India and the Silk Road in the Air

22 September 2008 (Last Updated September 22nd, 2008 18:30)

Extra competition, increased funding and new facilities are appearing everywhere you turn. Penny Jones looks at how India is using its airports to build better international links and boost its economy.

India and the Silk Road in the Air

India – a land of prosperity, comfort and reward. This was the picture painted in January last year when a report by investment bank Goldman Sachs predicted that in the next decade India could become an economy to be reckoned with. The report said a decade of reforms had increased competition and efficiency, and were paving the way for growth which could allow India to overtake the economies of Britain, Italy and France to become the fifth-largest economy in the world.

But this is not to say the road will be easy – a few major hurdles still remain. The most obvious, as is true in the other rising economy of China, is a lack of energy infrastructure. Second to this is the need to invest in India's vital transport systems, which include its airports.

"A decade of reforms has increased competition and efficiency and is paving the way for Indian growth."

Airport check-ins are starting to overflow with travellers and business people flocking to India as the economy develops. India is rising to the challenge with tenders flying left, right and centre for new airport builds, upgrades and technological developments as it forms a new strategy for air travel that will dramatically affect the wealth of its people on the ground.

India – determined to take off

India has more than 20 international airports and more are on the cards. In June this year these international airports handled a total of 9.47 million passengers and 145,120t of freight.

Overall these figures rose due to an increase in aircraft movement for international flights of 13.3% on June the previous year to 21,200 flights. This growth took place during an international year of uncertainty for airports due to the ongoing financial downturn, increased cost of fuel, and carrier
uncertainty.

The domestic market has not been so strong. On 16 September, it was reported that the Indian Government was looking to finalise a $1bn relief package for India's domestic carriers, which have felt the brunt of the economic crisis and fuel prices. It is predicted airline losses in the domestic market could double in the current financial year to about $1.5bn. Airlines are now charging user fees for airports and cutting back flights in an effort to ease the pain of what could be their most
trying time yet.

International flights, however, have remained strong and India's south seems to be leading a lot of this growth. Increased flights to Bangalore and Hyderabad's international airports have become safe bets for airlines looking to operate new routes. Last winter 144 new flights were added to Bangalore International Airport by Indian, Emirates, Singapore Airlines, Malaysian Airlines and Thai Airways.

And at Hyderabad International Airport (named Rajiv Ghandi International Airport before its opening this March) new routes have been launched by Gulf Air and Air India Express. And at present, Al Arabia, Emirates and Singapore Air are hinting they may also increase their presence there.

Hyderabad – enticing trade in the south

Hyderabad is one example of an airport planning for success in India. It has just completed building a new 105,300m² terminal that can handle 12 million passengers a year. With 12 contact and 30 remote stands for parking of code-F aircraft including the A380 and its own control tower, technical building and cargo station, phase one of its build already improves drastically on India's offering to the international market. Long-term plans are to cater for more than 40 million
passengers a year with the expansion of both airside and landside services and infrastructure.

"Airport check-ins are starting to overflow with travellers and business people flocking to India as the economy develops."

The venture operates as a public-private partnership between GMR Group (the airport operator which holds 63% of the equity), Malaysia Airports-Holdings Berhad and the State Government of Andhra Pradesh and Airports Authority of India. GMR itself has overseen several infrastructure projects in India, including agri-business projects, and has a good understanding of the economic needs of the nation. Its approach to the funding of Rajiv Ghandi in Hyderabad is helping set a new standard of
partnership in India, which could easily drive forward new airport projects in future.

It is also setting new standards for cargo trade. In March this year it became India's leading air cargo facility as far as infrastructure goes.

Housing both domestic and international facilities in a total of 14,330m², it can handle 100,000Mt a year. It is also building a logistics centre to help companies increase their freight throughput and business activities.

Bangalore and the IT link

The new Bengaluru International Airport (previously HAL Banagalore), opened in May 2008 with its eyes set on a different set of demands it hopes will lead it to become another airport hub in the south. It wants to leverage Bangalore's importance to the IT outsourcing sector to grow its operations both in the air and on the ground.

Ministers in the state of Karnataka, where the airport is situated, have visited the US to push for investment of funds to help link Bangalore's port and airport. Aerospace and automotive industries from around the world in particular have outsourced key IT services such as business process and knowledge process management to Bangalore.

To become a real cargo hub Bangalore, operated by Bangalore International Airport Ltd, must do more than link its cargo services. Airport infrastructure will need to be modernised and new infrastructure built inside the airport terminal itself to boost capacity. But the airport has the state's backing, and it is the state that is ultimately pushing for this shift for increased trade.

The state government in Karnataka is not relying solely on the facilities it can promise. It is trying to set up a range of new special economic zones to ensure business is there once the funding for facilities comes in. It is also planning satellite cities around Bangalore to accommodate more people, as well as new roads and rail feeder services.

Other airports in the south looking to expand include Kerala state's Calicut International Airport, which is currently undertaking an acquisition of land so it can expand in passenger and cargo services

"India has more than 20 international airports and more are on the cards."

Outside of the south, Delhi International Airport is constructing a third terminal, to have a capacity of 34 million passengers by the time it opens for the nation's hosting of the Commonwealth Games in 2010, and Mumbai International Airport, which services the second most populous city in the world and the financial capital of India, is currently undergoing modernisation.

On the road to growth

The efforts of India have already started to pay off. In September 2008, the south saw a 10% surge in passenger load, and it is hoped that positive feedback being received on the new operations, and plans at other facilities, will boost this number still further in coming months.

From world-class cargo facilities at Hyderabad to new technologies such as IP networks at Bengaluru to some of the world's longest runways and A380-ready gates and parking, India is certainly paving its own silk road in the sky. And with this pace of growth, its airports, at least, look set to help India take off in the race to become a nation that demands attention in the economic world.