Saturday, March 11, 2017

Little interest in private sector to build airport infrastructure

Mumbai: Almost a decade after the Union Cabinet approved a new airport in Navi Mumbai in 2007, there is no sign of work getting under way. Earlier this year, the Mumbai International Airport Ltd (MIAL) was the sole bidder, forcing the Maharashtra government to extend the deadline for a second time. “Execution challenges like approvals and land acquisition; regulatory uncertainty primarily pertaining to fixation of aeronautical tariffs; market risks around Greenfield airports or second airports etc., have dampened the private sector’s interest,” said ratings agency ICRA Ltd in a March 9 report.
According to ICRA, this poor interest in building airport infrastructure comes at a time when existing capacity is bursting at the seams.  In Mumbai airport, for example, the capacity is 40 million passengers a year but in fiscal 2016, it saw the transit of 41.7 million passengers.
This is the scenario across most airports. According to ICRA calculations, the annual capacity of all airports in India is 270-290 million passengers. In comparison, total passenger traffic for the current fiscal is estimated at 265 million, translating to more than 90 per cent capacity utilisation.
The pace of growth in air traffic is only expected to accelerate. ICRA estimates that by FY 2022, the air traffic in the country would exceed 450 million passengers, meaning capacity would have to double.  This is estimated to require capital expenditure of Rs 1.4 lakh crore over the next five years compared to Rs 52,000 crore undertaken in the past 10 years. ICRA estimates that the capex plans already announced stand at Rs 55,000 crore.
11/03/17 Khushboo Narayan/Indian Express