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September 01, 2018

Sector Report: Airport Infrastructure

This report is available to users in India for ₹40,000 + applicable taxes

 

Table of Contents

 

  • Summary
  • Passenger
  • Freight
  • Investment plans
  • Introduction
  • Brownfield airports
  • Greenfield airports

 

Summary

 

Growth in air passenger traffic to moderate this fiscal

 

CRISIL Research expects air passenger traffic growth at Indian airports to stay flattish at 15-17% in fiscal 2019, on account of a rise in domestic and international passenger traffic. Moreover, air passenger traffic growth is expected to slow down to 11-13% in fiscal 2020, as fares will likely rise.

 

We forecast overall passenger traffic will expand at 12-14% compound annual growth rate (CAGR) between fiscals 2018 and 2023, driven by a 12-14% increase in domestic traffic growth. While the share of domestic passengers in total passenger traffic is pegged to increase, it depends on the growth in domestic gross domestic product, airport infrastructure, and revival in the global economy.

 

Limited routes operational under UDAN owing to slot constraints

 

Till February 2018, only 43 routes connecting 17 airports are operational out of the 117 routes allocated routes for the 45 UDAN (Ude Desh ka Aam Naagrik) airports.

 

In February, 262 routes (31 are in common with other airlines) were allocated under Phase II of UDAN, which includes helicopter operations. In UDAN Phase II, new players such as Indigo, Jet Airways, Skyone Airways, Pawan Hans, AAA Aviation, Ghodawat, etc., have also participated and won several routes under the scheme.

 

Freight traffic growth at Indian airports to decline in fiscal 2019

 

We expect freight traffic at Indian airports to moderate to 7-9% in fiscals 2019 and 2020 compared with 13% in fiscal 2018. The air freight traffic expansion will be led by a growth in domestic and world economies, increasing connectivity on account of air service agreements, and a booming e-commerce industry. Moreover, the higher base in freight during the previous year on account of exceptional freight traffic is expected to bring down the freight traffic growth for the fiscal.

 

In fiscal 2018, rise in imports of electrical and electronic components for mobiles, solar cells, etc., have boosted growth in air freight traffic. Moreover, grounding of the A320neos of Indigo and GoAir have prompted movement of aircraft equipment, giving an additional boost.

 

Share of greenfield investments to increase by fiscal 2023

 

CRISIL Research expects investments to the tune of Rs 420-450 billion in airport infrastructure between fiscals 2018 and 2023 compared with an estimated Rs 175-200 billion investments during the past five years. This steep rise in investments can be attributed to the revision in cost of construction for Phase I of Navi Mumbai airport to about Rs 135 billion compared with Rs 90 billion earlier. Moreover, changes in the scope of work for Bhogapuram and revision in expansion plans for Bengaluru and Hyderabad airports have also led to the increase in investments.

 

Moreover, Delhi airport has recently received clearance for the modification of Terminal 1. This had been significantly delayed on account of the reluctance of players to shift a part of their operations to Terminal 2. This could speed up expansion at the airport as it is already operating beyond its designed capacity.