Professional Documents
Culture Documents
Executive Summary.3
Advantage India... 5
Market Overview & Trends........ 7
Porter Five Forces Analysis ...20
Strategies Adopted.. 22
Growth Drivers......... 24
Opportunities.....36
Success Stories.... 38
Useful Information.........................41
2015 2020
2014 2024
Source: World Travel and Tourism Council, Airport Authority of India, TechSci Research
AUGUST 2015 3
For updated information, please visit www.ibef.org
AIRPORTS
EXECUTIVE SUMMARY (2/2)
267
CAGR: 10.8% Indias middle income population
is expected to increase from 160
By 2016, Indias middle income 160 million (over 50 per cent of the
class to be triple the total total population in the US) in
population in Germany 2011 to 267 million by 2016
equivalent to over three-times
Germanys population
2011 2016
Source: World Travel and Tourism Council, Asian Development Bank, TechSci Research
ADVANTAGE INDIA
AUGUST 2015
AIRPORTS
ADVANTAGE INDIA
Robust demand
Opportunities in MRO
RisingGrowing demand
FY00 working group and widening
FY15
middle class demography is Growth in aviation accentuating
expected to boost demand demand for MRO facilities
No of No of
operational India plans to increase the number Expenditure in MRO accounts for operational
airports: 50 of airports to 250 by 2030 to cater 13-15 per cent of total revenues; it airports: 68
to growing leisure and business is the second-highest expense after
travel fuel cost
AUGUST 2015
AIRPORTS
EVOLUTION OF THE INDIAN AVIATION SECTOR
Indias civil aviation market is set to become the worlds third3 largest by 2020
Non-scheduled airlines in
39 122 (FY15)
operation
Passenger handling
capacity at airports 66 million 270 million (FY14)
Airports and
airstrips in India Customs airports
Operational (68) (7)
(449)
Non-AAI airports
and airstrips
(324)
Civil enclaves International (12)
(26)
International Domestic
Source: Airports Authority of India, TechSci Research
Notes: AAI Airports Authority of India, JV Joint Venture,
FY Indian Financial Year (April March)
Spicejet
92.00% Market share: 9.80%
Passenger load traffic: 88.70%
90.00% Indigo
Market share: 36.90%
Passenger load traffic: 85.70%
88.00%
Passanger Load Factor
86.00% GoAir
Market share: 8.80%
Passenger load traffic: 85.50%
84.00%
Delhi
Passenger traffic handled in
FY14: 36.8 million
FY15: 40.9 million;
Kolkata
Passenger traffic handled in
FY14: 10.1 million
FY15: 10.9 million;
Mumbai
Passenger traffic handled in;
FY14: 32.2 million
FY15: 36.6 million
Hyderabad
Passenger traffic handled in
FY14: 8.7 million
Bengaluru FY15: 10.4 million
Passenger traffic handled in
FY14: 12.9 million
FY15: 15.4 million;
Chennai
Passenger traffic handled in
FY14: 12.9 million
FY15: 14.3 million;
Total passenger traffic stood at a 190.1 million in FY15 Passenger traffic in FY15
200 35.00%
Passenger traffic increased by 12.47 per cent in FY145 180 30.00%
160 25.00%
Growth in passenger traffic has been strong since the new 140 20.00%
millennium, especially with rising incomes and low-cost 120
15.00%
aviation; passenger traffic expanded at a CAGR of 11.16 100
10.00%
per cent over FY0615 80
60 5.00%
40 0.00%
20 -5.00%
0 -10.00%
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Domestic passenger traffic expanded at a CAGR of 11.8 per Growth in domestic passenger traffic has been robust
cent over FY0615; by FY17 domestic passenger traffic is
expected to touch 209 million 200 50.00%
180
40.00%
160
International passenger traffic posted a CAGR of 9.5 per
140 30.00%
139.3
cent over FY06-15 and is set to touch 60 million by FY17
122.41
120
121.51
116.37
20.00%
105.52
100
89.39
87.06
80 10.00%
Growth in passenger traffic set to remain strong in future
77.3
70.62
22 50.98
60 0.00%
40
-10.00%
51
47
