE aims to accelerate the development and implementation of operational procedures
to reduce the environmental footprint for all phases of a flight on an operation-by-operation
basis, from gate-to-gate and facilitate world-wide inter-operability of environmentally
friendly procedures and standards. To gauge the improved environmental impact of a
perfect flight minimizing on-ground delays, it uses expeditious taxi routes and runways,
conducting gradual climb and descent paths and fly direct optimum routes (user preferred
route) based on existing meteorological and airspace conditions. AAI’s significant lead in
conducting the user preferred route project that involved 1031 INSPIRE city- pair flights
resulted in carbon savings of 6885 tonnes until 28th February 2013.
In 2013, AAI was awarded the Strategic Advancement in Air Traffic Award as part of
the ATC Global Excellence 2013 awards. AAI also received the Excellence in ANSP
Management Award, for ANS’s initiatives to improve operational efficiency and safety,
which have resulted in an estimated reduction in carbon emission by 510 million kg and
savings of $200 million.

3.1.4. Technology technologies that find application in related travel


Significant advancements in technology have / other industries that could be extrapolated to
changed the face of the aviation sector over aviation infrastructure in future.
the past decades. As an airport developer and Further, the adoption of technology will need to
operator, AAI is required to not only respond be seen in terms of its potential impact on overall
to advancements in technologies relevant to airport operations, reduction in operational costs
airport operations that improve an airport’s and improvement in customer service (know
operational efficiency and customer experience and serve customers better) to ensure that this
but also to advancements / developments in meets standards that customers who have used
the areas of air navigation, safety, security, and such technologies at international airports have
aircraft manufacturing. come to expect. It will be important for AAI to
When assessing potential opportunities for and track such developments and actively consider
threats to AAI in the medium to long-term future, their deployment through detailed assessment
it has taken into account (1) developments in of ‘value-for-money’ for various applications at
these areas over a similar time horizon in the various airports.
past to understand potential areas and the Some developments in the aviation industry are
pace of further impending changes, and (2) outlined below for reference.

50 AAI Corporate Plan 2017-26


Biometric data Border Protection (CBP) at New York’s John
Several international airports have introduced F. Kennedy International Airport deployed a
systems for biometric data collection of system for biometric authentication of electronic
passengers to validate passenger information passports. This technology allows biometric
during the immigration process. This results in matching of a traveller’s face with the facial
higher security and often faster processing times image stored on the identification document’s
for passengers. Recently, facial recognition (passport) e-chip. In the US, by the end of 2016,
systems have also been used to provide security non-expired US passports in circulation are
at airports. In January 2016, US Customs and expected to be made electronic.

Japan plans to introduce biometric data – a photo of a passenger’s face and fingerprint
information – with a mobile unit to reduce queuing at immigration counters at airports. It
will first be used at Kansai International Airport in Osaka, Naha Airport in Okinawa and
Takamatsu Airport in Kagawa Prefecture.

Smart gates Introducing similar systems at AAI’s airports in


In 2013, Dubai Aviation Engineering Projects future may require AAI to make appropriate
(DAEP) and Emaratech signed an agreement airport plans and incur investments to make
with Dubai International Airport to build and requisite provisions. This may need to be traded
install smart gates at Dubai International Airport off against a focus on enhancing airport efficiency
and upgrade immigration counters. The project and security – initially through investments in
aims to decrease immigration counters, and ease infrastructure creation and subsequently in
and expedite procedures with over 78 million upgrading existing infrastructure.
passengers expected to use the airport in 2015 Smart airports
and 103 million by 2020. The first phase of the Another major development could be the move
project with 28 smart gates installed is expected towards “Smart Airports”. CISCO defines smart
to cost about DH 100 million. Similarly, Sydney airports as having emerging technologies, with
International Airport’s immigration system is advanced and pervasively deployed sense-
already in the process of being fully automated analyse respond capabilities.
with few personnel supervising the process.

There is growing emphasis on exploiting technology to provide enhanced customer


experience, operations and value

AAI Corporate Plan 2017-26 51


Further, such airports have a highly integrated airport’s security capabilities. Besides, they
system with sub-systems built around a “digital provide a range of personalized services by
grid”: a single, converged, often carrier-class collecting and analysing passenger data to
internet protocol (IP) network that enables anticipate needed services. Thus, greater process
high-speed broadband traffic throughout the integration among the airport, airlines, various
entire ecosystem, including the airport, airport allied aeronautical and non-aeronautical
city, airlines, seaport, logistics, authorities, and services induces benefits along the entire value
other parties, enabling exchange of real-time chain13. Some such developments have been
information. highlighted in the case studies presented below.
Such airports substantially improve operational
efficiencies, passenger services as well as an

Case study 1: Changi International Airport, Singapore: Emphasis on Customer


Experience
Changi International Airport, Southeast Asia's biggest international airport, with over
55 million passengers a year (2014-15), emphasizes customer service. Already in the
process of constructing two new terminals, Changi focuses on technology that enables
staff to provide an excellent experience. They have adopted an instant feedback system
(IFS), collecting passenger experience through a simple touch-screen interface, installed in
locations such as immigration counters, information counters, retail and F&B outlets, and
even toilets. They collect over 1.5 million feedback responses a month through this system
alone. Similarly, Changi uses mobile devices for routine inspections that allow inspectors to
notify staff and rectify problems immediately. The case highlights the shifting focus towards
using technology to collect customer feedback and using data analytics to provide better
passenger service.
Source: “Technology the backbone of world’s Best Airport”, Mar 30, 2014, CNBC

Case study 2: Hamad International Airport, Doha: Change in airport design to


make airports sustainable
At the Hamad International Airport, considered one of the most “sustainable” airports,
the orientation and high-tech glazing of the passenger terminal building was selected to
help minimize the impact of heat gain within the building from the hot climate; it also
uses high-performance insulated glass to reduce solar exposure. In addition, it utilizes
demand ventilation controls using carbon dioxide occupancy sensors, displacement air
ventilation systems, daylight sensor controls and an energy management control system,
creating a truly energy-efficient airport. The case shows the shifting focus of airports
towards innovative designs and materials to reduce their utility costs and to become more
sustainable or environmentally friendly.
Source: Airport World, ACI magazine

13
Source: “Smart Airports: Transforming Passenger Experience To Thrive in the New Economy”, July 2009, Cisco
Internet Business Solutions Group (IBSG)

52 AAI Corporate Plan 2017-26


Aircraft design From a medium to long-term perspective, AAI
Besides changes in aircraft sizes deployed on will consider these potential developments
routes on account of growth in traffic, aircraft when planning capacity and infrastructure
manufacturers such as Airbus continuously enhancements at its airports over the medium
experiment/ innovate in terms of seat and long term.
configurations, systems on board, etc. 3.2. Summary of external assessment
The implications of a change in aircraft size Based on the external assessment profiled in this
for AAI could be direct; it may need to handle section, certain opportunities and threats have
higher passengers per aircraft movement, which been identified. These have been presented
may affect terminal peak hour capacities as well in section 5 along with the strengths and
as the requirement of on-ground services. weaknesses identified on the basis of internal
assessment.

AAI Corporate Plan 2017-26 53


Coimbatore Airport

Trivandrum Airport

54 AAI Corporate Plan 2017-26


4. Market Assessment
A market assessment was undertaken to identify The market assessment, focused on 3 key parts:
and assess possible changes in the needs, 1) existing business in which AAI operates 2)
service expectations and perceptions of AAI’s allied services being provided at the airports
key customers. In this context, certain emerging and 3) understanding and managing customer
trends have already been looked at in the expectation. Market assessment is based on
section on external assessment. The focus in this secondary research and industry analysis,
section is to understand how AAI can to focus interactions within AAI at the management level,
on its customers in this plan period and the interaction with stakeholders, and consultations
opportunities or challenges this will throw up for with industry experts.
AAI in the future.

Exhibit 22: Framework for internal assessment

Existing areas of business Possible oppurtunities

• Inflight catering

• Passenger • Maintenance, repair


operations in India and overhaul

• Cargo operations in India • Ground handling

• City side development

• International consulting
oppurtunities

Area of
Business

Understanding customer expectations

AAI Corporate Plan 2017-26 55


4.1. Existing market constituents The market assessment focused on
Currently, AAI’s focus market studying key market trends, identifying
constituents are: drivers of future growth, assessing
future requirements and assessing
¾¾ Passengers potential competition. Exhibit 23
¾¾ Cargo owners / industry illustrates the approach adopted to
intermediaries study, for instance, passengers as a
key market constituent for AAI
¾¾ Tenants and concession holders at
AAI’s airports

Exhibit 23: Approach to market analysis

Step 4

Step 3
Assessment
of
competition
Step 2
Assessment of
required infrastructure
growth in future

Step 1
Drivers of growth
and projected
growth in traffic

Studying current
market trends

56 AAI Corporate Plan 2017-26


4.1.1. Airport development and over the last decade, there was a
operations decline in passenger traffic in 2008-
4.1.1.1. Studying current market trends 09. This was mainly on account
of the global economic downturn.
In terms of passenger numbers, As the global economy re-gained
India is the ninth largest civil aviation momentum, passenger traffic again
market in the world; 223.6 million increased between 2009-10 and
passengers used air transport (from, 2011-12. The year 2012 again saw a
to and within India). The number of decrease in traffic growth on account
passengers travelling by air in India of the collapse of Kingfisher Airline
has increased 2.59 times over the and a slowdown in economic growth.
past decade (a CAGR of 11.6%). This The following years saw a revival
increase can mainly be attributed to in economic growth and low crude
the entry of low cost carriers (LCCs), prices, which again led to passenger
as shown in Exhibit 24. While Indian traffic increasing, with double-digit
aviation has seen consistent growth growth in 2014-15 and 2015-16.

Exhibit 24: Growth of passenger traffic in India

35.00%
Air Deccan 31.44%
30.00% starts
operations Discontinuation
of Kingfisher
25.00%
23.71%
21.25%
20.00%
17.62%
15.90%
15.00% 9/11
Crises 13.16%
10.00%
7.67% Global economic
meltdown
5.00%

0.00%
-1.79%
-5.00%
-4.86% -6.85%
-10.00%
1997-1998

1998-1999

1999-2000

2000-2001

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

2014-2015

2015-2016

Source: Annual review of Traffic, AAI

AAI Corporate Plan 2017-26 57


Much of the boost to passenger traffic CAGR of 11.82%. There has been
in India comes from the domestic an increasing trend in international
sector, which makes up about 75% passenger traffic too during the last
of India’s total air passenger traffic. decade, but it contributes just under
Over the past decade, domestic a quarter of the total passenger traffic
passenger traffic has increased at a (see Exhibit 25).

Exhibit 25: Growth of domestic and international traffic

Passenger Traffic in India, in millions


250

200

150

100

50

0
2000-2001

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

2014-2015

2015-2016

Domestic International

Source: Annual review of Traffic, AAI

4.1.1.2. Drivers of growth and projected economic growth and domestic traffic
growth in traffic growth.
Economic growth has been one of the Increase in passenger traffic has
key drivers of growth in passenger also been encouraged by changes
traffic in India. Over the last 15 years, in the aviation landscape in India.
the Indian economy has grown at a After liberalization of India’s aviation
CAGR of 13.4% and the passenger sector in the early 1990s, several
traffic has grown at a CAGR of private airlines emerged and began
14.2%. As can be seen in Exhibit 26, operations in India. The year 2003
there is a positive correlation between heralded the phase of low cost airlines

58 AAI Corporate Plan 2017-26


Exhibit 26: Correlation between growth of domestic traffic and GDP

Domestic Air Passengers and GDP Relation

200 160
140
Domestic pax traffic (millions)

120

GDP (INR '000 billion)


150
100

100 80
60
50 40
20
0 0
1998

2001

2004

2007

2010

2013

2016
Passenger traffic Passenger traffic

Source: International Monetary Fund (IMF) reports, DGCA annual air transport reports

with Air Deccan starting operations Given the number of new airlines
that year. With a number of other either beginning or planning to begin
airlines operating on this model, LCCs operations on the LCC model, the
have steadily gained market share14 predominance of LCCs is expected to
and, in 2015, had a market share of continue in the future. An Airbus study
63% vis-à-vis 13% in 2005. projects that the number of people
Organisation for Economic Co- flying in India will increase from 1 in
operation and Development (OECD) 20 Indians in 2014 to 1 in 4 Indians
estimates that the Indian economy will in 2032.
grow at a CAGR of ~6% for the next According to passenger traffic
twenty years. According to a report by projections by AAI, the passenger
India Brand Equity Foundation (IBEF), traffic at AAI airports will increase from
business travel in India is expected to about 93 million to approximately
increase 3-fold to US $60.4 billion, 279 million between 2015 -16 and
spending on leisure travel is expected 2025-26, growing at a CAGR of about
to increase 2.3 times to US $224.6 11.65%. During the same period,
billion and the overall domestic travel the number of overall passengers
and tourism industry is expected to will grow from 224 million to 591
increase 2.8 times to US $349 billion million. A comparison of growth at
by 2024.15 AAI airports with respect to the overall
passenger growth in India is presented
in Exhibit 27.
DGCA data
14

Source: IBEF
15

AAI Corporate Plan 2017-26 59


Exhibit 27: Passenger growth forecast

700

600
Domestic pax traffic (in millions)

500

400
269 289 311
251
300
213 233
195
200 178
163
131 149
183 207 223 240 259 279
100 162
127 144
93 113
0
2015-2016

2016-2017

2017-2018

2018-2019

2019-2020

2020-2021

2021-2022

2022-2023

2023-2024

2024-2025

2025-2026
AAI Airports JVC Airports
Source: AAI

Apart from AAI, a number of other mark or if the airline industry is faced
agencies have carried out long term with challenges such as a sudden
passenger forecasts. According to spike in aviation turbine fuel (ATF)
the report prepared by the National prices, low economic growth, high
Transport Development Policy competition etc. As traffic projections
Committee (NTDPC) 2013, total are used to plan capacity expansion,
air passenger traffic is expected to a mechanism for a periodic review of
increase to 655 million, by 2030-31 a traffic projections must form part of the
CAGR of ~10%. According to the long review mechanism of the Corporate
term forecast of Centre for Asia Pacific Plan to ensure the alignment of
Aviation (CAPA), total air passenger planned capacity expansions to
traffic is projected to be 781 million revised traffic projections. The
passengers by the year 2034-35, exercise must especially focus on
growing at a CAGR of 7.32%. traffic forecast around key demand
It, however, needs to be borne and growth centres.
in mind that actual traffic growth 4.1.1.3. Assessment of required airport
may differ from the projections if infrastructure in future
underlying assumptions regarding
To keep pace with growing passenger
the overall growth rate are off the
traffic demand, AAI has drawn up

60 AAI Corporate Plan 2017-26


a development plan involving a Further, according to a report of the
capital expenditure of INR 14,746 working group on the civil aviation
crore spread over the plan period. sector by NTDPC (2012), a total of
As part of the development plan, INR 335,306 crore (between 2017
existing terminal buildings will be and 2032) will be required to develop
expanded, new terminal buildings airport infrastructure in the country.
and additional parking bays will Of this INR 53,148 crore will be
be constructed, runways will be spent on green field developments
extended/strengthened and city side while the remaining INR 282,160
development will be undertaken at crore will be spent on Brownfield
select airports. A detailed list of works developments. Exhibit 28 details the
is provided in Annexure 1. additional capacity and investment
requirements.

Exhibit 28: Additional capacity and investment requirement

Period Incremental Capacity (MPPA) Investment required (INR Crore)


Greenfield Other than Total Greenfield Other than Total
green field green field
2017 – 22 43 171 214 11,765 62,459 74,223

2022 – 27 62 249 311 17,122 90,900 108,021

2027 – 32 88 353 431 24,261 128,801 153,062

Cumulative 193 773 966 53,148 282,160 335,306

Source: AAI presentation to MoCA (2012)

A number of new green field airport vision and positioning to exploit this
projects are already in the planning growth opportunity.
phase – Navi Mumbai in Maharashtra, 4.1.1.4. Assessment of competition
Bhogapuram in Andhra Pradesh,
Dholera in Gujarat and Mopa in Goa The inauguration of Cochin
etc. Besides, it is projected that new International Airport in 1999 heralded
airports will be required in major cities the era of private sector participation
such as Delhi, Chennai, Kolkata, etc. in airports development / operations
in the Indian airports sector. The
As can be seen from the table above, Airports Authority of India Act was
apart from the planned developments amended in 2003 to allow for public-
by AAI over the next 5 years, green private partnerships (PPPs) in airports.
field airports will need to be developed This was followed by the Delhi and
over the next 10 to 15 years. This could Mumbai airports being bid out by AAI
prove either an opportunity or threat on a PPP basis in 2006. Following this,
for AAI, depending on AAI’s strategic

AAI Corporate Plan 2017-26 61


Bengaluru and Hyderabad saw green developed and operated in India. A
field airports come up on PPP basis in snapshot of the evolution of airport
2008. These developments have led ownership in India is presented in
to a change in the way airports are Exhibit 29.

