The government has in its July budget announced plans to enhance air connectivity in tier-2 and 3 cities and towns. The schemes for the development of such new airports will be implemented by the Airports Authority of India (AAI) or by public-private-partnership (PPP) models, the latter being at geographies where it is viable for the private sector to make investment.
According to AAI officials, the agency plans to develop at least five airports before the end of this financial year. These airports, which will have just basic facilities unlike some of their city-based cousins, will enhance regional air connectivity in smaller towns and cities.
The AAI officials, however, didn’t reveal the names of the locations where these airports are slated to come up.
In June 2014, civil aviation minister
P Ashok Gajapathi Raju had made a presentation to Prime Minister Narendra Modi that included plans for developing 50 no-frills airports in several states.
The minister had further informed the Rajya Sabha on July 22 that the government planned to set up three low-cost airports in Bihar at Gaya, Muzaffarpur and Raxaul. However, the time-frame for the completion of these projects hasn't been drawn yet.
The government is also keen on further developing the existing-35 non-metro airports. “While there is a big push from the current government to develop regional airports, the completion of these airports are expected to happen in phases”, said an AAI official.
Aviation consultants Centre for Asia Pacific Aviation (CAPA), however, states that the AAI should exercise caution before rushing to commit capital to such projects.
“There needs to be an in-depth enquiry into why more than 100 airports are currently idle or loss–making and why several regional airports have failed to attract airline services”, said a July CAPA report.
“The low-cost airport strategy should be linked to a policy for supporting viable regional airlines,” the report said.
Most Indian airlines haven’t made profit in the last few quarters and the sector continues to suffer from the high taxes levied by the state and airports, and high fuel costs. Over the last seven years Indian airlines have lost about $10.6 billion (R63,663 crore), said another CAPA report.
“Indian carriers expected to post losses of $1.3-1.4 billion (R7,807-8,408 crore) in 2014-2015, following on from a $1.7 billion loss last year,” the report said. Still low airport taxes could make no-frills airport attractive.