43
12th Plan Period
41
38
20
34
32
30
26
0 -20.00%
60
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
FY02 FY07 FY12 FY17E During FY15, international passenger traffic increased
International Passenger Throughput International (million) by 8.9 per cent compared to 8.3 per cent in FY14
Domestic Passenger Throughput Domestic (million)
Total freight traffic registered a CAGR of 6.7 per cent over International freight traffic was 61 per cent of the
FY06-15 total in FY15
3000 50.00%
Domestic freight traffic increased at a CAGR of 8.23 per
cent over FY06-15 while international freight traffic rose 5.9
40.00%
per cent over the same period 2500
30.00%
986
In FY15, domestic freight traffic was 0.98 million tonnes, 2000
852
812
840
while international freight traffic was at 1.5 million tonnes
784
20.00%
689
1500
568
552
During FY15, domestic freight traffic at 0.98 million
530
10.00%
increased by 17.38 per cent while international freight traffic
484
at 1.5 million increased by 7.08 per cent compared to FY14. 1000
1542
0.00%
1496
1468
1440
1407
1271
1149
1147
1023
By 2023, total freight traffic is expected to touch 4.14 million
920
500
tonnes growing at a CAGR of 7.27% between FY2016-23. -10.00%
In addition, International freight traffic is expected to grow at
a CAGR of 7.13% while Domestic freight traffic is expected 0 -20.00%
to grow at a CAGR 7.50% between FY2016-23. FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Freight traffic is expected to be five times the current level Freight traffic (million tonnes)
by the end of the next two decades. It is expected to be 11.4
3.00 25%
million tonnes by 2032
2.50 20%
Growth in import and export in India will be the key driver for 15%
2.00
growth in freight traffic as 30 per cent of total trade is 10%
1.50
2.53
undertaken via airways
2.35
2.28
2.28
5%
2.19
1.96
1.72
1.00
1.70
1.55
0%
1.40
0.50 -5%
0.00 -10%
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Million Tonnes Growth(%)
Total aircraft movement recorded a CAGR of 5.1 per cent Total aircraft movement in FY15 (000)
over FY07-15
1800 25.0%
Both international and domestic aircraft movement have 1600 20.0%
nearly doubled over this period 1400
15.0%
1200
In FY15, total aircraft movement increased by 4.5 per cent 1000 10.0%
1606.04
1536.59
1478.9
1544
to 1.6 million 800
1394
5.0%
1331
1308
1306
1078
600
0.0%
400
200 -5.0%
0 -10.0%
FY07FY08FY09FY10FY11FY12FY13FY14FY15
During FY15, the total number of international aircraft International ('000) Domestic('000)
movement increased to 0.35 million, an increase of 3.02 per Growth-Domestic(%) Growth-International(%)
cent from FY14
Source: Association of Private Airport Operators, TechSci Research
Notes: YoY Year on Year; FY Indian Financial Year (April March)
Until recently, AAI was the only major player involved in developing and upgrading airports in India
Post liberalisation, private sector participation in the sector has been increasing
Private sector investment is expected to increase to USD9.3 billion during the Twelfth Five Year Plan from USD5.5 billion in
the previous plan
Currently, five international airports have been completed successfully under PPP mode
Rising private
Investment made by the private sector during the Twelfth Five Year Plan (201217) is
participation and
expected to increase by 69.1 per cent to USD9.3 billion over that during the Eleventh Five
Investments Year Plan
Greater use of non- Rising business activity leading to higher demand for non-scheduled airlines
scheduled airlines 122 operators with combined fleet of 406 aircrafts in FY15
Indian airports are emulating the SEZ-aerotropolis model to enhance revenues; focus on
Focus on non- revenues from retail, advertising, vehicle parking, etc.