Exhibit 29: Evolution of airport ownership in India

Government
aims to develop
more than 100
operational
Initiatives taken by airports. Private
state government participation
• Five small airports envisaged on a
by Maharashtra large scale
• 3 small airports
by Karnataka
• Large airports
on PPP basis by
Kerala

Development of
Greenfield airports
in Hyderabad and
Bangalore

Modernization
of Delhi and
Mumbai airports

Development of
airport at Cochin
— First private
airport operator

62 AAI Corporate Plan 2017-26


Allowing private sector participation by global operators such as Zurich
has generated considerable interest Airports, Fraport, Vinci Concessions
among large Indian and global and Egis group.
corporations in participating in the The consistent growth in air traffic in
airports sector in India. The GMR India since 2006 has been largely
group and GVK group already have captured by the PPP airports. From
significant interest in the airports sector catering to 54% of the total traffic in
in India. Other large Indian business 2007-08, AAI now caters to around
houses such as the Reliance group, 41% of the total traffic. The traffic
the Tatas and Essel have also evinced distribution between AAI and PPP
interest in PPP projects in the sector. airports is shown in Exhibit 30.
This is apart from the interest shown

Exhibit 30: Traffic distribution between AAI and PPP airports


250
224
190
200
162 159 169
144
150 42% 42%
124
117 109 42% 43% 43%
42%
100
41%
55% 40%
58% 58%
50 58% 57% 57%
59% 58%
45% 60%
0
2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

PPP AAI

Source: AAI

The overall traffic share of PPP have already been pre-qualified


airports (Delhi, Mumbai, Hyderabad, to bid for Navi Mumbai and Mopa
Bengaluru and Kochi) has increased airports. These airports may attract
from 45% to 58% and share of other traffic from the current AAI airports
AAI airports has reduced from 55% – Mopa airport will compete with the
to 42%. Going forward, airports existing Goa airport operated by AAI.
in Navi Mumbai, Mopa, Dholera A similar situation may arise in future,
and Bhogapuram are planned to for instance, for Chennai airport (AAI’s
be developed on a PPP basis and largest airport) as well. PPP airports /
a number of private sector players private sector participation in second

AAI Corporate Plan 2017-26 63


airports for local catchment poses a ATF prices that could affect the relative
threat to AAI’s organic growth. economics of these transport modes.
Another form of competition to 4.1.2. Cargo operations
the airport industry in general is
4.1.2.1. Current market trends in the cargo
from other modes of transport. The
segment
development of new national and
state highways has led to reduced Indian airports saw a throughput of
travel time between cities. The Indian 2.7 MMT of freight during FY 2015-
Railways too is taking steps to improve 16, against 2.5 MMT during the same
passenger experience and to increase period last year. Unlike passenger
the average speed of select trains. traffic, cargo traffic is dominated by
In the medium to long term, high- international throughput. For the year
speed trains will become a reality and 2015-16 international cargo traffic
might have an impact on air traffic. was 61% of the total throughput.
Although competition from improved For the same period the share of
road connectivity may not act as a PPP airports was 79% and 65% for
real threat to air traffic, especially international and domestic cargo
for medium to long haul routes, the respectively. A comparative break up
competition that the railways might of international and domestic cargo
present will need to be monitored for AAI and PPP airports is presented
given the possibility of an increase in in Exhibit 31.

Exhibit 31: International and Domestic cargo growth


International Cargo (Million MT) Domestic Cargo (Million MT)
1.40 0.80
1.30
0.68
1.20 0.70
1.05 1.10
1.00 0.91 0.60 0.54
0.52

0.80 0.50 0.45


0.70 0.36
0.40
0.60 0.30 0.29 0.29
0.44 0.27
0.36 0.41 0.30 0.23
0.34 0.35
0.40
0.20
0.20
0.10
0.00 0.00
2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

AAI Traffic PPP Traffic AAI Traffic PPP Traffic


Source: AAI traffic data

64 AAI Corporate Plan 2017-26


AAI undertakes cargo handling at for operations and management.
eight international and nine domestic Exhibit 32 lists these airports according
airports, while cargo handling at nine to the AAI’s classification of the region
international and seven other domestic of operation.
AAI airports are given out to third parties

Exhibit 32: International and Domestic cargo growth

Northern Eastern North-Eastern Southern Western


Domestic cargo operations (CUDCTs)
Amritsar Kolkata Bagdogra Chennai Ahmedabad
Jaipur Bhubaneswar Coimbatore Aurangabad
Lucknow (outbound) Raipur Madurai Indore
Port Blair Vizag
Mangalore
International cargo operations
Amritsar Kolkata Guwahati Chennai Ahmedabad
Lucknow Bagdogra Coimbatore Indore
Varanasi Trichy Goa
Jaipur Mangalore
Trivandrum
Calicut
Vizag

Source: AAI Cargo Directorate

4.1.2.2.
Drivers of cargo traffic and attached to them such as perishable
projected growth in traffic items, high value fashion textiles, gems
As in the case of passenger traffic, & jewellery, etc. In India, as shown in
economic growth has a major impact Exhibit 33, the projected growth in
on the growth of air cargo. Strong export demand for auto components,
economic growth favours increase in pharmaceuticals and processed food
industrial activity, which has a positive exports as well as growth in domestic
impact on the air cargo business. e-commerce, textile and electronics
industries augur well for the air cargo
Typically, air cargo constitutes low industry over the next ten years.
volume, high value products or
products with significant time value

AAI Corporate Plan 2017-26 65


Exhibit 33: Sector wise growth in air cargo

61% share 29% 15% 33%


2014-20 2015-20 2011-14
International

Auto- Pharma Processed-food


Component exports exports
9.25% exports
(2012-32)

Total
Air-cargo
e
35% 24% 11%
39% share 2014-20 2012-20 2014-21

Domestic
E-commerce Electronics Textile
Industry Industry production

Source: IBEF, Boeing (traffic estimates), Industry reports

According to AAI estimates, all India to the Airbus Global Market Forecast
air cargo traffic is expected to increase (2011), the express industry in India
to 3.6 MMT by 2020-21; of this, is expected to demand 110 small jet
domestic freight, which contributes freighter aircraft (which can carry a
about 40% share of the traffic, is payload of 10 to 30 tons) by 2029,
expected to reach 1.4 MMT at a which is 15.4% of the global small jet
CAGR of 6.9%. International freight is freighter aircraft demand.
expected to grow at a CAGR of 5.9% The e-commerce industry is expected
to reach 2.16 MMT. NTDPC’s forecast, to contribute to driving the domestic
however, is more optimistic. The cargo / express cargo market.
report16 projects total freight volume The significance of e-commerce
at around 4.9 MMT by 2020-21. can be gauged by the fact that the
The express cargo industry in India is e-commerce market in India was
also likely to contribute to the growth estimated at USD 17 billion for the year
in domestic cargo traffic. According 2014. According to a report on the

Working Group on Civil Aviation Sector, National Transport Development Policy Committee, June 2013
16

66 AAI Corporate Plan 2017-26


future of e-commerce by Assocham,17 traffic demand. A report prepared by
the market is expected to grow to USD NTDPC forecasts that the total cargo
100 billion due to higher internet and throughput at all Indian airports
mobile penetration and will contribute will cross 18 MMT by 2030-31. The
4% of the GDP by 2019. total cargo volume will require an
4.1.2.3. Assessment of cargo infrastructure additional 12.6 MMT capacity and an
investment of INR 52 billion to meet
AAI has appointed a consultant to the demand. A break up of forecast of
prepare a cargo specific business volumes, capacity requirements and
plan, which will include an assessment investment is given in Exhibit 34:
of current and future infrastructure
requirements to meet growing cargo

Exhibit 34: NTDPC forecast for cargo infrastructure growth

Period Throughput Estimated Additional Investment re-


forecast capacity capacity quirement
(MMT) requirement requirement (INR billion)
(MMT) (MMT)
2017 – 22 7.4 9.6 4.8 20

2022 – 27 12 15.6 8.5 35

2027 – 32 18 23.4 12.6 52

Cumulative 34.4 48.6 25.9 107

Source: NTDPC

4.1.2.4. Competition to AAI final destination. Non-availability of


Competition to AAI for cargo traffic is certain services like a centre to handle
from PPP airports as well as competing perishable products or a pharma
modes. As observed earlier, a holding facility has also led to a
large part of air cargo traffic is on leakage in traffic to PPP airports.
international routes. Of this, 78% is Further, unlike passengers, cargo can
handled by the PPP airports. Improved be transported across long distances
services and better international by road / railways to take advantage
connectivity at these airports has led to of better connectivity, higher efficiency
leakage of traffic from AAI airports. In or cheaper tariff. Hence competition
some cases, as observed by the cargo from other modes of transport acts as
department at Chennai airport, cargo a threat to AAI’s cargo operations.
is sent on bonded trucks to Bengaluru
or Hyderabad to be shipped to its

http://www.assocham.org/upload/event/recent/event_1113/Background_Paper_Future_of_e-Commerce_web.pdf
17

AAI Corporate Plan 2017-26 67


4.2. Allied services In India, some of the PPP airports
To identify possible allied services have substantially monetized city-side
which AAI can evaluate as possible land assets for development. DIAL has
business areas in future, the business monetized city-side assets – a number
portfolio of a few key international of hotels have been developed in
airport operators were studied. The the aerocity. DIAL has given land on
airport operators covered were long-term lease to developers and
Changi Airport, Aéroports de Paris, receives fees. In Hyderabad, GHIAL
Fraport and Indian operators like has developed an aviation academy
DIAL, GMR Hyderabad International on the city side.
Airport Limited (GHIAL) etc. Based 4.2.1.2. Future outlook
on this study, the following allied GHIAL is in the process of developing
services were identified as potential India’s largest Airport City that
opportunities for AAI to evaluate: will form an integrated ecosystem
¾¾ City side development spread over 1,500 acres (of the total
¾¾ Airport consulting etc – 5,495 acres of land available to
International opportunities GHIAL) through its subsidiary GMR
Hyderabad Aerotropolis Ltd. It will
¾¾ Maintenance, repair and overhaul offer commercial office space, retail,
(MRO) leisure and entertainment, hospitality,
¾¾ Ground handling education and healthcare facilities.
Two special economic zones (SEZs)
¾¾ In-flight catering
are also planned at Hyderabad
These have been further detailed in airport. GHIAL is using three primary
the sub-sections below. models to develop its city-side land
4.2.1. City-side development – (a) lease land to developers where
they build the required infrastructure
4.2.1.1. Current trends and operate; (b) lease land and
Airports around have started infrastructure to third parties for
monetizing their city-side assets operations and (c) enter into joint
to obtain an additional stream of ventures to develop and operate city-
non-aeronautical revenue while side business.
transforming themselves into new DIAL is in the process of expanding its
dynamic centres of economic activity. city side development and evaluating
City-side development is being various options including development
diversified from being only about of large retail / office spaces. Mumbai
cargo and car parks to logistics International Airport Limited (MIAL)
centres, hotels, convention centres, and Bangalore International Airport
office complexes, intermodal centres, Limited (BIAL) have also commenced
retail malls, hospitals etc. In the case of city-side developments to leverage
some airports, the developments are land available on the city side for
so large so as to constitute an “airport earning additional non-aeronautical
city” or “aerotropolis” (airport-centred revenues.
urban economic regions).

68 AAI Corporate Plan 2017-26


4.2.1.3. Attractiveness for AAI 4.2.2. International consulting
One of AAI’s major strengths is the huge opportunities
network of city-side land at its airports 4.2.2.1. Current trends
that can be used for development.
As a natural extension to their
AAI has already commenced the
core business, a number of airport
process of identifying airports for city-
operators have diversified into
side development, techno-feasibility
international markets for opportunities
reports, master planning, architectural
such as consulting business, technical
concepts and business plan studies
advisory services for ANS. Changi
are already being undertaken. The
Airport Group, Aéroports de Paris,
list of airports for which these studies
Fraport, etc. have dedicated consulting
are being undertaken is presented
divisions.
at Annexure 3. The attractiveness of
these opportunities will need to be Exhibit 35 highlights some of the
considered on a case-to-case basis. areas where global airport operators
The restrictions imposed on city-side are currently offering their consulting
development by AAI act may limit the services to other countries.
potential for city-side development at
AAI airports.

Exhibit 35: Potential disciplines for international consulting for AAI

O&M Air Traffic Management

Airport Safety & Security Renovation & Modernization of Airports

Airport Feasibility Studies Pavement Design & Construction

Airport Electrical Installations & Night Landing Facilities

Passenger & Cargo Terminal Design & Construction

Airport Management on Turnkey basis Integrated Passenger Information System

AAI Corporate Plan 2017-26 69


Interactions suggest that AAI has An analysis of various key aspects
also pursued such opportunities in reveals that AAI can utilize its strengths
the international market, mainly in to enter this market and benefit from
South Asia, to offer technical advisory the opportunities. However, the
services to airport development Authority will face challenges arising
authorities / governments. However, from the highly competitive nature
the volume of work undertaken has of the business and moderate entry
not been significant. barriers.
4.2.2.2. Future outlook Consultancies are typically awarded
The aviation sector is a dynamic sector in an open bid process; however,
and the environment is frequently the project award and execution can
changing in terms of how airports be challenging owing to language
are planned, designed, constructed constraints and lack of local expertise.
and operated etc. Such dynamism For instance, in West and Central
will always require countries that are Africa, there are about 24 French
not advanced in the development speaking countries. To work in these
of operations to seek assistance of countries, fluency in French may be
airport operators having expertise in a primary requirement. This is where
airport development and operations. AAI may lose out to its European
competitors. AAI may also face
International Air Transport Association competition from Chinese players in
(IATA)18 estimates that there will be these markets.
an increase of 4.9% in passenger
numbers between the years 2014 In terms of overall competition, AAI
& 2034 in the Asia-Pacific market. faces stiff competition in both Asia
A high growth rate of 4.7 per cent and Africa. The Changi Airport Group
is also expected in Africa during the is very active in the Asian region and
same period. According to the CAPA in the Middle East. It concluded a
Global Airport Construction Report, six-year O&M contract at Dammam
2016, the global airport construction airport in Saudi Arabia in 2014.
market size is US$ 543 billion. Africa Apart from Changi Airport Group
has already initiated construction (CAG), Vinci Concessions, Egis,
projects with about 40 new airport TAV, Arup, Mott MacDonald, Leigh
projects commissioned in 2012. These Fischer, etc., are other competitors
projects will need expertise in terms of who have established themselves in
planning, designing, operations, etc. both Asia and Africa. The results of
the assessment indicate that although
4.2.2.3. Industry segment attractiveness AAI has limited experience at present,
AAI has conducted an assessment of it should explore the opportunity.
the outlook in terms of the market for
international consultancy; the results
are summarized below. A snapshot
of the assessment is presented in
Exhibit 36.

18
“IATA Air Passenger Forecast Shows Dip in Long-Term Demand”, Nov 26, 2015, IATA official website

70 AAI Corporate Plan 2017-26


Exhibit 36: Assessment for international consulting business

Bargaining power
of suppliers: Low
Technical expertise is
Bargaining power
AAI’s strength but AAI of customers: Low
currently faces manpower Bargaining power limited
shortage . In some by project budgets
projects, collaborate with specified by government
regional experts organizations

Barriers to entry: Threat from


Moderate Substitution:
Consultancy contracts Low
typically involves open There are no substitutes
bidding process but Intensity of for provision of such
project award and competition: consultancy and
execution can be development services
High
challenging
Competition is high
owing to presence of well
established, large players

Beneficial to AAI’s entry Obstacle to AAI’s Entry

AAI has a vast pool of talent, which 4.2.3. Maintenance, repair and overhaul
has experience in various airport (MRO)
functions from air traffic management
4.2.3.1. Current market trends
to designing and developing civil
structures. AAI’s adoption of advanced The current MRO market of
technology in ANS compared to Indian carriers is estimated to be
countries in South Asia and the approximately INR 500 crore (USD
Association of Southeast Asian Nations 750 - 800 million). While the market
(ASEAN) gives it an edge in offering for MRO is large, there are only a few
consulting services in the region. In the MRO service providers, the key service
past, AAI has carried out development providers’ being Air India Engineering
works in North and Sub-Saharan Services Limited (AIESL), Air India
Africa, in Libya, Algeria and Tanzania. Nagpur Mihan SEZ, Air Works India
Both Asia and Africa are fast growing Pvt. Limited, Cochin International
aviation markets and AAI will explore Aviation Services Ltd and MAS-GMR
the possibility of offering its services in Aero Technic Ltd (MGAT). Exhibit 37
these regions. gives the location of key MRO service
providers in India.

