Airports Authority of India (AAI) is gearing up to the challenges posed by the upcoming Regional Connectivity Scheme (RCS) and plans to connect about 22 airports under RCS in the first phase.
“In the first phase, there are 22 airports that are already in place and flights can be started as and when airlines want to fly. Out of the 22 aiports, one is in Andaman Nicobar, three in Assam, two each in Uttar Pradesh, Punjab, Rajasthan and Gujarat,” said AAI Chairman Guruprasad Mohapatra.
“AAI will be investing Rs 17,500 crore in upgrading airport infrastructure over a period till 2019-20 and the amount will be generated through internal accruals. If more money is needed at a later stage, we may raise money from outside,” he added.
Talking more about RCS, Mohapatra said that 20 airport are ready to fly as and when they are needed and another 20-30 airports can be made fit to fly with some investments.
RCS envisages capping of airfare at Rs 2,500 for one-hour flights, which connect unserved and under-served airports and proposes levy.
The regional connectivity scheme will be in operation for 10 years with individual route contracts to be for a 3-year span. limited period exclusive route rights will be allotted to selected operators.
As per the policy, un-served and under-served airports would be revived to boost regional connectivity. There are 394 unserved and 16 under-served airports in the country. Other measures include extending concessions, giving viability gap funding for operators as well as providing cost-effective security solutions by Bureau of Civil Aviation Security (BCAS) and state Governments.
Mohapatra also said that AAI is planning to develop 50 no-frills airports over a period of time keeping in mind mass air travellers due to RCS.
When asked about earning potentials, he said that AAI is not getting enough money and profit from MIAl and DIAl is going to get down in time to come so it is looking to enhance non-aeronautical revenues, which currently account for around 19 per cent of its annual top line.
“The priority is to increase non-aeronautical revenues which is also the mandate for AAI from the PMO and Niti Aayog, especially since there is a limit to revenues from the aeronautical side,” said Mohapatra
Keeping the mandate in mind AAI plans to partially monetise around 55,000 hectares of land owned by it in urban areas across the country.
"We have a huge chunk of land on the city side which we have not been able to monetise. That is where we are focusing now," he said.
land is proposed to be utilised for commercial activities, including for hospitality business and warehousing.
Towards land monetisation, Mohapatra said all options such as leasing and revenue-sharing models would be explored.
Recently, AAI floated a proposal for city-side development of Bhubaneswar airport as part of land monetisation efforts.
"We will replicate such a model at other airports also. There is an opportune time for going for it," Mohapatra said.
AAI saw its profit after tax jump nearly 30 per cent to Rs 2,537.36 crore last fiscal, on the back of higher passenger numbers and increased revenues.
Minister of State for Civil Aviation Jayant Sinha had informed lok Sabha in the first week of August that AAI recorded a total revenue of Rs 10,824.50 crore in 2015-16 compared to Rs 9,284.98 crore in the year-ago period.
In the last financial year, AAI's profit after tax stood at Rs 2,537.36 crore, higher than Rs 1,959.22 crore in 2014-15.
"Increase in passenger numbers, marginal increase of User Development Fee (UDF) charges in AAI airports, Passenger Service Fee (Facilitation Component) and increase in lease revenue from Delhi and Mumbai airports have contributed to the increase in AAI revenues," Sinha said in a written reply.