aeronautical revenue Absence of complementary meals in low-cost airlines have boosted the food and
beverages retail segment at airports
Source: DGCA
Note: FY Indian Financial Year (April March)
AUGUST 2015
AIRPORTS
PORTERS FIVE FORCES ANALYSIS
Competitive Rivalry*
Competition among major players is very high, especially in LCCs (Low cost
carrier) section because the airlines compete for the middle income group
customers and passengers of air-conditioning segment of railways. This group Threat of New
has low brand loyalty and is highly price sensitive Entrants
Competition might intensify further in LCC segment with Air Asia India being (Low)
granted DGCAs operator license
Threat remains low because of the Threat remains low in this sector Bargaining Competitive Substitute
nature of the industry (Regulatory also as no other means of Power of Rivalry Products
hurdles, Capital-intensive) transport is as swift, and Customers (High) (Low)
Air Asia India has been granted convenient as airlines (Low)
DGCA approval (Price War) It saves time
STRATEGIES ADOPTED
AUGUST 2015
AIRPORTS
STRATEGIES ADOPTED*
LCC segment is poised to grow, led by plans of induction of an additional 20 aircrafts on domestic
routes by the second half of FY14
Expansion of CAPA
Expansion Further, rise of LCCs was also supported by the exit of Kingfisher, which created a void
Capacity will also increase with new terminals coming up in Mumbai, Bengaluru, Chennai and
Kolkata
Indian carriers to double their fleet capacity by 2020 to around 800 aircrafts
Indian LCCS are looking forward to increase their ancillary services, without tampering their
business models. This includes services like lounge access, priority boarding, customer loyalty
Ancillary services
memberships and customer meals
Both Indigo and GoAir are eyeing a larger share of corporate market
Indian LCCs are expected to increase their regional, international (Asia-pacific, Middle East)
operations
Indian LCCs are looking forward to increase their low cost products on routes which will take up to
Increasing operations four hours (shorter international routes)
This will allow deleveraging of domestic fleet, increasing aircraft utilisation and improving commercial
performance
Chennai, with its strategic location in South India has a strong potential to become a hub, with
connecting flights to Gulf and across South East Asia
Although India is heavily characterised by LCCs, there is shortage of low cost airports. Government
Governments push has plans to develop around 100 low cost airports, which will significantly lower the operating costs
NIAMAR (National Institute of Aviation Management and Research) has been developed to bridge
the supply gap of aviation personnel
Source: Central Asia-Pacific Aviation, TechSci Research
Note: *(Notes w.r.t airlines), LCC Low Cost Carrier
AUGUST 2015 For updated information, please visit www.ibef.org 23
AIRPORTS
GROWTH DRIVERS
AUGUST 2015
AIRPORTS
STRONG DEMAND AND POLICY SUPPORT DRIVING INVESTMENTS
Increasing
Growing
Growing demand
demand Policy support
Strong investments
government
support
Inviting Resulting in
Rising domestic
Increasing Increasing private
and foreign
liberalisation, sector
tourists and
Open Sky Policy participation
travellers
Strong projected
Strong growth in Policy sops, FDI
demand making
external trade encouragement
returns attractive
4,601
4,307
The population belonging to the working age group
4,077
6
3,900
3,708
3,457
3,141
2000
2,914
2,789
2,509
(1564 years), at 65.7 per cent of the total population 4
2,260
currently, is expected to grow; this indicates the 1000 2
employee base and the frequency of business travel 0 0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015E
are expected to increase
96.01
90.16
Successful ad campaigns abroad
100 CAGR: 10.85%
77.87
The share of travel & tourism in Indias GDP showed
69.3
68.7
7.5 per cent growth in 2014; and is expected to grow 80
60.9
by 7.0 per cent per annum by 2014-2023E
48.7
46.2
60
42.1
CAGR: (1.81%)
More business travellers as well
26.4
25.5
20.80
24.4
19.10
40
22.3
17.78
22.1
18.6
India is one of the fastest growing economies
20
Business travel & tourism spending decline by CAGR
1.81% between 2007-15. 0
Emergence of business hubs like Mumbai (Finance), 2007 2008 2009 2010 2011 2012 2013 2014 2015
Bengaluru (IT), Chennai (IT), Delhi (Manufacturing, IT) Leisure Travel & Tourism Spending( In USD Bn)
Business travel market grew to USD28.8 billion in Business Travel & Tourism Spending(In USD Bn)
2015 from USD24.9 billion in 2014, making India the
10th largest business travel market in the world in Source: World Travel and Tourism Council,
2015. Make in India, Global Business Travel Association, TechSci Research
Notes: IT Information Technology, F Forecast
489.32
490.74
600
447.52
450.2
Over FY09-15,
369.77
Indias exports expanded at a CAGR of 8.93 500
314.41
309.56
305.96
303.69
288.37
300.4
per cent to USD309.5 billion in FY15.