AAI Corporate Plan 2017-26 71


Exhibit 37: Airports with MRO facilities

Air India, Nagpur


MIHAN SEZ

Air India
Engineering
Services Ltd.
(AIESL)

Nagpur

MAS-GMR Aero
Air Works Technic Ltd. (MGAT)
India Mumbai and AIESL
Engineering Hyderabad
Pvt. Ltd.
Bengaluru

Kochi
Cochin International
Aviation Services

One of the key challenges for the fleet. Further there are new entrants
MRO industry in India has been the expected to enter the Indian airline
high tax on such services. Further, industry. Given this, the Indian MRO
there are other challenges that the market is expected to grow further.
industry faces such as problems faced Based on estimates made by Boeing,
in the import of key components and the MRO market is expected to grow
problems arising from the movement at a CAGR of about 7% to reach USD
of experts. 1.2 billion by 2020.
While in the past, steps have been The Government of India, in the Union
taken to boost investment in the MRO budget for 2016-17, has provided
business in India, only a very small the following incentives to promote
percentage – 10% – of the overall investment in the MRO business in
MRO requirement of Indian airlines is India:
met by service providers in India. ¾¾ Tools and tool-kits used by the
On account of such challenges, MRO have been exempted from
approximately ninety percent of customs duty
expenses on MRO by Indian carriers ¾¾ The procedure for availing of
are being spent outside India, mainly exemption from customs duty have
in Sri Lanka, Singapore, Malaysia and been simplified
the UAE.
¾¾ The restriction of one year for
4.2.3.2. Future outlook utilization of duty free parts have
With growing air traffic, Indian been extended to three years.
airlines are expected to expand their

72 AAI Corporate Plan 2017-26


¾¾ Foreign aircraft brought to India for Globe Ground and Menzies Bobba,
MRO work, are allowed to remain which account for more than 70% of
for up to 6 months or as extended the market share.19 The rest of the
by the DGCA. The aircraft can market is highly fragmented between
carry passengers in the flights at smaller ground handling companies
the beginning and the end of the like Universal Aviation, Aviaxpert
stay period in India. and Dani Aviation etc. Air India is
Further, NCAP, 2016, has also allowed the dominant player with its subsidies
exemption on airport royalty and AIATSL and AISATS operating at more
additional charges for MRO operators than 50 airports.20
for a period of 5 years. 4.2.4.2. Future outlook
4.2.3.3. Industry segment attractiveness India handled total ATMs of 1.79
With the growing need for MRO million in the year 2015-16. It is
services in India, there are several projected that the total number of
companies that have shown an ATMs will reach 3.2 million by the year
interest in developing MRO set-ups. 2025-26. Given the projected growth
The government has also taken some in ATMs, the overall outlook for the
positive steps to promote the MRO ground handling business looks
business within the country. This positive. CAPA has projected that the
presents a good opportunity for AAI ground handling market in India will
to try and capitalize on in the future. grow to US $1 billion by 2022-23. It
further states that if airlines outsource
4.2.4. Ground Handling all their ground handling activities,
4.2.4.1. Current trends the market size will increase further.
According to IATA, globally, airlines The NCAP, 2016, amended the
outsource more than 60% of their ground handling policy of 2010,
ground handling operations and the providing incentives for the ground
trend is increasing. However in India, handling business. The NCAP, 2016
airlines primarily handle most of their suggests that three ground handling
ground handling operations on their agencies (GHA) including Air India’s
own. CAPA estimates that in 2012- subsidiary/JV should operate at all
13, the third-party handling market in major airports as defined in the
India was around US $220 million. In AERA Act 2008. Non-major airports
India, the primary customers of third have been exempted from minimum
party handlers are foreign airlines. number of ground handlers under the
Ground handling at Indian airports policy, as it directs airport operators
is governed by the Ground Handling to decide on the number of GHAs at
Policy of India, 2010. these airports, based on the traffic
output, airside and terminal building
The ground handling business in India
capacity. Further, it also allows all
has eight key players – Air India Air
domestic scheduled airline operators
Transport Services Limited (AIATSL),
including helicopter operators to carry
Air India SATS Airport Services Private
out self-handling at all airports.
Limited (AISATS), Bird WFS, Bhadra,
Cambata, Celebi GH, Celebi NAS,

AAI and CAPA estimates


19

SATS Annual report 2014-15


20

AAI Corporate Plan 2017-26 73


Exhibit 38: Evolution of Ground Handling policy in India

Regulatory guidelines easing participation of self-handling by airlines Ground Handling


Policy, 2010
• Parties that can offer ground handling services at metro airports
− Airport operator/ JV Company
− Air India/ JV company
− Independent third party (appointed by bidding process)
• Self- handling for all airlines for passenger check-in & baggage handling

NCAP, 2016
• Three Ground Handling Agencies (GHA) including Air India’s subsidiary/JV should
operate at all major airports as defined in the AERA Act 2008.
• Non-major airports are exempted from minimum number of ground handlers. Airport
operator will decide on the numbers, based on the traffic output, airside and terminal
building capacity.
In case of third party ground handling, Air India’s subsidiary/JV will match the lowest royalty/
revenue offered by the other ground handlers. All domestic scheduled airline operators
including helicopter operators will be free to carry out self-handling at all airports

NCAP, 2016 policy allows self-handling handling may continue in future.


and hence the current trend of self-

74 AAI Corporate Plan 2017-26


4.2.4.3. Industry segment attractiveness the attractiveness of the ground
Based on secondary research, an handling market in India for a new
assessment was undertaken to assess entrant. Exhibit 39 shows the result.

Exhibit 39: Porter's assessment for ground handling business

Bargaining power Bargaining power


of suppliers: Low of customers: High
Availability of large Unfavourable financial
labour pool in the positions of airlines
country reduces supplier would lead to intense
bargaining power negotiations. Availability
of many GH players at
an airport

Barriers to entry:
High Threat from
Long standing Substitution:
relationships with various High
local authorities/airlines. Technology upgradation
Also, need for high could reduce scope for
capex, technical skills &
Intensity of GHS
manpower training competition:
High
Presence of multiple
third-party GHAs, self-
handling by airlines

Enhance attractiveness Obstacle to AAI’s entry

As discussed earlier, the market for generating business is established


third-party ground handling is not relationships with various airlines.
very large as a number of airlines While AAI is in an advantageous
manage ground handling operations position because it is an airport
themselves. Further, third-party ground operator, it currently does not have the
handling is also highly competitive and technical skills / capability to undertake
fragmented – it includes established ground handling services and will
players such Celebi (of global repute), need to incur both capital expenditure
AIATSL and AISATS etc. Based on for various equipment and bring on
interactions with various stakeholders, board the requisite manpower.
it is understood that a key factor for

AAI Corporate Plan 2017-26 75


4.2.5. In-flight catering size is limited to full service carriers,
4.2.5.1. Current market trends the presence of a large number of
players, has resulted in a fragmented
In India, the airline operating model market.
has an impact on the type of in-
flight catering required. Typically full 4.2.5.2. Future outlook
service carriers provide hot meals As discussed earlier, the LCCs have
to their passengers while low cost been gaining market share in India
carriers provide curtailed options with a 63% share in 2015. This trend
(limited snacks and beverages). With is likely to continue and the market
LCCs not opting for traditional hot share of the LCCs may continue to
meals, the traditional catering market increase as a number of new airlines
for domestic traffic is limited to full are poised to enter the Indian market
service carriers such as Air India, Jet as LCCs.
Airways and Vistara. With more than While globally, the in-flight catering
60% market share with the LCCs, the market is expected to grow in the next
overall catering market is limited to five years with the growth in passenger
less than 40% of domestic traffic. traffic, the increasing market share of
In India, there are several private LCC, may limit the potential for new
in-flight catering companies such as entrants in an already fragmented
TajSATS, Skygourmet Catering Pvt. and competitive market.
Ltd, Ambassador’s Sky Chef, Muthoot 4.2.5.3. Industry segment attractiveness
Skychef, Aerotech Aviation, Modern
Processes, Oriental Hotels, Tripzgo, 3A Based on secondary research, an
Travels, Comfort Kitchen, etc. TajSATS assessment of the attractiveness of the
is the market leader in the country and in-flight catering market in India for a
provides in-flight catering services in new entrant was carried out. Exhibit
Mumbai, Delhi, Chennai, Kolkata, 40 shows the results of an assessment
Amritsar, Goa and Bengaluru, and of the attractiveness of the in-flight
manages airport lounges in Mumbai catering market for a new entrant.
and Chennai. With the overall market

76 AAI Corporate Plan 2017-26


Exhibit 40: Assessment for in-flight catering business

Bargaining power Bargaining power


of suppliers: Low of customers: High
Skilled resources Airlines are free to
available in plenty for choose from a large
catering business number of catering
players

Threat from
Substitution
Barriers to entry: High
Low LCC are opting for direct
Low capital investment procurement of snack
Intensity of and beverages
requirement
competition: Restaurant options
High available for passengers
The market is very at the terminal
competitive and
fragmented ~ more than
10 players in the market
already

Enhance attractiveness Reduce attractiveness

The assessment indicated that AAI growth will remain a key factor for
does not have any specific established AAI to retain / expand its market.
strength in providing such services in Retention of and an increase in the
a highly competitive, characterised customer base will require meeting
by the presence of several leading their expectations through high quality
international service providers. service at airports.
4.3. Understanding and managing Accordingly, in this Corporate Plan
customer expectations period, concerted efforts to understand
and manage customer expectations
As discussed above, there is strong
will be needed.AAI has already
market potential for AAI to grow in
adopted the practice of measuring
its existing business and possibly
customer satisfaction at its airports
provide new services at AAI airports.
through the ASQ surveys undertaken
In this competitive and fast changing
at 11 AAI airports and the Customer
market, retention of customers and
Satisfaction Index (CSI) satisfaction

AAI Corporate Plan 2017-26 77


surveys undertaken at 53 other AAI operators were earlier responsible
airports. However understanding and for the infrastructure that supported
managing customer expectations air transportation and airports
involve activities that go much beyond were viewed as a public utility. In
measuring customer satisfaction. It recent years, however, privatization
requires that AAI be proactive in the of airports has led to a significant
following areas: change in passenger expectations
¾¾ Understanding customer from airports, including expectations
expectations relating to facilities and services
at airports, security clearance,
¾¾ Taking on board how global airport availability of baggage carts, courtesy
operators deliver on customer of airport staff, etc. AAI needs to
expectations assess the expectations of its customer
This sub-section discusses these groups in order to achieve higher
aspects, and specifically how other customer satisfaction in future. Some
airport operators are responding to details are provided below:
meet changing customer needs. 4.3.1.1. Internal Customers
4.3.1. Understanding customer Amongst internal customers, airlines
expectations: continue to be the most important
Traditionally, airlines were considered customer for AAI. Internationally,
as key customers for airports, and airlines’ expectations from airports
passengers were considered as has been evolving and rising with
customers for airlines. However, in airlines expecting airports to provide
the recent past, there has been a advanced technology for efficient
significant change in the way airports operations. Thus, AAI must evaluate,
view their customers – the focus of adopt and implement best practices
airports has diversified from just of other global airport operators
providing airport operation services to to respond to needs of its internal
providing non-aeronautical services customers (Please refer Annexure
and enhancing their revenues from 4).These include the following:
such non-aeronautical services.. ¾¾ Providing high technology solutions
Given this shift, today leading airports such as live tracking of ground
are classifying their categories of services (both luggage and people
customers as follows: flow), which help airlines to better
track and monitor performance on
¾¾ Internal customers – tenants like in-
ground
terminal concessionaires, ground
handlers, airlines, cargo operators ¾¾ Improving the efficiency of use of
etc.; and existing space at airports forfaster
processing of passengers, higher
¾¾ External customers – passengers,
traffic handling within the existing
airport visitors, meet and greeters
infrastructure etc.
Each of these customer groups have
¾¾ Using data analytics to increase
different expectations from the airport
operational efficiencies
operator, which has been evolving
over time. For example, airport ¾¾ Implementing advanced airport

78 AAI Corporate Plan 2017-26


operations database to manage in terms of airports services and
daily airport operations facilities, which can be mapped in
PPP airport operators are already one or all of the following categories:
proactively responding to such ¾¾ Faster processing at airports –
expectations. AAI will need to follow faster processing at various points,
suit. including check-in, security check,
4.3.1.2. External customers - passengers immigration, etc.

Like airlines, passenger expectations ¾¾ Courteousness of airport staff


from airports have increased ¾¾ Ease of journey at airports – efficient
substantially. Today, passengers are display and signage systems
developing expectations based on: ¾¾ Higher sense of safety and security
¾¾ their experiences from large ¾¾ High quality services and
international hub airports; infrastructure –
¾¾ learning from experiences of • Free Wi-Fi, high degree of
friends and family; cleanliness, adequate seating
¾¾ advertisements by international etc.
airport operators; etc. • Entertainment facilities such as
A unique travel experience is a key gaming zones, spas, lounges,
element in addressing passengers’ etc.
expectations as each journey has • Facilities for passengers with
different priorities and concerns. In special needs
creating this passenger experience,
the airport’s role should evolve from • Disaster management systems
passive asset owner to that of an active ¾¾ Better retail and F&B offerings
participant, enriching the passenger
¾¾ Customer feedback management
journey as a key partner. Each
passenger has different expectations

AAI Corporate Plan 2017-26 79


Aurangabad Airport

80 AAI Corporate Plan 2017-26


5.SWOT Analysis
As discussed in the internal Assessments tried to identify / assess
assessment section, several customer potential changes and trends in the
service benchmarking programmes environment external to the AAI that
have been established globally to could have an impact on it over the
systematically measure the customer next 5-10 years - most importantly
satisfaction of the airport, such as with reference to possible changes in
Airport Service Quality (ASQ) survey, the needs, service expectations and
SKYTRAX rating programme, etc. AAI perceptions of AAI’s key customers.
has been participating in the ASQ The focus was to identify those
survey programmes to assess its own changes that could have a significant
standing and understand the areas impact on the AAI and which could
for improvement in future. present opportunities or threats to
AAI may focus on exceeding AAI’s working / growth in the future.
customer’s expectations and planning 5.1. Key strengths
ahead for future, in order to offer Based on the internal assessment
differentiated service levels. AAI undertaken, following key strengths
will need to design the total airport were identified:
experience for its passengers, from the
moment the passengers arrived at the 5.1.1. Large land holdings
parking area or the drop-off point to AAI has access to large parcels of
the moment they take off, in order to lands at airports which it operates.
elevate the passengers’ experience to While a large part of such parcels
the next level. To do this, efficient use are currently under operational use
of information integration, technology or earmarked for future expansion
and people will be required. of aeronautical infrastructure, AAI
Earlier, the section on Internal still has large land parcels that can
Assessment focused on identifying be commercially exploited as well.
AAI’s potential strengths / areas Exhibit 41 highlights the information
of comparative advantage as well on land available for commercial
as potential weaknesses / areas of exploitation at some of key AAI
vulnerability. External and Market airports:

AAI Corporate Plan 2017-26 81


Exhibit 41: Land available at select airports

Airport Land available for Commercial


Exploitation
Kolkata Airport 95 acres approx.

Jaipur Airport 19 acres approx.

Bhubaneswar Airport 50 acres approx.

Amritsar Airport 27.54 acres approx.

Source: AAI

5.1.2. Network of airports across the for cross-border initiatives like Indian
country Ocean Strategic Partnership for
In terms of the number of airports being Reduced Emission (INSPIRE).
operated, AAI is the largest airport 5.1.4.
Consistent profitability and
operator in the country. Currently it financial resources
owns/operates 125 airports in the AAI has been a consistent profit
country and manages approximately making public sector entity. The
41% of the total passenger traffic. financial strength of AAI is evident
This network of airports is a significant from the cash reserves it had at the end
strength for AAI and can be leveraged of FY 15. AAI has also paid dividends
to explore opportunities in extending to the Government of India in the past
value propositions for its different years. The revenue between FY 07 to
customers. FY 15 grew at a CAGR of 13 per cent,
5.1.3. Expertise in providing air while profit before tax has grown at
navigation services around ten percent.
AAI has monopoly in providing air 5.1.5. Experienced Manpower
navigation and traffic management AAI has professionals with diverse
services in the country, excluding the experience in the fields of airport
airspace identified for military use. planning, engineering and
Over the years AAI has developed development, airport operations, etc.
significant expertise in providing It also has experienced manpower
these services including developing in other areas such as air navigation
and adopting contemporary services, cargo terminal development
technology systems such as GAGAN. and operations etc. Such diverse
The organization’s competency in experience provides AAI the strength
navigation services is well recognized to expand its current business, within
in the South Asia region. AAI has won India and in foreign territories.
the prestigious Jane’s ATC Award21

21
Reference - http://www.aai.aero/misc/IT_Airport28513.pdf

82 AAI Corporate Plan 2017-26


5.2. Key Weaknesses operators including private operators
Based on the internal assessment in India. A comparison of the privately
undertaken, the following key operated Rajiv Gandhi International
weaknesses emerged: Airport, Hyderabad with AAI operated
Chennai and Kolkata International
5.2.1. Low share of non-aeronautical Airports is shown in the Exhibit 42.
revenue While there have been efforts in
The share of non-aeronautical enhancing the non-aeronautical
revenue for major AAI airports is revenue at airports, there is scope for
lower as compared to global airport enhancing non-aeronautical revenue
further.

