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Strategic Opportunities in the Indian Airport Infrastructure Market
- Product Code:FRS00874
- Publication Date:May 2009
- Publisher:Frost & Sullivan
- Product Type: Report
Strategic Opportunities in the Indian Airport Infrastructure Market
This Frost & Sullivan research service titled Strategic Opportunities in the Indian Airport Infrastructure Market provides an overview of the various aspects of developing Indian Airport infrastructure, opportunities, drivers and restraints, government view point and recommendations. The study identifies the key revenue factors in an airport infrastructure project and lists several business models that could be employed in India. It examines issues surrounding airport development and modernization, highlights its financial aspects, and captures some of the main expenditures of an airport. The different monetary avenues that need importance and close monitoring are also addressed. The research covers details related to the eligibility criteria to bid for and win an airport project, the public private partnership (PPP) framework, and details regarding the participation of the Airports Authority of India (AAI) and State governments in the airport ventures. There are immense opportunities in the next five years, in all market segments of airport security, airport communication, navigation and surveillance, access control and perimeter security, airport maintenance, asset management, ground support equipment (GSE) and ground handling equipment (GHE) service providers and airport refeullers.
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Indian Airport Infrastructure Offers a Long Term Reward Avenue for Private Participants
Airport infrastructure development in India has thrived in the wake of emerging business places, increased scope for connectivity, and new operating models of airlines, government initiatives, and the dynamic growth of tourism. Airport infrastructure is witnessing improvisation and expansion on a massive scale, with the Government avidly supporting private participants. Trends indicate that the long-term prospects for both the private participants and the country are attractive. "The investment in Indian airport infrastructure market, especially in the Greenfield projects, will almost increase two fold in the next five years," notes the analyst of this research service. "The planned investment in airport infrastructure is estimated to be $9 billion by 2013."
Another key avenue is the phased up gradation of 35 non-metro airports identified by the AAI. The airports are slated to be up graded in three phases based on need and priority. All these airports can have private players pitching in for land-side development and some areas on the air side as well. These opportunities, on the whole, can be categorized as Brownfield opportunities for a private player. International investors and airport companies have evinced interest in the past during the bidding for Greenfield airports and many such companies are consortium partners in current airport development projects. The government aims to bring in international players to incorporate operating efficiency and global standards.
The Government of India has encouraged private participants by providing assistance in terms of tax holidays and offering land for construction. Empowered committees and steering boards have been set up to expedite and monitor the progression of projects and policies connected with the development of airport infrastructure. Observation of air traffic, cargo movement, and passenger movement across the main airports in the country suggests that the development of alternative airports will help ease congestion at the existing airports, and increase connectivity.
The primary challenges that face the market are funding and the identification of key geographical areas. Funding for the airport development projects encompasses equity from loans, government grants, investors, the AAI and consortium partners, which invest in the project in a phased manner to accommodate planned expansions.
Funding can be purely public or public-private; however, Greenfield projects have remained public-private alliances. "The total investment toward airport development during the next five years is likely to be $9 billion, of which close to $6.8 billion is expected to come through PPPs," explains the analyst.
Long-term sustainability of the airports in terms of funding is an issue for the government. Factors including the lack of indigenous technical and administrative expertise are perceived as the prime reason for poor planning and management. These factors should be seen as an opportunity for the private players and airport companies from across the globe to be interested in the Indian airport infrastructure market.
During the past five years, the rates of growth for air traffic has been 18 percent, domestic cargo growth has been 16 percent, international cargo growth has been 12 percent, and passenger movement has been 20 percent, which bodes well for the market. Although the current aviation market is slightly tardy, some positive growth trends are expected in five to seven years. The growth trend for international aircraft movement is expected to be 13 percent and domestic has been pegged at 14 percent. The domestic passenger growth is likely to be 20 percent, and international, 16 percent. The cargo growth is expected to be at 12 percent and 10 percent for domestic and international respectively.
In terms of revenue generation from the airport projects, both aeronautical and non-aeronautical sources play a vital role. The profitability of the airport lies in the creation of a balance between the aeronautical and non-aeronautical sources.
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Airport security
- Airport communication
- Navigation and surveillance
- Access control
- Perimeter security
- Airport maintenance
- Asset management
- Ground support equipment
- Ground handling equipment service providers
- Airport refeullers
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- 1. Executive Summary
- 2. Industry Overview
- 2.1 Origin of Aviation in India A Snapshot
- 2.2 Significance of Investment for the Sector
- 3. Key Trends
- 3.1 Trends
- I. Traffic
- II. Investment
- III. Revenue
- IV. Conventions
- 3.2 Traffic Trends
- I. Past Passenger Growth
- II. Past Cargo Growth
- III. Projected passenger Growth
- IV. Projected Aircraft Movement
- V. Projected Cargo Growth
- 3.3 Airports Capacity
- I. Current and Projected Capacity at Custom and Domestic Airports
- II. Current and Projected Domestic capacity at Domestic Airports
- III. Current and Projected International capacity at International Airports
- 3.1 Trends
- 4. Airport Financing
- 4.1 Development Allocation Break up
- 4.2 Task Force Commendations
- 4.3 CoI Commendations
- 4.4 Public and Private Investments
- 4.5 Critical Financial Perspectives
- 5. Market Scenario
- 5.1 Scope of Privatization
- 5.2 Drivers and Restraints
- 5.3 Regulatory bodies
- 5.4 Scenario on Airport Development
- I. Key aspects for development
- II. Investor Proposal Overview
- 5.5 Clearances and Agreements
- 5.6 Policy Implications
- I. Joint Ventures
- II. Ownership and Management
- III. Private Sector Participation
- IV. Greenfield Projects Overview
- V.PPP Model
- VI. Selection Criteria
- VII. Evaluation Criteria
- 6. Airports in India
- 6.1 Greenfield Airports
- 6.2 Snapshot of BIAL
- 6.3 Snapshot of HIAL
- 6.4 Hyderabad Airport A Case Study
- I. Bid, Agenda, Ideas, Structure and Splits
- II. Concession Agreement
- III. Concessions
- 6.5 Foreign Share Holding
- 6.6 Brownfield Airports
- 6.7 Snapshot Delhi and Mumbai Airports
- 6.8 Non-Metro Airports
- 6.9 Airport Companies
- 7. Airport Infrastructure A Business
- 7.1 Aerotropolis
- I. Concept
- II. Factors
- III. Drivers and Restraints
- 7.2 Airport Infrastructure Model
- 7.3 Airport Business Entry Models
- 7.4 Indian Airport Business Model
- 7.5 Revenue Patterns
- 7.1 Aerotropolis
- 8. Conclusions and Recommendations
- 8.1 Non-Metro Airports
- 8.2 Greenfield Opportunities
- 8.3 Returns on Airport Infrastructure
- 8.4 Entry Model
- 8.5 Recommended Model
- 8.6 Risks and Challenges
- 8.7 Airports Operating Model
- 8.8 Airport Allied Infrastructure Entities