249.82
400
Imports registered a CAGR of 6.68 per cent
185.29
178.75
which has reached to USD447.52 billion in 300
FY15 200
Growing trade augurs well for airports as they handle
100
about 30 per cent of Indias total trade (by value)
0
FY09 FY10 FY11 FY12 FY13 FY14 FY15
FDI in aviation and
Increasing airline
liberalised aviation Exports Imports
operators
policy
Growth in passenger
Rise in freight traffic
traffic
With the opening of the airport sector to private participation, six airports across major
cities are being developed under the PPP model
Liberalisation, Open
Currently, 60 per cent of airport traffic is handled under the PPP model, while the
Sky Policy remaining 40 per cent is managed by the AAI
Increased traffic rights under bilateral agreements with foreign countries
100 per cent FDI under automatic route for Greenfield projects
Encouragement to FDI 100 per cent FDI for existing airports is also possible with an approval from FIPB
Approval of 49 per cent FDI in aviation for foreign carriers
Notes: India currently has bilateral air service agreements with 104 countries. These include Brazil, 27 members of the EU, and
China. In 2008 traffic rights were been enhanced with Mexico, Saudi Arabia, Netherlands, Qatar, Iran, Japan and Turkey,
FDI Foreign Direct Investment, FIPB Foreign Investment Promotion Board
100 per cent tax exemption for airport projects for a period of 10 years
Taxes and duties Indian aircraft Manufacture, Repair and Overhaul (MRO) service providers are exempted
completely from customs and countervailing duties
In the Union Budget for FY13, the Finance Minister has proposed budgetary support worth
USD58.3 million to AAI to develop airport infrastructure in the North-Eastern states of India
At the same time, the aviation regulator DGCA has been allocated USD12.5 million for its
development plan
Budgetary support In the Union Budget for FY15, Finance Minister has said that there are 7 airports under
construction which includes Guwahati, Dibrugarh, Silchar, Agartala, Shillong, Imphal, and
Dimapur. India also plans to build 200 low-cost airports in the next 20 years to connect
tier-II and tier-III cities in the country
In the Union Budget for FY16, budgetary support of USD13.27 million has been allocated
to the Civil Aviation Sector out of which USD3.65 million has been attributed towards
Pakyong, Sikkim project
Source: Ministry of Civil Aviation
Notes: AAI Airports Authority of India,
DGCA Directorate General of Civil Aviation,
FY Indian Financial Year (April March)
The AAI aims to bring around 250 airports under operation across the country by 2020
Metro airports
The AAI has developed and upgraded over 23 metro airports in the last five years
The Airports Authority of India (AAI) is planning to spend USD1.3 billion on non-metro
projects over the five years (201317); it is mainly focusing on the modernisation and up
gradation of airports; New airports at Itanagar, Kohima and Gangtok are also planned
Non-metro airports
The Government of Andhra Pradesh plans to develop greenfield airports in six cities
(Nizamabad, Nellore, Kurnool, Ramagundam, Tadepalligudem, and Kothagudem) under
the PPP model
Over 30 airport development projects are under progress across various regions in
Northeast India
Northeast India AAI plans to develop over 20 airports in tier II and III cities in next five years
The AAI plans to develop Guwahati as an inter-regional hub and Agartala, Imphal and
Dibrugarh as intra-regional hubs
Recourse to the Public Private Partnership (PPP) model has boosted private sector investments in airports
PPP route for five international airports (Delhi, Mumbai, Cochin, Hyderabad, Bengaluru) most noteworthy
74 per cent private share holding in IGI Airport (Delhi) - owned majorly by GMR (54 per cent),
Fraport AG (10 per cent), Eraman Malaysia (10 per cent); rest of the shares owned by