Exhibit 42: Comparison of non-aeronautical revenues of AAI with a comparable private


airport

FY 15-16
Pax (in million) Gross Revenue Share of
non-aeronautical
Hyderabad – GMR 12.39 6,155 (INR mn)* 32.79%

Chennai – AAI 15.22 11,854 (INR mn)** 21.97%

Kolkata – AAI 12.42 8,162 (INR mn)** 24.53%

* Gross revenues from GMR consolidated FY 15-16 presentation


** Gross revenues from AAI provided data, Revenues exclude income from ANS services

5.2.2. Low growth of cargo business 5.2.3. Manpower shortage and training
Cargo revenues22 for AAI have been Manpower shortage is currently at
stagnant since 2007 and are less 40% of the sanctioned positions at AAI.
than two percent of total revenue. Interactions with various departments,
While cargo operations at Delhi and including Planning, Engineering,
Mumbai airports have increased Operations, Commercial, Air
significantly over the last few years, AAI navigation, Corporate Planning &
has not been able to expand its cargo Management Services (CP&MS) etc.,
business. Less than one-fifth of its suggested that the shortage has
total cargo handling capacity is being affected the performance of various
utilized at four out of nine terminals departments and is becoming a
operated by AAI. Based on interaction constraint for future growth. Further,
with stakeholders, it is understood that there are currently no formalized
lack of marketing to potential users is training programmes for various
one key reason for low cargo volumes. departments including planning,
Other reasons include weak customer operations etc.
responsiveness, lack of flexibility with
cargo department etc.
22
Cargo revenues from operating revenue and expenditure data provided by AAI

AAI Corporate Plan 2017-26 83


5.2.4. Limited focus on MIS – have focused on enhancing non-
Interaction with various departments aeronautical services revenue at
also revealed that no formalized MIS passenger terminals to increase their
systems in place at most departments revenues. Traffic is expected to grow
at the airport, regional and in the coming years and AAI has the
central levels. It is understood that opportunity to translate the increasing
information is being shared based passenger numbers into higher
on requirements. A formalized MIS terminal revenues. Providing value
system helps keep the management added services within the terminal,
informed of the prevailing business having retail capture at the airports,
situation and enables them to and enhancing the food and beverage
proactively take appropriate actions. (F&B) setup at the airports are some
Such a decision support system at of the opportunities available to AAI.
various departments / management 5.3.2. Increasing the cargo business
level can help them leverage the data There has been significant growth
/ information available within the over the past few years in the air
authority and ensure more informed cargo business and the trend is only
decision making. likely to strengthen with the growth
5.2.5. Limited focus on marketing of e-commerce and manufacturing
Marketing for airports allows effective industry. As discussed earlier, AAI
communication with its customers operates cargo terminals at its
and user base, helping an operator airports using both the operation
identify the services and the service and maintenance and self-handling
quality level required. Until recently,23 models, and is suitably placed to
AAI had limited focus on marketing. capitalize on this potential growth in
However, a department has now air cargo.
been established. Lack of marketing 5.3.3. Monetizing land holdings
and a branding strategy have led to A large number of airport operators
less than effective engagement with (including the AAI JVC airports
customers and promotion of various operators in India) have put the
service offerings. land holdings available to them to
5.3. Major Opportunities commercial use – to develop hotels,
Based on the external and market retail complexes, office complex,
assessment undertaken, following MROs, etc. As discussed earlier, AAI
major opportunities seem to be has access to large land holdings that
relevant: currently are not under operational
use. Like other airport operators,
5.3.1. Enhancing non-aeronautical AAI can monetize a part of its
services at the passenger terminals land holdings and exploit them for
As discussed earlier, a number of commercial developments, MROs,
airport operators – internationally and etc. Such developments can help
within India such as AAI’s joint venture enhance revenues and improve the
company (JVC) airport operators overall passenger experience.

23
Marketing function has been recently established by AAI, this is focus on promoting AAI’s services to airlines and
other potential business partners.

84 AAI Corporate Plan 2017-26


5.3.4. Adoption of state-of-the-art to be not very advanced in terms of
technology expertise available for air navigation
Technology in airport operations has services. AAI can leverage its expertise
changed over the years. Airports to provide services such as consulting
globally are adopting state-of-the-art and calibration of air navigation
technology such as e-gates, mobile equipment to such countries.
applications for customers, automated AAI also has vast human capital
storage and retrieval processes, radio having in-depth knowledge of
frequency identification (RFID) tags, airport planning and engineering,
etc., to improve operations, efficiency airport development, and airport
in passenger movement, improving operations. AAI can leverage human
passenger experience, etc. Further, capital to explore opportunities for
a number of airports have also providing services such as consulting,
implemented data analytics tools to developing, operating and managing
help them collect and analyse data to airports outside the country, focusing
better understand customer behaviour on developing countries (the South
and predict passenger behaviour etc. Asian, South-East Asian and African
This has helped airports design and region).
operate airports better and enabled 5.4. Major Threats
them to optimise the retail / F&B mix
at airports to enhance revenues. Based on the external and market
assessment undertaken, the following
5.3.5. Marketing initiatives to improve have emerged as major threats:
engagement with customers
5.4.1. Reliance on revenues beyond the
Engaging with customers, airlines control of AAI
and passengers, has become critical
for airport growth. Globally, it is One of the major contributors to AAI
seen that airports make significant revenues is the revenue share from
efforts to connect and engage with Delhi International Airport Limited
their customers and promote services (DIAL) and Mumbai International
and offerings through social media, Airport (MIAL). Currently this revenue
marketing promotions at airports, accounts for about 24%24 of the
organizing shopping festivals, etc. An total revenue. The revenue of these
effective marketing strategy can help airports are regulated by and based
AAI promote new and existing services on the guidelines issued by Airports
across businesses. Economic Regulatory Authority of
India (AERA). The tariffs for DIAL are
5.3.6. International opportunities for expected to reduce significantly in the
consulting and other services second control period25 (FY 2015-19).
As discussed earlier, AAI has significant This reduction in the tariffs will affect
expertise in and is well recognized for AAI’s revenue from DIAL; the overall
its expertise in providing air navigation revenue in 2016-17 is projected to
services. A number of countries in decrease.
the South Asian region are known

24
AAI Profit and Loss Account for year 2015-16
25
http://aera.gov.in/upload/order/566abbbd4c46ffinalorder11122015430opti.pdf

AAI Corporate Plan 2017-26 85


5.4.2. Obligation to implement RCS 5.4.4. Stricter environment and safety
As discussed earlier, AAI has the norms
mandate to implement the Regional Going by international experience,
Connectivity Scheme (RCS) which possible reforms in safety and
entails expanding the aviation network environment regulations in India
to unserved and underserved regions in the future could bring in stricter
of the country. The implementation compliance norms. These may include
of RCS could possibly result in stricter norms / restrictions around
operationalization of non-operational pollution levels, night curfews etc.,
airports and / or development of new which have already been applied in
airports. While the operationalization a number of leading airports globally.
of RCS is at a relatively early stage, Such stringent norms could lead to
it does not seem probable that loss of revenue for AAI or necessitate
AAI would benefit financially from additional spends to maintain
operationalizing non-operational compliance.
airstrips / airports with low traffic
5.5. Summarizing the SWOT
volumes.
Based on the above assessment,
5.4.3. Competition from other airport Exhibit 43 summarizes AAI’s SWOT
developers and operators analysis.
The increasing involvement of the
private sector in airport development
and operations and the interest
shown by global airport developers
in the Indian aviation sector is likely
to result in substantial competition for
greenfield airport development in the
country.
Various state governments are planning
to develop greenfield airports. These
include Maharashtra (Navi Mumbai
Airport), Goa (Mopa Airport), and
Andhra Pradesh (Bhogapuram).
All these airports are planned to be
developed on a PPP basis. Some of
these would be the second airport in
local catchments, leading to some
competition for existing traffic at AAI /
AAI leased airports.

86 AAI Corporate Plan 2017-26


Exhibit 43: Summary of SWOT analysis for AAI

Strength
• Large land holdings
• Network of airports across the country
• Expertise in providing air navigation services
• Consistent profitability and strong financial resources
• Experienced manpower

Weakness
• Low share of non-aeronautical revenue
• Stagnant growth of cargo business
• Manpower shortage and training
• Limited focus on MIS
• Limited focus on Marketing

Threat
• Reliance on revenue beyond the control of AAI
• Obligation to implement RCS
• Competition from other airport developers
• Stricter environment and safety norms

Opportunities
• Enhancing non-aeronautical services at passenger terminals
• Expanding the cargo business
• Monetizing land assets
• Adoption of state-of-art technology
• Marketing initiatives to improve engagement with customers
• International opportunities for consulting and other services

AAI Corporate Plan 2017-26 87


Vadodara Airport

Coimbatore Airport

88 AAI Corporate Plan 2017-26


6. Setting the Vision and
Mission
Vision and mission statements are 6.1. Setting the mission statement
building blocks of strategic planning 6.1.1. Approach to setting the mission
for any organization. These help
statement
an organization focus its energy on
what is important and in visualizing / As stated earlier, the mission
articulating the following.26 statement is the overriding purpose
of an organization, the purpose for
¾¾ “The mission projects the purpose
its existence. To develop the mission
of existence for the organization.
statement for this plan period, three
A mission is a general expression
things were taken into account:
of the overall purpose of the
organization, which, ideally,
is in line with the values and Exhibit 44: Framework of review
expectations of major stakeholders mechanism
and concerned with the scope and
boundaries of the organization. It
is sometimes referred to in terms of
the apparently simple, but actually Review of
challenging question: “What existing
business are we in?” mission
¾¾ “A vision or strategic intent is statement
the desired future state of the
organization. It is an aspiration
around which a strategist, perhaps
a chief executive, might seek to
focus the attention and energies of Management
members of the organization” view
These building blocks, together with
management aspirations, guide
organizations in identifying their
objectives. This section describes
the vision and mission setting
exercise for this plan period. Stakeholders'
view

26
Gerry Johnson and Kevan Scholes: Exploring Corporate
Strategy Text and Cases, seventh edition.

AAI Corporate Plan 2017-26 89


¾¾ The existing mission statement; same as documented in the previous
¾¾ Management view on purpose of Corporate Plan, however the mission
existence (Internal View); and statement needs to be aligned with
the changes in the industry and the
¾¾ Stakeholders’ view on AAI’s purpose expectations of the customers,.
of existence (external view).
6.1.1.3. External view
6.1.1.1.
Review of existing mission
statement Inputs were also sought from key
stakeholders outside the AAI to elicit
The existing mission statement is their view of AAI’s purpose (Please
“to achieve highest standards of refer Annexure 4). The following key
safety and quality in air traffic stakeholders were consulted:
services and airport management
by providing state-of-the-art ¾¾ Ministry of Civil Aviation
infrastructure for total customer ¾¾ Select airlines
satisfaction, contributing to ¾¾ Other stakeholders including
economic growth and prosperity passengers, industry experts etc.
of the nation”.
The stakeholders’ view is that AAI’s
6.1.1.2. Management's view main purpose is to provide high-
Within the senior management, there quality, safe and customer oriented
was a consensus that while purpose services – for both airport and air
of AAI’s existence continues to be the navigation.

6.1.2. Mission statement for this plan period


As can be seen, the management and key stakeholders broadly agree on the
purpose of AAI’s existence. Hence, the mission statement for the Corporate Plan
period of 2017-2026 is:

“To be the foundation of an enduring Indian aviation network,


providing high quality, safe and customer-oriented airport
and air navigation services, thereby acting as a catalyst for
economic growth in the areas we serve”.

90 AAI Corporate Plan 2017-26


6.2. Setting the vision statement the organization operates in and the
6.2.1. Framework for setting the vision opportunities and threats it poses,
the strengths and weaknesses of
statement
the organization, etc. The approach
Vision statements for an organization to developing the vision statement
articulate “the desired future has recognized these factors, while
state”. The desired future state aligning it with the overall Mission.
is a function of various factors – Exhibit 45 below highlights the
management’s aspirations, what framework used for identifying the
peers and competitors are aspiring vision for this plan period.
to achieve in future, the environment

Exhibit 45: Framework for preparation identifying vision statements

Key Inputs Overarching


Purpose
Internal, external and
market assessment
— SWOT Mission Statement
Vision for AAI
Management statement for “Purpose”
aspirations AAI
“To be state”

Guidance from peers


and competition

6.2.2. Inputs from internal, external and to be appropriately considered while


market assessment identifying the desired state and
An organization’s aspirations need revising the Vision statement.
to be aligned with its key strengths 6.2.3. Management aspirations
and weaknesses. The key strengths To identify the management’s
and weaknesses identified earlier, aspirations, AAI conducted a series of
therefore, need to be considered interactions and workshops with key
while reframing the vision statement. management personnel. (kindly refer
Further, the external environment to Annexure 5 for the questionnaire
(including market) and its evolution used to elicit the management
will both offer opportunities and viewpoint). Views elicited during these
pose threats for AAI. The Vision interactions and workshops have
statement has to be aligned with been presented in Exhibit 46:
these. Therefore, these factors need

AAI Corporate Plan 2017-26 91


Exhibit 46: Key inputs for vision

Functions Key Aspirations Key themes

Air Navigation Provide reliable services as per global


standards
Service
Implement and adopt latest technology
Go global
Safer, more efficient, cost effective/ fuel
efficient
Collaborate with other countries (INSPIRE)

Airport Operate more airports to promote regional Focus on quality


connectivity (from NCAP) and efficiency. Being
Development reliable. Being world
Provide modern services on par with global
& Operations standards class. Following highest
Find opportunities to expand in global
standards. Adopting latest
markets technology. Bringing
efficiency. Exceed customer
Improve operational efficiency at airports
expectations
Fast track expansion projects
Ensure profitability of airports
Focus on aspects of safety and reliability in Focus on growth and
airport operations developing a strong
O&M and modernization efforts aviation network:
Develop new airports,
Enhance sustainability – increasingly depend
on renewable energy sources for power at foray into the global
airports aviation market, scale up of
airport operations, improve
air connectivity and scale
Cargo Increased focus on cargo operations up of cargo operations;
Operations Develop new cargo hubs at regional airports
Partner with private players to provide
services / build infrastructure Focus on sustainability:
Focus on profitability,
Stress on serving the e-commerce market,
primarily for warehousing at both large and Being cost effective,
small airports development of manpower;
Environmental sustainability
Development of common user domestic air
cargo terminals (CUDCTs)

Other Focus on monetizing land holdings by


city-side development
Businesses
Target more consulting projects in India and
abroad
Emphasise non-aeronautical revenue
enhancement

The last column identifies the key key themes need to be considered
themes emerging from the various while reframing the vision statement
interactions and workshops. These for AAI for this plan period.

92 AAI Corporate Plan 2017-26


6.2.4. Guidance from peers ¾¾ Growth / Develop core business:
In developing its Vision, AAI also Enhancing the business, vying for
studied vision statements of a diverse growth, providing for extensive
set of airport operating authorities / connectivity
corporations (encompassing airports ¾¾ Global or regional aspirations:
of various sizes, from various regions Setting benchmarks globally or in
etc.) were studied (please refer the region. Expansion of business
Annexure 6 for the vision statements regionally or globally, based on
of the organizations studied) core strengths
The study showed that the aspirations ¾¾ Technology and process:
of these organizations (private and Setting technology and process
public sector) varied from commercial benchmarks. Leveraging
success to serving the community. technology to expand business
While the aspirations are different and offer distinctive passenger
for different organizations, there experience
are common themes that run across ¾¾ Innovation and proactive
various organizations. These are approach: Leading innovation in
described below: airport business to provide future
¾¾ Customer focus: Delighting the ready infrastructure for efficient
customers, enhancing airport operations
experience and providing safe These themes have been considered
operations for reframing the vision statement.

6.2.5. Vision statement for this plan period


Based on the above inputs, the vision statement has been finalized. It reads as
follows:
“To be the principal aviation services provider in the country, AAI shall
¾¾ adopt and facilitate the use of contemporary air navigation services;
¾¾ upgrade and develop airport infrastructure;
¾¾ support improving air connectivity at unserved and under-served
airports;
¾¾ have a restructured organization;
¾¾ focus on profitable operations at major airports through continuing
efforts on cost reduction and enhancing non-aeronautical revenue.”

AAI Corporate Plan 2017-26 93


94 AAI Corporate Plan 2017-26
7.Corporate Agenda:
Priorities, Action Areas and
Strategies
7.1. Introduction extracts from the vision statement were
This section outlines certain key used to define key priorities. Inherent in
priorities for AAI for this plan period the vision statement are management
to guide the course of its actions to aspirations and the SWOT analysis,
realise its Vision. factors also influencing short-listing of
the priorities for AAI for this Corporate
7.2. Framework Plan period.
The methodology used to identify
priorities is presented in Exhibit 47. Key

Exhibit 47: Framework for setting priorities

Key aspects of vision statement Identified Priorities

“Adopt and facilitate the use of


contemporary air navigation services” • Strengthening ANS

“Upgrade and develop airport infrastructure,


support improving air connectivity at • Retention and growth of user base
unserved and under-served airports”
• Strengthening organizational resources
• Improving operational efficiency
“Have a restructured organization” • Provision of value added services
• Emphasis on environmental
sustainability and safety

“Focus on profitable operations at major • Increase non-aero revenues


airports through continuing efforts on cost • Implementing cost reduction measures
reduction and enhancing non-aeronautical • Foray into new businesses
revenue” • Building the brand “AAI”

AAI Corporate Plan 2017-26 95


7.3. Priorities for AAI demand, its endeavour to improve
7.3.1. Use contemporary technology to air connectivity assumes increased
significance in the context of the
provide air navigation services
Regional Connectivity Scheme being
The first part of the vision of AAI pertains promoted by the government. While
to enhancing and upgrading the this part of the vision meets the overall
technology to provide air navigation mission, i.e., serving the nation, it
services. As the sole provider of air also focuses on the management’s
navigation services across all civil growth aspirations and involves the
airspace and airports in the country, following:
it is important for AAI to upgrade air
traffic management infrastructure to 7.3.2.1. Retaining and expanding of user
meet the growing demands of the base
industry. AAI shall, thus, focus on India is going through a phase of
addressing the following: high economic growth, and is one of
7.3.1.1. Strengthening ANS the fastest growing aviation markets
in the world. Figures available with
In order to realize its priority of the AAI suggest that domestic traffic in
strengthening air navigation services, India has had a year-on-year growth
AAI shall focus on the following: of 21.2% in FY 2015-16. The rapid
¾¾ Implementation of ATFM rise in passenger traffic, however, has
not worked in favour of AAI airports;
¾¾ Upgrade of FIU the JVC airports in Delhi and Mumbai
The implementation of ATFM across have grown much faster than AAI
airports in the country would enable airports. Hence, it is necessary that
the effective management of air- AAI work towards retaining its market
traffic along with the optimal usage share in terms of both passenger and
of airside facilities at airports. This will cargo traffic. The following actions
help in the reduction of fuel wastage, need to be taken to achieve this:
reduce operational delays and would ¾¾ Meet infrastructure requirement
increase safety. The augmentation of
FIU resources with manpower and ¾¾ Market AAI’s services
equipment is also a focus area of AAI shall focus on improving
AAI as it is an important step towards utilization of its assets and expanding
ensuring flight safety throughout the capacity where constraints suppress
system. growth. Further, to gain market
7.3.2. To Upgrade/develop of airport share, AAI must proactively work with
infrastructure and improve air state governments and airlines to
connectivity identify and develop new financially
feasible airports; this could include
A key aspiration of AAI is to connect participating in PPP projects of state
and serve more people and more governments.
businesses by enhancing airport
infrastructure and expanding 7.3.3. Restructure organization to
connectivity at both, served and efficiently serve all stakeholders
under-served airports. While the The restructuring of AAI is an
upgrade and development of airport important endeavour that may enable
infrastructure is a key focus area of it to respond to the requirements of
AAI in the context of rising air-travel various stakeholders in an effective

