The Committee on Infrastructure has initiated several policy measures that would ensure time-bound creation of world-class airports in India. A comprehensive civil aviation policy is on the anvil. An independent Airports Economic Regulatory Authority Bill for economic regulation is also under consideration. The policy of open skies introduced some time ago has already provided a powerful spurt in traffic growth that has exceeded 20% per annum during the past two years.

Greenfield international airports at Bangalore and Hyderabad have been approved and are currently under construction. These are likely to be commissioned by middle of 2008. Modernisation and expansion of the Delhi and Mumbai airports through PPPs has been awarded, based on a rigorous and transparent competitive bidding and evaluation process. Other major airports such as Chennai and Kolkata are also proposed to be taken up for modernisation through the PPP route. Similarly, to ensure balanced airport development around the country, a comprehensive plan for the development of other 35 non-metro airports is also under preparation. These measures are expected to bring a total investment of Rs. 40,000 crore for modernisation of the airport infrastructure.

On the analogy of the highways sector, a Model Concession Agreement is also being developed for standardising and simplifying the PPP transactions for airports. In addition, proposals for revamping the Airports Authority of India are to be finalised soon. This would include upgrading of the ATC services at the airports. Issues relating to customs, immigration and security are also being resolved in a manner that enhances the efficiency of airport usage.

India has 125 airports; of these 11 are designated as international airports

In 2004-05, Indian airports handled 60 million passengers and 1.3 million tonnes of cargo

- Passenger traffic grew at over 22% in 2004-05 over 2003-04; Cargo grew at 21.6% over the previous year

Currently, all 125 airports are owned and operated by the Airports Authority of India (AAI)

The Government aims to attract private investment in aviation infrastructure

- Privatisation of the Delhi and Mumbai airports is in progress – concessions have already been awarded. Expected investment of about Rs.15,700 crores (US $ 3.5 billion)

- New international airports at Bangalore and Hyderabad are being built by private consortia with a total investment of about Rs.4000 crores (US $ 600 million)

- 25 other city airports are being considered for private investment

Air India and Indian Airlines are Government owned international and domestic flag carriers respectively.

Indian private airlines – Jet, Sahara, Kingfisher, Deccan, Spicejet - account for around 60% of the domestic passenger traffic. Some have now started international flights.

100% FDI is permissible for existing airports; FIPB approval required for FDI beyond 74%

100% FDI under automatic route is permissible for greenfield airports.

49% FDI is permissible in domestic airlines under the automatic route, but not by foreign airline companies

- 100% equity ownership by Non Resident Indians (NRIs) is permitted

AAI Act amended to provide legal framework for airport privatisation

100% tax exemption for airport projects for a period of 10 years

‘Open Sky’ Policy of the Government and rapid air traffic growth have resulted in the entry of several new privately owned airlines and increased frequency/flights for international airlines.

Passenger traffic is projected to grow at a CAGR of over 15% in the next 5 years

- To cross 100 million passengers p.a. by 2010

Cargo traffic to grow at over 20% p.a. over the next five years

- To cross 3.3 million tonnes by 2010

Major investments planned in new airports and upgradation of existing airports

Favourable demographics and rapid economic growth point to a continued boom in domestic passenger traffic and international outbound traffic

International inbound traffic will also grow rapidly with increasing investment and trade activity and as India’s rich heritage and natural beauty are marketed to international leisure travellers.

- Consequent high demand for investments in aviation infrastructure

SME lending, a largely untapped market, presents a significant opportunity - SMEs account for 40% of the industrial output and 35% of direct exports

The Government is taking steps to increase participation by private industry

Major opportunities lie in:

- Modernisation / upgradation of metro airports – induction of partners for Chennai, Kolkata expected subsequently

- Greenfield airport projects planned in resort destinations and emerging metros such as Goa, Pune, Navi Mumbai, Greater Noida and Kannur.

Estimated investment of about Rs.40,000 crores (US $ 9 billion) for airport development over the next 5 years

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