Airports Authority of India has decided to enhance connectivity and revamp airports in Tier II and III cities that are poised to be future growth hubs

It is evident that air traffic demand has increased worldwide as economies have grown, and air transportation in turn, is a key cause and facilitator of economic growth. Apart from being a major industry in its own right, the aviation industry provides an essential input into the rapidly growing global economy. Greater air connectivity boosts productivity and economic growth by providing better access to markets, enhancing links within and between businesses and providing greater access to resources and to international capital markets.

Being well aware of this fact, Airports Authority of India (AAI), has decided to enhance air connectivity by providing airports in various cities of the country, thus making it the enabling factor for overall growth and development in the country. AAI realises that the need of the hour is to boost air connectivity in remote areas and Tier III cities. Regional air connectivity can be achieved by bringing down air fares, reducing operational expenses of various stakeholders so as to attain overall increase in air traffic in the country.

It is a matter of pride that by the year 2020, India could well be the third largest aviation market, and this is borne out by the rapidly expanding air transport network and opening of airport infrastructure in the country. In the current scenario, India is handling about 122 million domestic and about 47 million international passengers and it is poised to handle 217 million domestic and 76 million international passengers by 2020. From the present statistic of about 400, the complete fleet size is expected to expand to 1,000 aircraft by 2020. The aviation segment entered a boom phase with the entry of low-cost carriers.

It fostered regional connectivity, new airports, both through PPP mode and upgradation mode, including development of Greenfield airports, both full scale and low-cost airports. According to estimates, approximately 200 low-cost airports in the next 20 years, to connect Tier II and Tier III cities, are required to meet the surge in demand due to other nationwide developmental activities. Accordingly, the government is moving ahead with plans to develop 200 low-cost airports in Tier II and III towns across the country within the next few years and has already identified 50 such cities under the first phase of this development.

AAI has drawn up a low-cost model as the first step to provide air connectivity to these smaller towns where it was felt a sufficient number of people could afford to pay for air travel if the facility is made available.

The low-cost airport model that AAI proposes to introduce will be based on smaller size airports, with modular concept, with no frills but which will incorporate all the basic and essential infrastructure, thereby reducing the overall operating and service cost of operations for the airlines. However, the low-cost airport model will not compromise on the technical, security and other issues related to essential services at airports; emphasis will be made to enhance the non-aeronautical revenue.

AAI expects the next round of growth to come from regional connectivity, by linking small towns together. Airports will be so developed as to cut costs to airlines as well as benefit the ultimate customer, that is the passenger.

The development of these 200 airports will be undertaken in a phased manner, starting with around 50 airports at a time. AAI has already completed over 60 airports in the past five to six years. The ultimate success of development will come through cooperation from states and other stakeholders by providing such incentives as reduction in VAT charges on ATF (Aviation Turbine Fuel), providing land free of cost or at very nominal cost, provision for viability, gap funding, etc. As part of the strategy to encourage airlines to fly to smaller towns, the government plans to offer financial incentives to Indian carriers, including waiving of landing charges for aircrafts with a maximum certified capacity of less than 80 seats operating from non-metro airports, waiving of night parking charges, amongst others.

This will lead to more flights arriving in smaller towns and cut costs for flyers. This will also spread inbound tourist footfall to a larger geographic area in India and open new destinations and uplift the catchment areas around the airports.