96 AAI Corporate Plan 2017-26


manner. To this end, AAI shall focus ACI study,27 a one percent increase in
on the following: passenger satisfaction translates into
¾¾ Strengthening organizational 1.5% increase in non-aeronautical
resources revenue and a one percent increase
in aeronautical revenue.
¾¾ Improving operational efficiency
7.3.3.3. Providing value added services
¾¾ Provision of value added services
Airport operators globally have started
¾¾ Emphasis on environmental providing value added services to its
sustainability and safety passengers. Providing value added
7.3.3.1. Strengthening organizational services to customers has the following
resources benefits:
Based on internal assessment, AAI ¾¾ Airports can charge passengers
has identified certain challenges that separately for the value added
could affect its ability to respond to services being provided such as
changes in its business environment meet and greet etc.
and operate efficiently. For instance, ¾¾ Such services lead to higher
the organizational structure and passenger satisfaction and
processes must allow AAI to quickly improve their airport experience,
respond to the need for enhanced which in turn is expected to result
infrastructure at an airport to meet in improved non-aeronautical
unexpected high growth in traffic. revenue.
Hence, in this plan period, one of Hence, one of AAI’s priorities in this
AAI’s key priorities will be to address plan is to identify and provide value
challenges related to organizational added services to various passenger
resources. This will require, among groups.
other things, organizational
restructuring and the implementation 7.3.3.4. Emphasizing environmental
of a new management information sustainability and safety
system. In today’s world, environmental
7.3.3.2. Improving operational efficiency sustainability is a collective obligation
that organizations and countries
Operational efficiency is important work towards to help reduce carbon
to ensure passenger satisfaction and footprint and ensure a healthier
to improve their airport experience. environment. AAI has taken initiatives
Globally airports have taken a in this direction and will keep it as
number of initiatives to improve one of the key priorities for this plan
operational efficiency, and to enhance period.
the quality of services and facilities
at their airports to meet changing The priorities for AAI to maintain
customer needs in a competitive environment sustainability will be the
environment. In the past decade, it following:
has been observed that passenger ¾¾ Use environmental friendly energy
experience / operational efficiency resources
have had a significant impact on ¾¾ Implement energy efficient
an airport’s ability to generate non- solutions at its airports
aeronautical revenue. According to an
27
http://www.passengerterminaltoday.com/viewnews.php?NewsID=79058

AAI Corporate Plan 2017-26 97


¾¾ Target development of “green 7.3.4.2.
Implementing cost reduction
buildings” for expansions and measures
in development projects, and be
Globally, a number of airport
compliant with environmental
operators focus on cost efficiency at
norms
airports. To sustain and enhance its
¾¾ Implement measures to control profitability, cost reduction will be
water and noise pollution critical for AAI too. An efficient cost
7.3.4. Achieve profitable operations at base will help AAI deliver better value
Major airports to all customers, especially passengers
and airlines.
The last part of the vision focuses
on financial sustainability of AAI. Accordingly, in this plan period, an
Profitability of airport operations at emphasis on implementing cost
major airports can enable AAI to offset efficiency measures will be a priority
the reduced viability of operations at for AAI. Cost efficiency will need to be
non-major airports and the potential the goal at all operational airports of
decline of major revenue streams such AAI, and the regional and corporate
as lease revenues from JV airports. headquarters.
AAI shall thus address the following: 7.3.4.3. Foraying into new businesses
¾¾ Increasing non-aero revenues While AAI’s traditional businesses
¾¾ Implementing cost reduction are growing at a healthy rate, there
measures is potential for AAI to enter new
businesses and new markets. Globally
¾¾ Foray into new businesses airport developers / operators have
¾¾ Building the brand “AAI” swiftly entered new businesses that
complement their existing business. As
7.3.4.1. Increasing non-aero revenues discussed earlier, AAI’s key strengths
As stated earlier, a significant need to be leveraged and new
proportion of AAI’s revenue currently opportunities need to be explored. In
comes from lease revenue from Delhi this plan period, AAI will focus on the
and Mumbai airports and from air following key opportunities:
navigation services. To reduce its ¾¾ City side development at select
reliance on these revenue streams, airports
one of the key priorities for AAI in
this plan period will be to increase ¾¾ Aircraft maintenance, repair and
the share and amount of non- overhaul business at select airports
aeronautical revenue. ¾¾ International consulting
In its core area of operations, viz., opportunities, specifically in the
passenger and cargo operations, South Asian, African and Middle
the priorities for enhancing non- Eastern regions
aeronautical revenues are the 7.3.4.4. Building the brand “AAI”
following:
Globally, it is seen that airports make
¾¾ Enhancing non-aeronautical significant efforts to connect and
revenues from passenger terminals engage with their customers and
¾¾ Focusing on expanding the cargo promote their services and offerings
business through social media, promotions at
airports, organization of shopping

98 AAI Corporate Plan 2017-26


festivals etc. Such marketing focused efforts. For this plan period,
activities attract more customers; marketing and brand building have
engagement with customers enables been considered priority areas for
better servicing, which leads to better AAI.
customer experience and higher non-
7.4. Action Areas for the plan period
aeronautical revenues for airports.
Based on the priorities identified, this
For this plan period, marketing /
sub-section underlines the key action
branding will be priority areas for AAI.
areas for AAI in this plan period.
Marketing / brand building at AAI is
at a nascent stage and needs more

Exhibit 48: Action Plans for the plan period

Priority Action Areas


Strengthening ANS Implementation of ATFM

FIU upgradation

Retaining and expanding of Brownfield expansion


user base
Marketing airports and passenger engagement through social media

Development of greenfield airports

Strengthening organizational Organizational restructuring


resources
Implementation of a new management information system

Improving operational efficiency Improve operational performance at passenger terminals

Develop and operationalize hydrant fuel farms at high growth airports

Providing of value added Provision of value added services such as meet and greet etc. at AAI airports
services
Emphasizing environmental Energy efficiency
sustainability and safety
Develop “green airports”

SMS Level1-2 to Level 3-4 and safety audit

Increasing non-aeronautical Improving non-aeronautical revenue from passenger terminals


revenue
Accelerating cargo operations

Implementing cost reduction Cost reduction at airports


measures
Foraying into new business City-side development at select airports
and markets
MRO services at select airports

International consulting

Building brand “AAI” Brand building

AAI Corporate Plan 2017-26 99


7.5. Strategies 7.5.1. Strengthening ANS
Specific strategies have been 7.5.1.1. Implementation of ATFM
identified to achieve the goals of the AAI endeavours to implement ATFM
action plans outlined above. The in this plan period which would enable
departmental targets determined by balancing of demand and capacity
various AAI departments is outlined in in Indian airspace and airports for
Annexure 7. efficient operations of both domestic
and international traffic. Towards
this end, the ATFM project will be
undertaken in three phases28:

Exhibit 49: Phases for implementation of ATFM

Phase Description

ATFM for six metro airports i.e. Delhi, Mumbai, Chennai, Kolkata, Bengaluru
and Hyderabad
• ATFM will be provided for strategic and pre-tactical demand predictions to
determine period of demand vis-à-vis available capacity
• Centralized Air Traffic Flow Management (C-ATFM) will provide capabilities to
model and implement Traffic Management Initiatives (TMIs) to smooth demand to
available capacity via Ground Delay Programs
• For period of significant, unexpected capacity reductions, Ground Stop TMIs will
be modelled and implemented
• CATFM will provide updated demand prediction to monitor traffic management
Phase 1 initiatives (TMI) performance.
• Aircraft operators are provided capabilities to perform schedule management
adjustments to optimize their operations consistent the available capacity determined
by AAI and the constraints of the TMI

Nationwide implementation at all airports and Indian continental airspace.


• A nationwide ATFM system covering all airports to support ATFM for airspace
programs and arrivals into airports throughout India will be implemented.
• Key functional enhancements for including departure programs of additional airport
and airspace flow programs to complement the proposed airport arrival programs in
Phase 2 phase 1 may be taken up in phase 2.
• A passive web portal access shall be made available to the neighboring states to have
increased situational awareness of the ATFM in India.
• Aircraft operators will be able to view flight details and manage their own ATC slots
during a TMI. ATS Units, Airline and aerodrome operators will be able to view all
flights arriving and departing from their aerodrome.

Phase 3
Integration with international ATFM according to ICAO regional ATFM plan of Asia
Pacific region:
• The evolution of C-ATFM system in the third phase will be planned to harmonize with
recommendations of Air Traffic Flow Management Steering Group (ATFMSG).

28
Air Traffic Flow Management in India, Strategic Plan for Air Navigation Services 2014- 2018

100 AAI Corporate Plan 2017-26


7.5.1.2. Upgrade of FIU 7.5.2. Retention and growth of user base
The Flight Inspection Unit is a critical 7.5.2.1. Brownfield expansion
resource of AAI for conducting One of the priorities is user retention
flight checks and calibration of and growth, and to achieve this,
CNS facilities installed by AAI and AAI will need to plan and deliver
at defense airfields throughout the infrastructure development /
country. AAI shall take the following expansion in sync with passenger
steps to address the requirements growth and after taking into account
of FIU pertaining to equipment and the views of all relevant departments.
personnel: Key factors, depicted in Exhibit 50
¾¾ Augmentation of capabilities of need to be considered in infrastructure
existing Fleet for PBN ( SBAS, planning and development:
GBAS )
¾¾ Augmentation of Fleet
¾¾ Augmentation of manpower

Exhibit 50: Approach for infrastructure planning

Interactions
with airlines
to understand
their plans

Inputs
from all
departments
Forecasts of
traffic growth
over the next
few years,
considering
the changes in
environment

7.5.2.2. Marketing at airports its airports and has recently established


Airports are operating in a competitive a new marketing directorate with
environment and it has become the mandate to undertake airport
critical to use marketing as a tool to marketing for all AAI airports. In this
attract and retain customers. AAI has plan period, to achieve its objectives,
realized the importance of marketing the marketing directorate will focus on
the aspects presented in Exhibit 51:

AAI Corporate Plan 2017-26 101


Exhibit 51: Focus on airport marketing

Marketing
AAI airports
to airlines,
retailers and
passengers

Joint
marketing Design
promotions
customized
with tourism
department, marketing
industry campaigns
chambers

Developing Prepare and


marketing develop
intelligence marketing
and market plans for key
data AAI airports

7.5.2.3. Passenger engagement through consider adopting social platforms for


social media ¾¾ building informal relationships and
Social media is fast becoming the engaging directly with interested
primary tool for airport operators customers
globally to engage and market services ¾¾ introducing crisis communication,
to passengers. LeighFisher’s survey which is quick and direct during
for 160 airports, as shown in Exhibit times of crisis.
52, reveals increasing preference for
social media platforms like Facebook, ¾¾ enhancing corporate
Twitter and YouTube for passenger communications to increase
outreach and engagement. AAI will awareness

102 AAI Corporate Plan 2017-26


Exhibit 52: Usage of social media by airports

Airport
Infromal Management
Communication and
Operations

Corporate Corporate
Communication Communication

Airport
Promotion Construction
Projects

Customer
Services Promotion

Delayed Flight Community


Information
RElations

Crisis New Service


Communication

0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100%

Uses of social media by airport Uses of YouTube by airport


operators worlwide operators worlwide
(percent of airports surveyed) (percent of airports surveyed)
Facebook Twitter

Source: Leigh Fisher Survey and analysis of 160 airports worldwide, as of January 2013.

¾¾ promoting products and services passenger and improve passenger


¾¾ analysing customer behaviour by experience. Social media is also an
surveying customer opinions, e.g., effective tool for marketing products
about new opportunities and services. The following possible
categories can be used for interacting
In this plan period, AAI will use social with passengers / marketing its
media as a tool for interacting with services:

AAI Corporate Plan 2017-26 103


Exhibit 53: Potential Social Media Platforms for AAI

Category Description Media


Social networking Develop social networks with other users that share Facebook,
common interests or activities
Foursquare
Information or entertainment service that is accessed
via mobile devices and allows, e.g., users ‘check-in’ at
venues

Airport blog / Updated with entries that provide general commentary, Airports own blog or discussion
Microblog descriptions of organized events or content such as forum /
photos or video for readers
Twitter
Online service, platform or site that allows users to
exchange small elements of content such as short
sentences or links

Community Online platforms or sites allowing users to share multi- YouTube, Instagram, Scribd,
media such as photos, music, videos or presentations

7.5.2.4. Development of greenfield airports planned. Navi Mumbai, Bhogapuram


With growth in passenger traffic, and Mopa are a few developments that
many Indian airports have reached will come up on the PPP model. In all
saturation levels. Non-availability of three cases, AAI will lose some traffic
land in the immediate vicinity has to new airports, leading to potential
restricted expansion possibilities loss of revenue and passenger traffic.
and second airports are now being AAI will need to take steps to mitigate
the risk of revenue and traffic loss.

104 AAI Corporate Plan 2017-26


Exhibit 54: Strategy on new greenfield airports

Traffic assessment Shortlist airports


Identify airports where traffic Shortlist airports using
demand is higher than available the traffic assessment
capacity and expansion exercise and identify
works are not possible due suitable land for
to land constraints, presence second airports
of obstacles or operational
constraints

Prepare business case


Present to state Prepare a business case
government based on requirements
Present a comprehensive like land, capex, technical
business case to state specifications, timelines for
government(s) for development works, phasing
consideration of the project, etc.

7.5.3. Strengthening organizational for informed decision making. Some


resources key elements that an effective MIS
could help address are the following:
7.5.3.1. Organizational re-structuring
¾¾ Operations – Recording pain
As mentioned earlier, AAI has
areas for passengers and attempt
appointed a consultant to advise it
to Improve passenger experience
on organizational restructuring. The
by increasing efficiencies at
recommendations by the consultant,
multiple touch points
who has already begun work, is
expected to be implemented within ¾¾ Finance – Enhancing profitability
this plan period. through better control on financial
health
7.5.3.2.
Implementation of new
management information systems ¾¾ Commercial – Monitoring of
utilization of retail space, car park
To improve efficiency and to maintain
and other rentals
seamless information sharing in this
plan period, a robust MIS system ¾¾ Airport marketing – Identifying
will be implemented at AAI. The MIS trends and opportunities to attract
system will act as a catalyst for the more airlines to AAI airports
management and provide information

AAI Corporate Plan 2017-26 105


¾¾ Infrastructure – Monitoring boarding bridges, etc. The study will
project progress, and proactively also focus on augmenting manpower,
maintaining infrastructure for enhancing the technical and soft
better efficiency and serviceability skills of airport staff, and identify
¾¾ Environment and Sustainability state-of-the-art technologies and
– Improving safe and energy processes to be adopted to enhance
efficient business operations customer service performance. In this
plan period, AAI will implement the
¾¾ Business development – measures suggested by the consultant
Monitoring business opportunities to enhance operational efficiency at
pipeline within India/overseas select airports and introduce them
¾¾ Engineering – Monitoring in other airports progressively to
maintenance activities at the improve passenger experience on an
airports organization wide scale.
7.5.4.2.
Develop and operationalize
hydrant fuel farm
As can be seen, MIS would differ for
each department in terms of coverage To improve fuelling systems at
of information, frequency of reports airports, AAI plans to develop hydrant
etc. A specific work stream will need to fuel farms at select airports. The main
be initiated to design and implement purpose of fuel farms is to increase
a robust MIS system for AAI. (Please efficiency in ground handling and
refer Annexure 8 for potential MIS reduce turn-around times. AAI intends
coverage for some departments.) to define thresholds beyond which it
would be mandatory to adopt hydrant
7.5.4. Improving operational efficiency
linked fuel farms at its airports. Further,
7.5.4.1. Improve operational performance AAI willl endeavour to earmark and
at passenger terminals reserve suitable areas at major
AAI has appointed a consultant to airports where anticipated traffic
undertake an operational efficiency growth and aircraft movement are
study. The study will recommend expected to achieve or surpass pre-
measures to improve operational defined thresholds. AAI will evaluate
efficiency in areas like passenger and development of hydrant fuel farms on
baggage processing time, passenger models highlighted in Exhibit 55.
flow, utilization and management
of operating systems like passenger

106 AAI Corporate Plan 2017-26


Exhibit 55: Development Models for Fuel Farms

Development Risk for the airport Responsibilities and Examples


Model operator
Fully Outsourced – Low risk for the airport The ATF producer and supplier take land on lease and
The development operator build infrastructure. Operations and maintenance respon-
(through long term sibility also lies with the concessionaire.
concession) and
O&M is outsourced Implemented at Hong Kong International Airport and
to a third party. Sydney
Fuel concession models
Multiple ATF producers and suppliers take land on lease
and build common infrastructure. O&M costs are also
divided amongst the suppliers.
Implemented at Bogota & Lima Airports (Single Operator
/ Open Access)

Hybrid – The Airport Low to medium risk for the The airport operator builds the facilities and leases the
builds the facility but airport operator O&M to a private player
outsources O&M
Implemented in India at GHIAL (at operation commence-
ment), and at DIAL & MIAL airport through an special
purpose vehicle (SPV) in which the airport operator shares
ownership with partner companies. Implemented Interna-
tionally at South Africa , London and Jeddah

Fully in-sourced – High risk for the airport Development on this model needs detailed viability as-
Airport builds, oper- operator sessment as, apart from capex risk, capabilities in O&M
ates and maintains also need to be considered.
the facility on its own
Implemented Internationally at Tulsa and Tucson Airports

The suitability of a development of operations, financial viability,


mode has to be ascertained for each alignment to overall strategic goals,
airport separately based on the scale etc.

