Opinion
Mint Explainer: The cruising altitude for India's airport expansion
Summary
- India aims 220 airports by 2027. That will be sufficient to serve our population.
India is rapidly expanding and overhauling its network of airports, with the focus shifting beyond top metros. The Adani group has just announced a ₹10,700 crore plan to transform the Lucknow Airport, and has similar plans for the Ahmedabad airport as well. In fact, the Modi government says it has almost doubled the number of operational airports to over 140 since it took over, and hopes to raise that figure to about 220 by 2027. For a country of India's size, that would be a fairly extensive, elaborate and spread-out airport network, in many ways on par with developed countries, including the US and China. The challenge would be to make these airports commercially viable soon.
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India’s ambitious airport expansion drive
India is building a maze of airports, connecting its smaller cities to the rest of the country, and, indeed, the world. Several new international airports are coming up, including in Noida, Navi Mumbai and Goa. And several new domestic airports are sprouting across the country, from Kurnool in Andhra Pradesh to Rourkela in Odisha and Rewa in Madhya Pradesh. The number of operational airports in India has surged in recent years, from 74 in 2014 to about 141 now. And we are not done yet, says aviation minister Jyotiraditya Scindia.
By 2027, India plans to have about 220 airports, in many ways matching the network of developed countries, including the US. Now, the US has over 15,000 airports but only a very small number of these run commercial flights, about 3% to 4% - that's about 500-odd. The others are mainly reserved for private service, often rented out to flying schools and cargo companies, and also used as refueling stations.
The US land size is about three times that of India, and its network of commercial airports – about 500 at the moment – has been vital for it's economic growth and prosperity over the decades. By that yardstick, if India were to have 220 operational airports, it would be a fairly big number, capable of supporting its fast-growing economy over the medium term. India’s large and fast-growing middle class has driven the surge in domestic air traffic in recent years, and some studies estimate it’s already the size of the US population.
For comparison, China has about 240 operational airports, and plans to add 150 more by 2035, taking its tally to about 400.
China is almost equal to the size of the US, and has seen a sharp rise in standards of living in recent decades, triggering an aviation boom. It will need to keep expanding its network of airports to service its giant economy.
India needs to spur regional aviation
Even as India expands its network of airports, the challenge before it would be essentially two-fold. It needs to deepen the penetration of aviation in its smaller towns and cities – more airports in the smaller cities would help it do just that. Also, India will need more airlines, with greater emphasis on regional services, but it needs to expand incrementally. Fewer, viable airlines would be preferred over a big spurt in number. There are crucial takeaways from the experience in the US, China and Brazil. Almost 70% of US airports offer only regional service, and more than a third of all scheduled departures were on regional airlines.
In fact, regional airlines are the main service providers to more than half of US, mostly as a private entity or a subsidiary of a major airline. China too is now focusing on smaller, branch airports in its rapid expansion of the civil aviation network. Another BRIC country, Brazil too has ambitious plans to build hundreds of regional airports - at the moment, it has about 20 main airports.
Will India need more airlines?
In the US, there are 18 major carriers – exceeding $1 billion revenue annually – and another four dozen smaller ones. But the 10 largest carriers have captured 90% of its domestic market. China has eight major carriers and over 40 passenger airlines, but most of the smaller ones are owned or have tie-ups with the “Big Three".
So, even in the more developed markets, a few airlines tend to become dominant. While there may be headroom for a few more, India has seven airlines now and that is a good number.
The bottom line
India may have enough airports in a few years, and 220 may be an adequate number in the near term. The challenge is to make them commercially viable quickly, generating enough traffic for them to make profits or break even.
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