Airports Authority of India
74 per cent private shareholding in CSI Airport (Mumbai) - owned majorly by GVK (50.5 per
cent), Bid Services Division (Mauritius) Limited (13.5 per cent), ACSA Global (10 per cent);
rest of the shares owned by Airports Authority of India
74 per cent private shareholding in RGI Airport (Hyderabad) - owned majorly by GMR (63 per
cent), Malaysia Airports Holdings Berhad (11 per cent); rest of the shares owned by
Government of India (13 per cent) and Government of Andhra Pradesh (13 per cent)
Presently India has five PPP airports each at Mumbai, Delhi, Cochin, Hyderabad and Bengaluru, which together handle over
60 per cent of countrys air traffic
Type of project/
Name of airport Operator Revenue sharing
PPP structure
Chhatrapati Shivaji Mumbai International Airport Ltd 38.7 per cent of gross revenue to be
Brownfield/BOOT
International Airport (MIAL) shared with AAI
Indira Gandhi Delhi International Airport Ltd 45.9 per cent of gross revenue to be
Brownfield/BOOT
International Airport (DIAL) shared with AAI
OPPORTUNITIES
AUGUST 2015
AIRPORTS
OPPORTUNITIES
The Indian aviation sector The Indian Aviation Industry Airport developers can now
likely to see investments aims to boost MRO business draw on wider revenue
totalling USD12.1 billion in India, which is currently opportunities such as retail,
during the Twelfth Five Year worth US500 million and is advertising and vehicle
Plan estimated to grow over US1.5 parking
billion by 2020
Of the total investment, Future operators will benefit
USD9.3 billion is expected to MRO facilities are developed from greater operational
come from the private sector at Gurgaon and Nagpur efficiency due to satellite
based navigation systems like
Success of PPP formats will Indian airline companies Project Gagan which is in
raise investment in existing spend over 1315 per cent of development phase
and greenfield airports their revenues on
maintenance, which is the
second-highest cost
component after fuel
Notes: Project Gagan is directed towards transitioning from a ground-based navigation system to a satellite-based one. AAI and ISRO are
jointly working on this. A Space Based Augmentation System (SABS) will be operational by 2013,
MRO Maintenance, Repair and Overhaul
SUCCESS STORIES
AUGUST 2015
AIRPORTS
IGI INTERNATIONAL AIRPORT, DELHI - A COMPELLING SUCCESS STORY
Ranked first in the world at the ACI Annual Service Quality Awards in 2014 (category: handling 25-40 million passengers) up
from second in 2012
Delhi International Airport Ltd became the first in the world to receive the ISO 22301:2012 certification for its robust business
continuity management system
New Terminal 3 won the British Construction Industry Award for the best international project in 2010
Phase I Final
Facts and features
Passenger Traffic: 40.9 mn (FY15) 100 million (by 2020)
Passenger handling
34 million (60 million as on October
Aircraft movement: 0.3 mn (FY15) capacity per annum 2013)
Cargo: 0.7 mn tonnes (FY15)
Terminal 3 Area (acres) 1,907 5,106
Ranked fifth in the world at the ACI Annual Service Quality Awards in 2014 (category: handling 25-40 million passengers)
23rd across all categories among a survey of 146 international airports in 2010
Plans to increase the handling capacity at the airport from 36 to 48 flights/hr and to increase the passenger capacity to 40
million annually
USEFUL INFORMATION
AUGUST 2015
AIRPORTS
INDUSTRY ASSOCIATIONS
Purchasing Power Parity (used in calculating per-capita GDP slide 12, GROWTH DRIVERS)
Public Private Partnership (a type of joint venture between the public and private sectors)
Year INR equivalent of one USD Year INR equivalent of one USD
200405 44.81
2005 43.98
200506 44.14
2006 45.18
200607 45.14
2007 41.34
200708 40.27
2008 43.62
200809 46.14
2015(Expected) 61.03
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