AAI Corporate Plan 2017-26 107


7.5.5. Provision of value added services entertainment zone, art gallery, etc., at
7.5.5.1.
Value added services at AAI select airports. For specific measures
to be taken, AAI will undertake airport
airports
specific studies to identify potential
In this plan period, AAI aims to provide services and implement solutions. The
value added services to its passengers approach AAI will adopt to achieve its
for example meet and greet services, target is shown in Exhibit 56:

Exhibit 56: Approach to provide value added services

• Based on airport
throughput
• Based on passenger
profile and
Identify requirements
airports for
providing
value added
services
• Study the value
added services being
provided at airports
globally
• Based on passenger
profile, shortlist
services to be
Identify provided
value added
services to be
provided • Implement value
added services at
airports in a phased
manner
• If required, appoint
third-party agency to
provide such services
Provide and train staff
services at
select airports

108 AAI Corporate Plan 2017-26


7.5.6. Emphasis on environmental etc. While these measures will help
sustainability and safety reduce energy consumption, there is
further potential that AAI can realize.
7.5.6.1. Energy Efficiency
To bring in more energy efficiency
Currently, there are some energy at AAI airports, Exhibit 57 shows the
efficiency measures already being possible options available to AAI in
implemented at select airports; e.g., this plan period:
LED lighting at passenger terminals

Exhibit 57: Options to improve energy efficiency

• Automated electrical power demand and lighting & climate control to reduce
Technology energy consumption at airports
interventions at • ICT-based building management systems to improve operations
airports

• Installation of sensors, meters and advanced data loggers at airports to


Energy measure parameters such as temperature, pressure, flow rates, electrical
Measurement and consumption, etc.
Monitoring • Undertaking energy audits to assess areas where there are energy leaks and
how energy can be conserved.

• Passenger terminal to be designed in a manner to ensure effective usage of


Building design / solar energy/renewable energy to reduce energy consumption.
re-design

7.5.6.2. Develop “green airports” the action plan will be to reduce the
In future, AAI shall design and plan carbon footprint at AAI airports and
terminals in a way that they meet adopt measures to lower the levels
the Green Rating for Integrated of air, water and noise pollution.
Habitat Assessment (GRIHA) or green Measures shown in Exhibit 58 will be
building requirements and achieve a implemented.
rating of GRIHA 4. In this plan period,

AAI Corporate Plan 2017-26 109


Exhibit 58: Strategies to develop green airports

Potential options Strategy


GRIHA compliance for new developments Follow the GRIHA protocol during construction phase to achieve at
least a rating of four on a five-point scale

Reducing COX, SOX and NOX emissions Promote the use of efficient fuels like compressed natural gas for
from vehicular traffic on airside vehicles on the apron
Comply with restrictions on age of vehicles, as set by state pollution
control boards to reduce COx emission
Introduce new technology like fuel cell for vehicles
Design efficient vehicle movement area on airside to reduce
congestion and hence emissions

Preventing spillage of fuel and other Operationalize a spill management procedure at all airports to pre-
chemicals vent and manage spillage caused by oil, toxic heavy metals, etc.
Maintain a record of all the spills on the apron and measures taken
to mitigate the associated risks
Source equipment to efficiently handle major spills

Monitoring air and water quality Install air and water quality monitoring units within the airport
Install air and water quality monitoring units outside the airport pe-
rimeter, within 2KM of the airport
Operationalize a mechanism to mitigate any ground water pollution
caused by the spillage of chemical or untreated sewage into ground
water

Reducing water utilization Operationalize water treatment plants to recycle water


Introduce water saving technology for cleaning, horticulture and pas-
senger amenities

Long-term measures to reduce aircraft Introduce a noise mitigation plan for airports with night time
pollution operations
Prepare a plan to incentivize aircraft to use fuel efficient engines

110 AAI Corporate Plan 2017-26


7.5.6.3. Shift from SMS Level 1-2 to Level SMS implementation level 1-2. This
3-4 and safety audit represents an advancement in SMS
Safety and security of passengers maturity from basic and reactive
has been at the forefront of AAI’s safety risk management (SRM)
efforts. In an effort to improve these processes to proactive and continuous
areas AAI has envisaged a shift to improvement levels of SRM.
safety management system (SMS) Exhibit 59 represents the development
implementation level 3-4 from present requirements for this shift.

Exhibit 59: Strategies/Plan for SMS implementation level 3-4

SMS Implementation Level Development strategy/requirements


SMS implementation Level 3 • SRM to be applied to initial design of systems, processes, organi-
(Proactive processes, looking ahead) zations, and products, development of operational procedures,
and planned changes to operational processes.
• The activities involved in the SRM process involve careful analysis
of systems and tasks involved; identification of potential hazards
in these functions, and development of risk controls.
• The risk management process developed at level two is used to
analyze, document, and track these activities. Because the ser-
vice provider is now using the processes to look ahead, this level
is termed “proactive.”
• At this level, however, these proactive processes have been im-
plemented but their performance has not yet been proven.

SMS implementation Level 4 • The final level of SMS maturity is the continuous improvement
(Continuous Improvement, Continued level. Processes have been in place and their performance and
Assurance) effectiveness have been verified.
• The complete Safety Assurance (SA) process, including
continuous monitoring and the remaining features of the other
SRM and SA processes are functioning.
• A major objective of a successful SMS is to attain and
maintain this continuous improvement status for the life of the
organization.

Source: SMS Implementation guide, Federal Aviation Administration

AAI Corporate Plan 2017-26 111


7.5.7. Increasing non-aeronautical consists of three categories – duty free
revenue (at international airports), revenue
from retail concessions and revenue
7.5.7.1. Improving non-aeronautical
from F&B concessions. The options
revenue from passenger terminals
AAI can exercise to increase terminal
Currently, main terminal revenue revenues are outlined in Exhibit 60.

Exhibit 60: Strategies to increase non-aeronautical revenue from terminals

Potential options for enhancing Strategy


terminal revenues
Modifying the contracting structure Traditionally, AAI has opted for fixed rental contracts for concessions
with the terminals. This model ensures a fixed income but AAI does
not get the benefit of higher sales made by concessionaires. AAI is
considering modifying the contracting structure and is evaluating the
following options:
Revenue sharing contract – Revenue sharing is the most preva-
lent contracting model for concession contracts at airports. A plain
revenue share contract ensures that both the airport and the retailer
stay invested in the project and ensure its success. However, this also
puts risk on the airport operator in terms of a decline in income when
the sales are low.
Minimum Annual Guarantee (MAG) contract – MAG contract is
another variant of the revenue sharing contract being used by airport
operators. Under this arrangement, the concessionaire needs to pay
a fixed minimum amount to the airport operator. Over and above
the minimum amount, the airport operator also gets a small revenue
share percentage.

Terminal redesign; enhancing the retail Terminal redesign – AAI has appointed consultants to assess the
/ F&B capture at the airports and new terminal redesigning exercise at some of its airports to enhance their
offerings retail / F&B capture. In this plan period, more airports are likely cov-
ered under a similar exercise.
Enhancing the product mix – In this plan period, AAI can under-
take passenger profiling and record passenger expectations in terms
of retail / F&B capture at the airport. Based on passenger expecta-
tions, the product mix provided at airports can be reconsidered /
changed.
New offerings – Further, in this plan period, new offerings such
as retail kiosks may be provided at select airports. Retail kiosks can
be used for areas that are too small to accommodate retail outlets.
Retail kiosks can be used to sell essential items, e.g., cosmetics or
electronics etc.

112 AAI Corporate Plan 2017-26


7.5.7.2. Accelerating the cargo business suggested by the consultant. A similar
AAI had appointed a consultant exercise needs to be undertaken for
to advise it on the way forward to other airports in the AAI network.
improve AAI’s cargo business. The 7.5.9. Foray into new business and
consultant has submitted its report markets
to the Cargo Directorate. As per the
7.5.9.1. City-side development at select
recommendations of the consultant,
airports
the AAI management has decided
to form a 100% AAI owned Cargo AAI has large land holdings that can
Subsidiary to give focused attention be put to use for city-side development.
for cargo development and flexibility While land for city-side development
in the cargo operations - AAI Cargo is available at a number of airports
Logistics and Allied Services Company operated by AAI, all airports may not
Limited (AAICLAS). AAICLAS will be attractive for such development.
undertake all the activities that AAI will consider the following key
were previously carried out by the aspects in drawing up the strategy for
Cargo Department of AAI and it is city-side development:
envisioned that it will become the ¾¾ Identify airports suitable for city-
foremost integrated logistics network side development
in India. It will work as a multi modal
interface, linking air, surface & water ¾¾ Define a suitable product mix
transport. AAICLAS will promote, ¾¾ Choose the development model
represent, organize, undertake,
establish, conduct, handle, arrange,
own, operate, participate, facilitate, Exhibit 61: Strategy for city-side
sponsor, encourage, and provide the development
business as Cargo Terminal Operator,
Free Trade Zone, Air Freight Station
and Inland container depot for
cargo and passengers. AAICLAAS
is currently in the process of being Identify
operationalized. Airport
7.5.8. Implementing cost reduction
measures
7.5.8.1. Cost reduction at airports
AAI has appointed a consultant to
advise it on potential cost reduction Strategy
measures at select airports. The Chose Define a
consultant is currently undertaking development suitable
the assignment and will submit its model product mix
inputs / report in due course. In the
coming plan period, the airports shall
endeavour to implement the measures

AAI Corporate Plan 2017-26 113


7.5.9.2. Identify airports Exhibit 62: Potential development options
AAI has already appointed consultants to be assessed
to undertake assessments at select
airports to assess the viability of
undertaking city-side development.
AAI intends to develop a framework Hotels
to identify airports where city-side
development can be undertaken
which will consider aspects such Hospitals
as land available for development
(considering the land required for
future development), passenger Commercial Retail
traffic, passenger profile, location of office Complex
complex
the airport, real estate development
within the city, etc., for identifying
potential airports for city-side Golf-course
development. Further, consultants will
be appointed to undertake financial
viability assessment to ensure that
development is undertaken only at on real estate developments within
financial viable airports. airport lands. Within the provisions of
7.5.9.3. Potential development options the Act, the most appropriate product
For airports where city-side mix will need to be identified on an
development is viable, the next step airport-by-airport basis.
is to assess and finalize the product 7.5.9.4. Development model
mix for such development. Exhibit 62 There are multiple models available
indicates the product mix that has for development of such facilities.
been developed by airport operators The following are possible options,
world-wide. with examples of airport operators
While airport operators world-wide that have undertaken city-side
have developed real estate within development based on the models
airport lands, AAI is regulated by the AAI shown in Exhibit 63:
Act 1994, which imposes restrictions

Exhibit 63: Possible development models


Possible development model Risk for AAI
Lease model – with/without additional licence fee (including other variants of the Low
lease model)

JV Model – JV with real estate developer for development and/or operations Medium

Development model – AAI takes full responsibility for the development and opera- High
tion of city-side developments

114 AAI Corporate Plan 2017-26


For each planned city side 7.5.9.5. Development of MRO
development, the above models will Apart from developing land for real
be studied and based on factors estate, AAI will consider the possibility
such as management’s preference, of using the land available on the
risk perception, market interest etc., airside to develop MRO facilities at
the most suitable model will be select airports. The following three-
implemented. Annexure 9 indicates step approach, as shown in Exhibit
various concepts adopted by global 64 will be followed to assess the MRO
airport operators for city side business potential at AAI airports:
development.

Exhibit 64: Three step approach to MRO business

Identification
Market Market Entry
of airports for
assessment Model
MRO

• Assessment of land • AAI to appoint • Evaluate possible entry


availability on airside a consultant models in the MRO
with access to apron to carry out a business. A few examples
• Plans of future market assessment of business model are :
expansion to assess considering key • Land as lease
land availability segments of MRO • JV with existing player
• Brief interaction with activity • Self-developed and
airlines to assess • Line maintenance operated
interest on using • Airframe heavy • Adopt the most suitable
airport for MRO maintenance model for developing
• Engine overhaul MRO at select airports
• Components
overhaul
• Modifications

AAI Corporate Plan 2017-26 115


Exhibit 65: Examples of MRO business (Representative list)

Land Lease / JV with MRO player 100 % owned


Land sale and developed by
airport operator
Risk Low Medium High

Implementation Air India Ltd, MRO in GMR’s GHIAL with Ma- Malaysia Aerospace Engi-
Mihan SEZ (which has laysia Aerospace Engi- neering exited the venture
Examples connectivity to Nagpur neering SDN established with GHAIL taking over
Airport) MAS GMR Aerospace the balance 44.61% stake
Engineering Company in 2014
Limited (MGAE) which
started operations in 2011
at an SEZ near Hyderabad
International Airport

7.5.9.6. International Consulting (SAARC), ASEAN and Africa. AAI


As discussed in the SWOT analysis, already has a business development
one of the key strengths of AAI is cell that focuses on exploring and
its expertise in a diverse range of evaluating international opportunities
airport related services. This can be in consulting. In this plan period, the
marketed abroad as consultancy modes suggested in Exhibit 66 can
to countries in the South Asian be adopted to identify and target
Association for Regional Cooperation international consulting opportunities:

Exhibit 66: Modes of entering international consulting business

Possible mode Strategy


Tracking international consulting oppor- First mode to enter the international consulting market is to respond
tunities tenders to international tenders issued by various government / authorities
for their consulting needs. In this plan period, international consulting
tenders to be proactively identified and tracked

Government-to-Government route (G2G) The second mode is to explore G2G route to create opportunities in
route consulting – leveraging the relationships of the Government of India
with other countries and identifying opportunities for AAI to provide
consulting services.

116 AAI Corporate Plan 2017-26


7.5.10. Building brand “AAI” and fonts to be used for external
and internal communication, etc.
7.5.10.1.Brand building
As a second step, AAI shall focus
In this plan period, AAI aims to on building its brand to engage
build the AAI brand both within the customers.
organization and outside. Currently,
There are two potential levels, as
AAI lacks consistent branding
shown in Exhibit 67, at which AAI
standards within the organization. As
may target branding – an overall AAI
a first step AAI shall introduce brand
brand, which passengers associate
guidelines for aspects like stationery
with high service levels, and brands
formats (letter heads, business cards,
for key airports.
etc.), presentation templates, colours

Exhibit 67: Strategy for brand building

Potential options for creating Strategy


an AAI brand
Overall AAI brand Potential measures to create the overall brand
• Identify services that customers should associate with AAI
• Identify services that can be standardized across airports that pas-
sengers can associate with AAI
• Maintain consistency in sales and promotions activities across all
airports

Developing standalone airport brands Potential measures to create standalone airport brands
• Identify airports that AAI wants to develop a brand for
• Identify and communicate specific services that customers should
associate with each airport
• Differentiate services and products according to the needs of cus-
tomers using the airport
• Create a unique identity for each airport to manage customer expec-
tation

The options above are not exhaustive; AAI will detail this further during the plan period and identify and implement
specific measures in this direction.

AAI Corporate Plan 2017-26 117


Bhopal Airport

118 AAI Corporate Plan 2017-26


8. Corporate Plan
Monitoring and Review
8.1. Corporate Plan monitoring and some revision in the strategies to be
review implemented to achieve its action
The Corporate Plan states the Vision, plans may be needed. Strategies and
Mission, objectives and priorities for plans formulated for 10 years may
AAI to meet during the next 10 years, require readjustment as changes take
besides suggesting the strategies to place in an ever-evolving economic
achieve its goals. To ensure that AAI and social environment. To this end,
moves in the direction outlined in this the Corporate Plan monitoring and
Corporate Plan, it intends to introduce review exercise will be undertaken
an institutionalized review framework on an annual basis. The exercise
to assess the progress made in will include preparing annual plans
implementing the strategies and the and action plans, monitoring of
extent to which priorities have been the application of strategies and
achieved. reviewing the progress made vis-à-vis
the priorities and action plans defined.
The monitoring and review framework
is critical given the fact that AAI’s Exhibit 68 presents the overall
external environment and the market Corporate Plan monitoring and review
it operates in, changes dynamically in framework to be adopted by AAI.
a short period of time. The changes
affect AAI’s business and hence,

AAI Corporate Plan 2017-26 119


Exhibit 68: Corporate Planning Monitoring and Review framework

10 year Corporate Plan

Vision & Priorities Targets


Mission

AAI
Strategies

Monitor and Review of Corporate Plan

Change in External /
Market Environment
New New
Opportunities Threats

New strategies required


CP&MS — Directorate
Responsible level goals —
for overall Annual goals
and targets annual basis
coordination

Achievements and shortfalls

Use of Review of
strategies progress

Performance review

8.1.1. Annual monitoring and review also cover the annual goal setting
Under this framework, AAI will exercise which provides inputs for
institutionalize an annual monitoring the Memorandum of Understanding
and review mechanism and Corporate (MoU) to be entered into with MoCA.
Planning and Management Services The following are the key steps to be
(CP&MS) will play a pivotal role in undertaken in the annual monitoring
overall monitoring and review exercise. and review exercise.
It is suggested that this exercise will

120 AAI Corporate Plan 2017-26


Exhibit 69: Key steps to be undertaken in the annual monitoring and review exercise

The Corporate Planning and Management Services (CP&MS) Department would start
Commencement the monitoring exercise on a financial year basis (same as MoU) with a focus on
of monitoring and monitoring / reviewing the implementation of the previous year’s Corporate Plan.
review exercise

CP&MS will review the status of implementation of various strategies and assess
performance against priorities and targets. Based on such a review, CP&MS would
Review of document achievements and shortfalls and the results would be shared with all HODs
performance for review.

