COST BENEFIT ANALYSIS OF

SECONDARY AIRPORTS IN
INDIA

SUBMITTED BY:
BHARTI GUPTA (17)
KIRANDEEP (31)
MONALISA ROY (37)
NADA KAMAL (39)
COST BENEFIT ANALYSIS
A technique to find, quantify and add all positive
factors is known as benefits.

Then all the negatives, known as costs are identified,

quantified and subtracted from it.

The difference between the two indicates whether

the planned action is advisable or not.

The real trick in doing a cost benefit analysis is to

make sure that one includes all the costs and all the
benefits and properly quantify them.
Principles of cost benefit analysis
1. There Must Be a Common Unit of Measurement.
(The most convenient common unit is money. )

2. Time value of money needs to be considered.

3.The Analysis of a Project Should Involve a With Versus

Without Comparison.

4.Double Counting of Benefits or Costs Must be Avoided.

5.Decision Criteria for Projects:

discounted present value of the benefits must exceed the
discounted present value of the costs
 What are Secondary Airports
A secondary airport can be an airport in addition to an existing
airport in the city that caters to most of the air traffic for long
and short-haul flights.

A secondary airport is an airport with all the necessary minimum

facilities required for making take-off and landing operations of
an aircraft, possible along with required safety and security
provisions.

Quite Often, Secondary airports are considered as Low-Cost

Airports.

An older airport can be refurbished into secondary airport.

(E.g.: Dallas love field, became the secondary airport after primary
operations.)
Objectives of cost benefit analysis for secondary
airports
Create maximum revenue.
Increase customer satisfaction.
Provide source of entertainment at airport.
Provide necessary products and services mainly
for Low Cost Carriers and its users.
Enhance the airport image.
Create local business opportunities.
Create a contemporary concession program.
Increase control over concession operations.
Privatize management of concessions.
REGULAR PRIVATE AIRLINES AND LOW COST
AIRLINES (LCA) SHARE IN THE DOMESTIC
PASSENGER TRAFFIC - MAY 2007 (Source: AAI)
Benefits of Secondary Airports
LCCs are provided with smaller airports with
increased opportunities to compete with more
established competitors.

Airlines choose to fly from the secondary airport

primarily due to the lower price offered by them.

Secondary airports have ‘primary’ catchments

areas of their own, for which the secondary
airport is much more convenient than the region’s
primary airport.
How secondary airports compete with
primary airports
Provide alternatives to the major hubs.
(hub n spoke)

Compete with the larger hubs because they offer

opportunities to by-pass these hubs.

The low-cost airlines and the secondary airports

jointly form parallel networks that compete
against the routes of the legacy airlines and
the major hubs.
WHY LOW COST CARRIERS PREFER
SECONDARY AIRPORTS
These are relatively uncongested and thus free from
ground and air traffic control delay.
They appreciate the low charges.
 Lack of congestion, together with work rules permit
fast turn-around times at the gate.
Low-cost airlines to increase the flying time and thus
the productivity of their aircraft, and eventually
lowering their operating costs significantly.
Integral to their efficiency. 
Competitive situation
In India there is no secondary airport that has come into existence but
during the last couple of years the development and reconstruction of a
number of regional airports has started in European countries and USA.

These smaller airports will be competing with one another for flights.
Since low cost airlines are looking for smaller, inexpensive airports they
provide an opportunity for these new regional airports.

 This could greatly nourish the development of a given region, so local

public administration authorities, such as municipalities are trying to
support them financially.

Unfortunately a very limited amount of money is coming from the central

public finance institutions. Such airports could promote the trade and
tourism in cities and regions that have tourist attractions, plus such
towns and areas having airports would be more appealing to investors.
Challenges for secondary airports
Airline service with a palette of features.

 To retain airline service or, at a minimum, to

avoid major losses if their airlines withdraw for
any reason.

To plan its investments modestly, flexibly, and for

the short term until its situation be firmly
established.
Secondary airports across the world
KUALA LUMPUR
The newly built secondary terminal at Kuala Lumpur
opened in March 2006, separated by a considerable
distance from the main terminal.
The overall structure of charges is very simple, with
no separate charges in force for noise, security or
terminal navigation. There is a boarding bridge
charge, but it does not apply for the first three hours
after an aircraft has arrived, so we have not taken it
into account in calculating overall charges.
FRANKFURT-HAHN INTERNATIONAL AIRPORT
It is a former military airfield, and it was
developed primarily for commercial operations by
low cost operators.

The airport has a single passenger terminal, so

there is no charge differentiation in respect of
different facilities.

The landing charge does not apply in the case of

aircraft turnarounds which take 30 minutes or less.
 Cont…
The per passenger charge varies between €5.35 for
up to 100,000 passengers p.a. to €2.48 for between
2,000,001 and 3 million passengers p.a. There are
further discounts on further passenger increments
beyond 3 million passengers. For our calculations
we have contrasted the charges which would apply
at a traffic level of 2.5 million passengers, all with a
sub-30 minute turnaround, with those which would
apply at a traffic level of 2.5 million passengers all of
which were subject to a turnaround of over 30
minutes.
COST AND BENEFIT
1.COST TO OPERATOR 1.BENEFITS TO
STAKEHOLDERS:
2.COST TO SOCIETY
 OPERATOR
 AIRLINES
 PASSENGERS

2. BENEFITS TO
SOCIETY
COST AND BENEFIT TO THE OPERATOR
COSTS BENEFITS
 Cost To Meet Safety Generate Additional
Security Standards Of IATA Revenue By Carbon
And ICAO. Emission Trading.
 Opportunity Cost.
 Competition-Handling. Non-Aeronautical Revenue
 Larger Break-even Period. Generation.
 Difficult To Arrange
Finances Of Such Incentives By
Magnitude .(The estimated cost of Government.
building a Low Cost airport is
(CONCESSIONS, TAX HOLIDAYS,
approximately 200 crores)
LANDS AT SUBSIDISED RATES)
Costs and Benefits to Society
COSTS BENEFITS
Environmental Issue. Employment Generation.
Business opportunities.
Economic Development.
Society will have to
Increase in income.
compromise on the
Level of Services. Reduction in poverty.
Increase in literacy rate.
Reduction in Carbon
emissions as the problem
of Congestion will be
solved at primary airports.
Costs and Benefits to Passenger
Costs Benefits

 Passenger will have to  Time saving.

compromise on the level of
services.  On time departures and
arrivals.

 Low fares
Limitations to study
Made all the efforts to reduce the subjectivity in the
research but as the survey was mostly based on
human perceptions related to various factors, which
may lead to a subjective result.

Due to security reasons entry to the airport was an

issue but we made efforts to get the information from
passengers and related authorities at the airport.

Time available for the completion of the project was

limited. 
THANK YOU !