While CP&MS undertakes review of performance, it would request all departments


Assessment of to undertake a broad external / market environment assessment – to assess new
external / market opportunities as well as threats to AAI.
environment

Based on the achievements of targets and new opportunities and threats identified,
Developing annual HODs will prepare annual goals and targets. The respective Members will finalize the
goals and action annual goals and targets – to be shared with CP&MS.
plans

CP&MS will consolidate goals and targets at AAI CHQ level. CP&MS will present both
Finalize annual department-wise / consolidated annual goals and targets to the AAI Board to review
goals and action and finalize annual action plans.
plans

8.1.1.1.
Commencement of monitoring to CP&MS Directorate by 15th
and review exercise October.
The monitoring system will coincide ¾¾ CP&MS department shall request
with the annual budgeting exercise all departments to commence
of AAI, which starts with a mid- a broad level external / market
term review in October. The CP&MS environment assessment for
Directorate will initiate the monitoring their departments to assess
and review exercise. This would and understand changes in the
involve the following steps: environment and their effects on
¾¾ CP&MS department shall circulate the department. The departments
templates to various departments would complete such broad level
to complete and return. Various assessment by 31st December and
departments shall be asked to furnish the assessment to CP&MS.
provide information on strategies CP&MS will then provide the
implemented in the assessment consolidated findings of the broad
year; information on goals and external/ market assessment.
action plans for the assessment 8.1.1.2. Review of performance
year; and information on goals Based on the information submitted
and action plans achieved in the by the departments, CP&MS team
assessment year. The departments will review the performance of all
shall provide the information departments of AAI. The review will

AAI Corporate Plan 2017-26 121


include the following: ¾¾ Achievements / shortfalls in
¾¾ Implementation of strategies previous year goals and action
– CP&MS will review whether plans
departments implement strategies ¾¾ New opportunities / threats
outlined in the Corporate Plan identified
¾¾ Achievements / shortfalls in the The HODs shall discuss the annual
goals and action plans – CP&MS goals and action plans with respective
will review the goals and action Members, finalize these and submit
plans achieved by the departments annual goals and targets of different
and identify shortfalls, if any departments to CP&MS team by 28th
CP&MS shall complete the February.
performance review by mid-February 8.1.1.5. Finalize annual goals and action
every year and share the results with plans
all departments. CP&MS shall also
CP&MS shall consolidate the
request departments to provide the
department level goals and identify
reason for shortfalls in meeting goals
any conflicts in department level
and action plans.
goals. It shall present the following to
8.1.1.3. Assessment of external / market the AAI Board:
environment ¾¾ The performance of each
As stated earlier, all departments shall department in the previous year
be asked to undertake a broad level –– Status of strategies
external and market assessment to implemented; and
identify the following:
–– Status of goals and action plans
¾¾ The changes in the environment
in the assessment year and their ¾¾ Planned department level goals
impact on the performance of the and action plans for the next year
department / AAI ¾¾ Consolidated AAI goals and action
¾¾ New opportunities for and threats plans for the next year
to AAI arising because of the ¾¾ Any identified conflicts in
change in the environment department level goals and action
The departments shall be required to plans for the next year
complete such assessment by the 31st CP&MS shall aim to get the Board’s
December of every year approval on the goals and action
8.1.1.4.
Developing annual goals and plans for next year by 31st March and
action plans provide confirmation to respective
departments on approved goals and
Subsequently, all departments will action plans.
develop annual goals and action
plans for the next year. The heads of 8.1.2. Review of strategies – every 3 to 5
department (HODs) would be made years
responsible for developing the goals The strategies presented in
and action plans by 15th February previous sections are planned to be
every year. The goals and action implemented over the short to medium
plans to be developed considering the term. Following implementation,
following: it may take approximately two to

122 AAI Corporate Plan 2017-26


five years for results to be achieved. HODs may suggest revision of some
Accordingly, while the Corporate Plan strategies to achieve goals and action
monitoring and review exercise will plans – both long term and annual, if
be undertaken on an annual basis, required.
strategies will be revisited over a three The steps for revising the strategies by
to five-year horizon. However, during AAI will be as follows:
the annual planning exercise, the

Exhibit 70: Steps for revising strategies by AAI

1 2 3

IDENTIFYING NEED FOR IDENTIFYING THE NEW APPROVAL AND


CHANGE IN STRATEGY STRATEGY IMPLEMENTATION
• Modifications may be Once the need to revise the The list of revised strategies
required in the existing strategies is identified, the will be presented to the AAI
strategy on account of respective HODs will identify Board for consideration.
the following: the following AAI will review and suggest
• Change in external • Modification in the modifications, based on which
environment existing strategy the revised strategies can be
• Existing strategy not • New strategy finalized for implementation.
leading to expected The revised strategies should
results be shared by the HODs with
• Change in the internal the CP&MS team, which will
environment collate the inputs from all
• Each HOD should departments.
undertake this activity at
the start of every 3rd year

8.2. Summary Corporate Plan should act as a


As discussed earlier, the environment compass and not as an inflexible
in which AAI operates is dynamic and blueprint for action. To meet this
changing and hence the Corporate objective, the monitoring and review
Plan should be able to respond to exercise is critical for AAI.
changes in the environment. The

AAI Corporate Plan 2017-26 123


Raipur Airport

124 AAI Corporate Plan 2017-26


Annexure 1: List of expansion works planned by AAI

Airport Proposed capacity Tentative Brief Timeline


cost
(in INR
Cr)
Runway Apron Terminal Status
building
Northern Region

Jaipur - - 18,000+ PMC/ENGG Terminal Expansion 2019-20


107,000sq. tender in Building– of Terminal
m / 5.0 PHP process 1200 Building
/ 5000 PHP
Dehradun - - 4,200 + PMC tender Terminal Expansion 2018-19
22,800 in process Building– of Terminal
sq. m/ 1.5 280 Building
MPPA /
1300 PHP
Srinagar - - 20,000 PMC tender Terminal Expansion 2018-19
+33,000 in process Building– of Terminal
sq. m/ 5.2 500 Building,
MPPA / Design Year
2300 PHP as 2023-
24 due to
land con-
straint.
Lucknow - - 16,250 PMC tender Terminal Itnl 'Bldg 2018-19
+1,00,000 in process Building - (T1)will be
sq. m/ 5.5 1042 demolished
MPPA / . T2 will be
4,000 PHP retained and
Expansion
of Terminal
Building
Leh 6 nos. 16,500 Terminal New Termi- 2019-20
AB321 sq. m/ 0.7 Building - nal building (subject to
MPPA / 800 300 and apron land transfer
PHP by IAF).
Jammu - - 6,750 Work in - Expansion -
+8,650 sq. Progress of Terminal
m=15,400 Building
sq. m/ 1.0
MPPA / 750
PHP
Gorakhpur - - 1,400 sq. - - - -
m/ 0.1
MPPA / 100

AAI Corporate Plan 2017-26 125


Airport Proposed capacity Tentative Brief Timeline
cost
(in INR
Cr)
Runway Apron Terminal Status
building
Eastern Region

Gaya 2786m X AB 321 Land being 150 500m Dec 2018-


45m acquired runway 19 (Subject
extension to handing
with CAT I over of land
lighting by state
gov.)
Patna - 10 AB 320 40,000 sq. 11.5 Acres 500 Needs to Dec 2018-
m/ 3.0 of land to be revised 19 (Subject
MPPA / be handed based on to handing
2,000 PHP over by the State Govt. over of land
state gov- Approval by state
ernment gov.)
Raipur 3251m X 2 C type - Tendering Runway 80, 500m Dec 2018-
45m (For AB Stage runway 19 (Subject
321) extension to handing
with CAT I over of land
lighting by state
gov.)
Ranchi - 3 (2 AB 321 - Tendering Apron-28 500m Dec 2018-
+ 1 ATR) Stage runway 19 (Subject
extension to handing
with CAT I over of land
lighting by state
gov.)
Bhubane- - - - - CT 40 - -
swar
Port Blair - 4 (2 C type 40,837 sq. Under con- 417 NITB for 2017-18
+ 2 D type) m/ 1.42 struction 600 Dom +
MPPA / 600 Int'l PHP
1,200 PHP
North Eastern Region

Agartala - - 30,000 PMC tender Terminal - -


sq. m/ 1.5 in process Building -
MPPA / 438
1,200 PHP
Guwahati - - 77,500 PMC tender Terminal New -
sq. m/ 3.5 in process Building Terminal
MPPA / -930 Building -
/3,100 PHP 4.43 MPPA,
Old Termi-
nal Building
- 1.6 MPPA

126 AAI Corporate Plan 2017-26


Airport Proposed capacity Tentative Brief Timeline
cost
(in INR
Cr)
Runway Apron Terminal Status
building
Dibrugarh 2469m x - - Work in 59.85 Runway Nov-17
45m progress extension,
Isolation
Bay, Link
taxi

Imphal - 06 Nos - - CT 40 - -
(5 No.
A-321)
(1
No.ATR-72)
Dimapur - 04 Nos - - CT 40 - -
(1 No.
A-320) (2
Nos A-321)
(1 No. ATR-
72)
Southern Region

Chennai - - T1(Dom) PMC Tender Terminal Existing Ter- 2019


New - in progress Building - minal Build-
60,300 sq. 2100 ing will be
m/ 10MPPA/ dismantled,
3,000 PHP, 16mppa
T2(New Int'l) new Termi-
- 1,08,500 nal Build-
sq. m/ ing to be
6MPPA/ constructed
4,000 PHP for seamless
(Total 30 operations.
MPPA)
Trichy - 10 nos. AB- 11,777 + PMC Tender Terminal - 2019
320 60,723 sq. in progress Building–
m/ 3.52 700
MPPA /
2900 PHP
Vijayawada - 10 nos. AB Interim Under con- Interim - -
-320 (Night Domestic struction at Terminal
parking Terminal the rate of Building -
facility) Building Rs.24.25 Cr. 161.65,
12,642 sq. PDC- Oct
m/ 0.43 2016
MPPA / 500
PHP

AAI Corporate Plan 2017-26 127


Airport Proposed capacity Tentative Brief Timeline
cost
(in INR
Cr)
Runway Apron Terminal Status
building
3025m x - Integrated AA&ES ac- Runway – As/ DPR 2019
45m (For Buillding corded 145 PH-I Devel-
AB-321) 30,360 sq. opment
m/3.13
MPPA
/1,200 PHP
Rajamundri 2600m x 3 Nos AB- - - - As/ DPR 2019
45m 320 PH-I Devel-
opment.
Kadapa 2015m x - - - - - -
45m
Visakhapat- - 6 Nos.- C - - - - -
nam (CE)
Tirupati - 4 Nos.- C - - - - -

Tirupati - 4 Nos.- C - - - - -

Belgaum 2300m x 3 Nos.- C New termi- - - - -


45m nal building
0.5 MPPA
Hubli 2600m x 3 Nos.- C New termi- - - - -
45m nal building
0.5 MPPA
Mysore 2600m x - - - - - -
45m
Thiruvanat- - - Air side - 12 - -
hap-uram corridor with
Rotunda
Calicut 3777m x - New Int'l - 120 - -
45m terminal
building
Arrival Block
3.0 MPPA
Pondicherry 2377m x - - - - - -
45m
Agatti 1540m x 2 Nos.- ATR- - - - - -
45m 72
Western Region

Surat 2905m x - - Under Con- - - -


45 m struction

128 AAI Corporate Plan 2017-26


Airport Proposed capacity Tentative Brief Timeline
cost
(in INR
Cr)
Runway Apron Terminal Status
building
Vadodara - - 17,500 sq. Under Con- - - -
m/ 0.73 struction
MPPA / 700
PHP
Jabalpur 2750m x 4 Nos C 9,000 sq. SOW Is- Runway New -
45 m m/ 0.24 sued. Site 120 , Domestic
MPPA/ 500 survey in Apron-21, Terminal
PHP progress TB -100 Building
-0.54 ap-
prox.Old
Terminal
Building to
be retained
for G.A. etc.
Juhu - - - - - - -

Pune (CE) - 17 57,300 sq. SOW Is- Terminal Old Termi- -


(10C+7B) m/ 3.10 sued. Building - nal Building
MPPA / 500 -7000 sq m
2300 PHP dismantled
and recon-
structed.

AAI Corporate Plan 2017-26 129


Annexure 2: Cargo handling capacity and volume handled by AAI airports
The following exhibit illustrates the list of airports, their capacity and volume of cargo handled in
2015-16 (in MT).

Name of the Covered Cargo handled in FY: 2015-16 (in MT) Annual hold-
airport area (in ing capacity
sqm) (in MT)
International Domestic Total

Chennai 54,620 230,753 84,872 315,625 1,102,373

Kolkata 21,906 49,166 90,513 139,679 303,293

Coimbatore 2,585 1,072 6,720 7,792 62,780

Amritsar 2,256 611 224 835 60,833

Lucknow 200 2,656 2,301 4,957 4,866

Guwahati 150 11 15,617 15,628 3,560

Trichy 4,000 6,579 3 6,582 28,993

Mangalore 1,400 566 370 936 17,885

Port Blair 945 - 3,842 3,842 23,116

Jaipur* 1,000 1,458 7,912 9,370 10,000

Source: AAI data

Note: For Jaipur airport, international cargo handling is outsourced to state government agencies

130 AAI Corporate Plan 2017-26


Annexure 3: Airports selected for City side development

City side development – Preparation of DPR (Phase I)


Airports Area Available Consultant Report Submission
(in Acres)
Lucknow, 217 M/S RITES March 2016
Raipur 80 M/S RITES March 2016
Tirupati 117 M/S RITES March 2016
Kolkata 105 M/S CBRE May 2016
Varanasi 60 M/S CBRE May 2016
Bhubaneshwar 80 M/s JLL May 2016
Jaipur 40 M/s JLL May 2016
Amritsar 60 M/s PWC June 2016

City-side development – Phase II


Airports Area (in Acres) Consultant
Chennai Under Planning To be appointed
Hyderabad
Trivandrum 2
Bengaluru Under Planning
Vizag
Coimbatore
Ahmedabad
Indore
Chandigarh 30
Guwahati 46
Gaya 62
Patna 10.5

City side development – Phase III


Airports Area (in Acres) Consultant
Trichy Under Planning To be appointed
Bhopal 2.5
Dehradun 2
Madurai Under Planning

AAI Corporate Plan 2017-26 131


Annexure 4: Stakeholder consultation

Stakeholder Comments*
Airline representation AAI should work towards optimum utilization of existing airport infrastructure to intro-
bodies duce efficiencies
(FIA and IATA) Night parking is constrained at AAI airports, which needs attention. More night parking
stands should be added at major airports
AAI should upgrade ground handling system at its airports to help airlines achieve
quicker turnaround time
Lack of night landing facilities at some AAI airports is a constraint for operation and is
affecting passenger growth. More airports should have night landing facilities
Passenger amenities at AAI airports have immense scope for improvement. Toilets,
baby care rooms, lounges, etc., need upgrade and better maintenance
Airlines AAI should consider introducing differential tariffs for LCCs and legacy carriers. This
(Domestic and will help in reducing operating costs for LCCs and hence, cheaper fares, leading to
International) passenger growth
Cost overruns resulting from delays in projects should not be passed on to airlines in
shape of higher tariffs
AAI should involve airlines for consultation before taking up capex projects. This should
be done through the Airport User Consultative Committee

*Based on interactions and secondary sources

132 AAI Corporate Plan 2017-26


Annexure 5: Questionnaires used for feedback on Mission and Vision statements

Feedback questionnaire on Mission and Vision statements for Members


AAI’s Mission statement was articulated in the Corporate Plan document 2007-16 as follows:

“To achieve highest standards of safety and quality in air traffic services and airport management by providing state-
of-the-art infrastructure for total customer satisfaction, contributing to economic growth and prosperity of the nation.”

Do you think the above appropriately captures AAI’s Mission / Purpose? Would you think any refinements are re-
quired to the same?
As part of the top management of AAI, what do you think AAI should aspire to achieve (“Vision”) over the next 10
years?

What are the changes and trends that will have the greatest impact on AAI over the next decade?
As part of the top management of AAI, what do you think are the key competencies / strengths of AAI which could
be leveraged / help in achieving the above articulated Vision?

In your view, what are some of the big opportunities and key challenges for AAI over the next decade?
What would be some key areas of enhancement for AAI to achieve the above articulated Vision?
Would there be any initiatives / action plans that you think are already being taken / should be taken up that would
be relevant to the Corporate Plan formulation?
Do you have any suggestions regarding the effective implementation of this Corporate Plan across the departments
of AAI?

AAI Corporate Plan 2017-26 133


Annexure 6: Vision statements of international airports

Airports Vision statement Key words


Changi Airport Exceptional People, Connecting Lives - We aspire Manpower skill development, team
to build a company where ordinary people achieve work, customer centric, people focus
extraordinary results. Working together as a team,
we bring great ideas to life and achieve exceptional
results beyond our individual capabilities.
Customers are our inspiration. From the youngest
child to the largest corporation, we understand that
what we provide connects people in ways that will
enhance their lives.
Hong Kong airport To strengthen Hong Kong International Airport as Leadership role in airport develop-
the leading international aviation hub and a key ment, people focus, economic com-
engine for the economic growth of Hong Kong. mitment
Abu Dhabi Airport Our vision is to be the world’s leading airports Aspiration, corporate excellence
group.
Infraero To be among the best airport solutions companies Staggered approach, airport solu-
in the world. tions, global benchmark
To be a worldwide reference in airport solutions.
Fraport We are Europe’s best airport operator and set Global leadership, best processes,
standards worldwide. technology, etc.

Aena international To be a leading, benchmark company in the airport Infrastructure management, global
infrastructure management sector worldwide. ambitions, commitment to parent
Participating and having a strong presence in the company
international airport services market is what Aena
Internacional contributes to the Aena group.
CAA Philippines To be a pre-eminent Civil Aviation Authority in the Excellence, global benchmark
world and a global brand of excellence in civil avia-
tion.
Angakasa Pura I To be one of Asia’s ten best airports management Management excellence, regional
companies. ambitions
Angakasa Pura II To become a leading and professional world-class Global ambition, aspirational
airport management company.
Airports Authority of Airports Authority of Thailand operates the World’s Futuristic approach, global ambitions
Thailand Smartest Airports.
ACSA To be a world leading airport business. Global ambition,

Aéroports de Paris Be a leading group in airport design, construction Focused on design, construction and
and operation. ops, ambitious
Munich Airport Living ideas – connecting lives Innovation, people focus
Amsterdam Airport Europe’s preferred airport Excellence, regional focus
Zurich Airport We are the leading transport hub and meeting Transport convergence, people focus,
place in Europe. regional focus
Dubai Airport To always go further and be the world’s leading Global ambition, all around excel-
airport company. lence
Beijing Airport To be a first-class airport management company Quality excellence
Mumbai Airport To be one of the world's best airports that consist- Global aspirations, customer focus,
ently delights customers and to be the pride of
Mumbai.

134 AAI Corporate Plan 2017-26


Annexure 7: Action plans provided by select Directorates of AAI

Action Plans for the plan period 2016-17 to 2025-26


Departmental Action Plans
Directorate of HR
Objectives Short Term Medium Term Long Term
Recruitment across Filling of vacancies in Filling up of vacancies in engi- Review the gaps in the
various functions operations, commercial & neering, ATC, CNS, HR, fire & manpower requirement of
cargo at E1 & E3 level with Finance to improve the perfor- all the disciplines and fill the
a strategy to improve non- mance vacancies.
aero revenue
Training plan Strengthen existing training Develop massive open online Establish training centers at
centers. Reinforce regional course. Collaborate with premier 15 select airports. Con-
training centers. Estab- management institute for indus- duct periodical reviews or
lish CHQ training center. try-academic tie-up. Standardize audits of training programs.
Develop & deliver induction all training packages and align Establish a training calen-
training program for HR, them with National Occupational dar. Develop & implement
OPS, Finance & Engineer- Standards. Align all training pro- a training credit system and
ing. Collaborate with inter- grams with 4-tier training policy link it to career progression.
national aviation training (E1-E3, E4-E5, E6-E7, E8-E9).
partners. update all training records on
LSO module of SAP.
Identifying non-core Identification of non-core Taking appropriate steps to Taking appropriate steps
functions and out- areas outsource identified as non-core to outsource identified
sourcing certain non- areas in Kolkata, chennai 10 as non-core areas in all
core functions after major airports remaining other airports
redeployment.
Organization restruc- Organizational restructur- Organizational restructuring of Organizational restructur-
turing ing of Northern region, other regions, Chennai & 10 ing of remaining airports
CHQ & Kolkata airport as other airports as per recommen- as per recommendation of
per recommendation of dation of consultant consultant
consultant
Departmental Action Plan
Directorate of Cargo
Objectives Short Term Medium Term Long Term
Development of latest
I.T. System for the
Cargo Directorate:
To be IATA e-freight
compliant at Chennai
and Kolkata Airport
followed with other
AAI airports having
International cargo

To establish CPC
& Pharma zone at
Aurangabad /Chennai
/ Bagdogra Airports
etc. depending on the
users requirements

AAI Corporate Plan 2017-26 135


Action Plans for the plan period 2016-17 to 2025-26
Departmental Action Plan
Directorate of Cargo
Objectives Short Term Medium Term Long Term
To launch Common
User Domestic air Car-
go Terminal (CUDCTs)
/ YInternational Cargo
/ International Courier
facilities at AAI Airports
based on need basis
subject to cargo/cou-
rier potential from time
to time
To launch e-commerce
warehousing facilities
at AAI Airports on 24
airports initially and
continuing (including
e-channel concept at
CUDCTS)
To obtain RA/RA-3
status for Chennai/
Kolkata airports fol-
lowed with at other
AAI Airports depend-
ing upon the export
cargo volumes.
To undertake Bonded
Trucking operations
within Indian territory
at AAO Airports.
To create/launch of
professional Train-
ing Centre/Institute
covering Commercial
all Cargo Opera-
tions /Aviation related
training programs with
subject experts from
the industry.
To undertake cargo
handling operations at
other Indian Airports
as well as abroad
through competitive
biddings basis.
To undertake ramp
Handling /Passenger
handling operations
at Indian Airports/
abroad through
competitive bidding
process.

136 AAI Corporate Plan 2017-26


Action Plans for the plan period 2016-17 to 2025-26
Departmental Action Plan
Directorate of Cargo
Objectives Short Term Medium Term Long Term
To launch / undertake
Air Freight Stations
role & responsibilities
at AAI Airports subject
to Customs approval
To launch Free Trade
Zone / Cargo Village
/ Dedicated Cargo
Airport(s) in India after
assessing the ground
realities.
To become Authorized
Economic Operator
(AEO) for facilitating
EXIM trade etc. at AAI
Airports
To undertake door to
door delivery of cargo
on behalf of the con-
signee at AAI Airports
To undertake Customs
clearance assignments
on behalf of consignee
/ importers / exporters
at AAI Airports.
To develop Air Cargo
Community System
(ACS) at AAI Airports
subject to levy of
License / user charges
etc.
Departmental Action Plan
Directorate of Commercial
Objectives Short Term Medium Term Long Term
Layout redesigning of 12 airports 27 airports 35 airports
airports
Contract restructuring 15 airports All operational airports
of retailers
Introduction of ad- Introduce services like (at • Value addition in existing facilities
ditional services for least for 15 airports) : • Identify and introduce new facilities to enhance passenger
passengers • Business lounge experience at all operational airports
• Facility for car rental
• Wi-Fi facility
• Art gallery
• Meet & Greet services
• Entertainment zone

AAI Corporate Plan 2017-26 137


Action Plans for the plan period 2016-17 to 2025-26
Departmental Action Plan
Directorate of ANS
Objectives Short Term Medium Term Long Term
Implementation of
multilayered surveil-
lance system
Upgrading FIU Augmentation of capa- Augmentation of capabilities of Augmentation of Fleet
bilities of existing Fleet for existing Fleet for PBN ( SBAS,
PBN ( SBAS, GBAS ) GBAS )
Overseas consulting Target SAARC Countries Target Africa/ Mid East
assignments
Capex plan
• Replacement of ex-
isting infrastructure
• Augmentation of
Infrastructure
• Adoption of new
Technology

Adopting a Perfor- Adopt a performance Continue the refinement of PBS. Further refinement of PBS.
mance Benchmarking benchmarking system for Include Horizontal and Vertical Setting up of Targets to be
System (PBS)for ANS ANS to measure Safety, Efficiency Parameters. achieved based on PBS.
Capacity, Efficiency and
Environmental Efficiency
Parameters.
Implementation of Flow Management at six Extension of Flow Management Indian ATFM system extend-
ATFM metro airports activities to cater to entire Indian ing ATFM activities across
Airspace neighboring Countries as
“cross-border” ATFM
Overseas consulting Target SAARC countries Target Africa/ Mid East
in Flight Procedure
Design
Finalizing ANS Strate- Update ANS Strategic Plan Update ANS Strategic Plan based
gic Plan to reflect New Civil Aviation on Global Plan (Aviation System
Policy guidance and Asia Block Upgrades- ASBU) Block
Pacific Seamless ATM Plan 1 (2018-2023) modules and
objectives. technology.
Developing R&D Ca-
pabilities
Implementing a Futur-
istic Telecommunica-
tions Network
Airspace Management

138 AAI Corporate Plan 2017-26


Action Plans for the plan period 2016-17 to 2025-26
Departmental Action Plan
Directorate of Marketing
Objectives Short Term Medium Term Long Term
Operationalization 2 Airports: 7 Airports 10 Airports
of Schedule Flights at
Airports
Enhancing Schedule To be updated
Flights at under-served
airports
Launching Airport 1st Year: 2 Airports (more 45 airports in 2nd, 3rd, 4th and 19 airports (having less
Loyalty Programme than 10 millions) 5th Year (.1 to 6 million passen- than 1 lac passengers)
gers)
Market Study to Assess 10*+2** airports
the Potential of Airport
Cities
Launching Incentive
Scheme
( 1st to 2nd Year )
Procuring passenger
MIS* tool
*MIDT (Marketing Informa-
tion Data Transfer System)
Hiring Agency to Sup-
port Airport Marketing
Directorate to carry
various activities
Preparing a hub
strategy for Chennai
airport
Training of marketing Refreshal and Advance Refreshal and Advance
team
Minimum 10 days
Departmental Action Plan
Directorate of IT
Objectives Short Term Medium Term Long Term
Implementation of
E-Office
Phasing out of physical
filing system
Implementation of 15 airports All operational airports
EPoS for retail conces-
sionaires
Central database
management
Revamping of E-ten-
dering portal
(both application and
hardware)
Implementation of
ISMS

AAI Corporate Plan 2017-26 139


Action Plans for the plan period 2016-17 to 2025-26
Departmental Action Plan
Directorate of IT
Objectives Short Term Medium Term Long Term
Revamping of Airport
Information Manage-
ment System (AIMS)
(both application and
hardware)
ISO 27001 certifica-
tion of IT division,
CHQ.
Implementation of
IPV4 to IPV6
Augmentation and
migration of applica-
tions from DC(RGB) to
DC(SAP)
Integrated Cargo 12 airports 25 airports To be assessed in the long
Management System term
Fire Training Simulator

Enterprise-wide data
mining for better
informed decisions
Enterprise-wide data
repository with single
point data collection
Implementation of new
Website
Refreshing of Data
Centre Infrastructure
Departmental Action Plan
Directorate of Aviation Safety
Objectives Short Term Medium Term Long Term
To graduate from SMS
Level1-2 to Level4
Establish dedicated
team for safety audits
Reduction in bird strike 5% per year
incidents
Reduction in separa- 5% per year
tion minima infringe-
ment
Reduction in runway 5% per year
incursion
Reduction in flight level 5% per year
bursts

140 AAI Corporate Plan 2017-26


Action Plans for the plan period 2016-17 to 2025-26
Departmental Action Plan
Directorate of Engineering
Objectives Short Term Medium Term Long Term
Introduction of au-
tomated building man-
agement system
Completion of solar 13 airports
projects
Achieving GRIHA 4
at new construction
projects
Replacing convention-
al lights with LED
Incremental reduction 10% per year
in energy consumption
Introducing pre-
engineered hangars &
terminals
Introduction of airfield
pavement manage-
ment system at 10
airports
Departmental Action Plan
Directorate of Planning
Objectives Short Term Medium Term Long Term
New projects for 2 airports 18 airports To be estimated based on
upgradation and ex- traffic growth and traffic
pansion of airports projections
Extension and upgra- 17 airports 2 airports
dation works at exist-
ing airports
Revival of non-sched- 12 airports* 3 airports* To be assessed at a future
ule airports for VFR date
operations
Development/Upgra- 5 airports
dation of regional (Kishangarh, Jharsuguda,
airports in Tier II and Tezu, Hubli, Belgaum)
III cities
Development of solar 12 airports
projects – roof top
based
Development of solar 3 airports
projects – ground
based
*
Note: Time lines depend upon willingness of airlines to operate

AAI Corporate Plan 2017-26 141


Action Plans for the plan period 2016-17 to 2025-26
Departmental Action Plan
Directorate of Operations
Objectives Short Term Medium Term Long Term
To establish the AOCC
at Goa and Lucknow
airports to enhance
efficiency of Airport
Operations
To award the Quality
and cost based selec-
tion MESS (up-keeping
contract) at 20 airports
where annual pas-
senger traffic is 1.25
million and more to
improve the cleanli-
ness parameters of
ASQ/ACI
To improve trained
manpower at all
operational airports to
strengthen the opera-
tions cadre for smooth
function of terminal /
airside operations
Departmental Action Plan
Directorate of Finance
Objectives Short Term Medium Term Long Term
Automation of tariff
cell
Real time banking/
Bank reconciliation on
a daily basis
Implementation of
billing gateway and
realization module
Developing a policy
for debtors manage-
ment and reviewing
of the existing credit
policy
Revising of financial
delegation of powers
Incremental cost re- 2% 3% 5%
duction (as a percent-
age of current cost)

142 AAI Corporate Plan 2017-26


Action Plans for the plan period 2016-17 to 2025-26
Departmental Action Plan
Directorate of Business Development
Objectives Short Term Medium Term Long Term
Bid for development, Minimum 2 projects 4 projects 8 projects
construction and op-
eration of greenfield/
Brownfield airports in
India and exploring
global markets for
such projects by form-
ing consortium/JV/SPV
Feasibility study, 20 airports 30 airports 50 airports
financial modelling,
architectural concept
plan & bidding for
development of city
side facility at various
airports
Feasibility study, 6 airports 10 airports 25 airports
financial modeling &
bidding for finaliza-
tion of developer for
Multi-Level Car Park at
various airports
Explore global aviation 2 projects 6 projects 10 projects
market of air naviga-
tion service providers
(ANSPs) & Airport
Operator offering
a comprehensive
e-business solution
in collaboration with
IATA and exporting the
services and domain
knowledge such as
GAGAN, NOCAS, etc.
Techno-economic 4 airports 8 airports 15 airports
feasibility studies for
the development of
New greenfield Airport
at comparatively less
attractive destinations
in Tier II and Tier III
cities wherein JV/SPV
with state Government
or any other local
stakeholders can be
formed under Regional
Connectivity Scheme
of New Civil Aviation
Policy
Participating and 2 projects 8 projects To be a leading FIS service
securing contracts for provider in Asia Pacific
Flight Inspection Ser-
vices and CNS related
activities

AAI Corporate Plan 2017-26 143


Action Plans for the plan period 2016-17 to 2025-26
Departmental Action Plan
Directorate of Business Development
Objectives Short Term Medium Term Long Term
Project for develop- Minimum 2 projects 6 projects 10 projects
ment of aviation
skill development
and export of AAI’s
capacity building in
all functional areas of
the airport business
and effective sharing
of best professional
standards and prac-
tices promoting FTC,
CATC & IAA globally.
Assisting/ advising Minimum 1 project 3 projects 5 projects
State Government on
state specific avia-
tion related activities
including setting up
of Regional Airlines
by State Government,
acquisition of suitable
aircraft for intra-re-
gional connectivity
within the state, their
flying training institutes
by improving their
viability and quality of
training.

144 AAI Corporate Plan 2017-26


Annexure 8: Potential coverage of MIS for AAI
Directorates MIS coverage
Cargo Airport wise loading and unloading of commodities
Airport wise categorization of types of cargo
Airport wise dwell time of cargo
Commercial Airport wise list of active concessionaires
Concessionaire wise list of monthly sale/transactions
Concessionaire wise average transaction value
Boarding pass wise duty free sales / average transaction value
Finance and accounts Airport wise detailed costs incurred
Airport wise detailed revenue earned
Airport wise cash flows
Airport wise sale and purchase of assets
Human resources Department wise manpower requirement
Department wise training requirements
Department wise planned retirements and succession planning
Engineering Airport wise list of works
Work wise time targets
Work wise cost targets
Time overruns
Cost overruns
Marketing Sector wise passenger traffic
Sector wise cargo traffic
Operations Airport wise passenger processing time
Airport wise landing/takeoff slot availability
Airport wise availability of parking slots
Airport / terminal wise congestion status
Airport wise flight delays

Note: The above list is just representative and not exhaustive. Each department has to define its specific information
requirements.

AAI Corporate Plan 2017-26 145


Annexure 9: City side development by international airports
Airport City Side Development Mix29
Aeroports de Paris Product mix at Paris Charles de Gaulle and Orly international airports
includes entertainment & business centres, hospitality and retail with golf
courses.
Kuala Lumpur International Airport New airport city is commercially anchored by its large gateway park
that, in addition to retail and office development, includes motor sports,
an automotive hypermarket and leisure venues drawing on the local as
well as aviation-induced market.
Hong Kong International Airport’s SkyCity One million square metresretail, exhibition, business office, hotel and
entertainment complex near its passenger terminal. Supported by high-
speed rail connectivity with city centres.
Dubai World Central $32 billion airport city under development, 25 miles south of downtown
Dubai. Corner stoned by a multimodal air logistics hub, will include
office towers, hotels, a mega mall, golf course and housing for 40,000
on-site workers.
Incheon’s “AirCity” It encompasses international business areas, logistics zones, shopping
and tourism districts, as well as housing and services for airport city
workers and residents.
Beijing Capital Airports Holding Fast progressing Capital Airport City’s master plan takes an expansive
definition of airport functions including, among others, shopping, enter-
tainment, education, sports and leisure, logistics, light manufacturing,
finance, trade and housing

29
Various media reports and respective airport websites

146 AAI Corporate Plan 2017-26


Chennai Airport

Rajiv Gandhi Bhawan, Safdarjung Airport, New Delhi - 110 003


Website: www.aai.aero