45
1 AIRPORTS AUGUST 2015 For updated information, please visit www.ibef.org

AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

  • Upload
    others

  • View
    3

  • Download
    0

Embed Size (px)

Citation preview

Page 1: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

11

AIRPORTS

AUGUST 2015 For updated information, please visit www.ibef.org

Page 2: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

22For updated information, please visit www.ibef.org

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

AIRPORTS

AUGUST 2015

Page 3: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

33For updated information, please visit www.ibef.org

EXECUTIVE SUMMARY … (1/2)

Source: World Travel and Tourism Council, Airport Authority of India, TechSci Research

AIRPORTS

By 2020, passenger traffic at

Indian airports is expected to

increase to 421 million from

190.1 million in 2015

Third largest aviation market by

2020

The travel & tourism industry is

forecast to grow 10.79 per cent

to USD349 billion in 2024 from

USD125.2 billion in 2014

Travel & tourism to be

contributing USD349 billion to

GDP by 2024

Spending on business travel is

estimated to increase to

USD60.4 billion in 2024 from

USD19.1 billion in 2015, while

that on leisure travel is forecast

to rise to USD224.6 billion from

USD96.01 billion in 2015

Business & leisure travel to

boost growth

AUGUST 2015

190.1

421

0

200

400

600

2015 2020

2015 2020

CAGR:

17.24%

125.2

349

0.0

200.0

400.0

2014 2024

2014 2024

CAGR:

10.79%

96.01

224.6

19.1 60.4

0.00

200.00

400.00

2015 2024

Leisure Travel & Tourism Spending( In USD Bn)

Business Travel & Tourism Spending(In USD Bn)

Page 4: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

44

160

267

2011 2016

For updated information, please visit www.ibef.org

EXECUTIVE SUMMARY … (2/2)

Source: World Travel and Tourism Council, Asian Development Bank, TechSci Research

AIRPORTS

Working population (aged

between 15 and 64 years) is

estimated to increase from 812

million in 2014 to 900 million by

2030, almost three times the

US population

By 2030, India’s working

population to be thrice the total

population in the US

India’s middle income population

is expected to increase from 160

million (over 50 per cent of the

total population in the US) in

2011 to 267 million by 2016

equivalent to over three-times

Germany’s population

By 2016, India’s middle income

class to be triple the total

population in Germany

CAGR: 10.8%

AUGUST 2015

812

900

2014 2030

CAGR: 0.6%

Page 5: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

ADVANTAGE INDIA

AIRPORTS

AUGUST 2015

Page 6: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

66

Growing demand

For updated information, please visit www.ibef.org

ADVANTAGE INDIA

Source: Ministry of Civil Aviation, MRO India, TechSci Research

Notes: FDI – Foreign Direct Investment, MRO – Maintenance, Repair and Overhaul; FY – Indian Financial Year (April – March)

Robust demand

• Rising working group and widening middle class demography is expected to boost demand

• India plans to increase the number of airports to 250 by 2030 to cater to growing leisure and business travel

• Freight traffic also likely to go up as trade with the rest of the world increases

Opportunities in MRO

• Growth in aviation accentuating demand for MRO facilities

• Expenditure in MRO accounts for 13-15 per cent of total revenues; it is the second-highest expense after fuel cost

• By 2020, the MRO industry is likely to grow over USD1.5 billion from USD0.5 billion currently

Policy support

• The government has been encouraging private sector participation

• Tax incentives for developers; liberalisation of the aviation sector –Open Sky Policy

• Government has allowed 49 per cent FDI in aviation for foreign carriers, while NRI’s are allowed to pick up 100 per cent equity in airlines

Increasing investments • Investments totaling USD12.1

billion in the airport sector are likely to be made during the Twelfth Five Year Plan (2012-17); of these, private investments are expected to total USD9.3 billion

• Growing private sector participation through the Public - Private Partnership (PPP) route

FY00

No of

operational

airports: 50

FY15

No of

operational

airports: 68

Advantage

India

AIRPORTS

AUGUST 2015

Page 7: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

MARKET OVERVIEW AND TRENDS

AIRPORTS

AUGUST 2015

Page 8: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

88For updated information, please visit www.ibef.org

EVOLUTION OF THE INDIAN AVIATION SECTOR

Source: Airports Authority of India, Planning Commission, Ministry of Statistics and

Programme Implementation, Ministry of Civil Aviation, TechSci Research

Notes: 1 India ranks after US, China and Japan, 2 Data for FY15, 3 India ranks after the US and China, 4 Data for Financial Year and not Calendar Year; FY – Indian Financial Year (April – March), mn km – Million Kilometers

AIRPORTS

India is the ninth largest civil aviation market in the world

India ranks fourth1 in domestic passenger volumes (139.3 million2) as of FY15

India’s civil aviation market is set to become the world’s third3 largest by 2020

Scheduled airlines: distance

flown (mn km)

Non-scheduled airlines in

operation

Number of aircrafts

Passenger handling

capacity at airports

Number of airports 50

66 million

225

39

199

125

270 million

1,649

122

772

2000

(FY144)

(FY15)

(FY14)

(FY15)

(FY14)

AUGUST 2015

Page 9: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

99For updated information, please visit www.ibef.org

INDIA HAS 449 AIRPORTS AND AIRSTRIPS, OF WHICH 125 AIRPORTS ARE OWNED BY AAI

Source: Airports Authority of India, TechSci Research

Notes: AAI – Airports Authority of India, JV – Joint Venture,

FY – Indian Financial Year (April – March)

AIRPORTS

Airports and airstrips in India

(449)

AAI managed (125)

Non-AAI airports and airstrips

(324)

Non-operational (31)

Operational (68)

International (12)

Customs airports (7)

Domestic airports (49)

• Airports Authority of India (AAI) was –

• Established in 1994 under the Airports Authority Act

• Responsible for developing, financing, operating, and maintaining all government airports

• The Aircraft Act (1934) governs remaining airports

Activity in AAI

airports - shares (%)

– FY14

Basic facts

Civil enclaves (26)

22%

27%

63%

78%

73%

37%

Aircraft movement

Passenger traffic

Freight traffic

International Domestic

AUGUST 2015

Page 10: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

1010For updated information, please visit www.ibef.org

Note: Market Share as on April’15 and Load Data for the month of April’15

as published by Directorate General of Civil Aviation

SIX MAJOR AIRLINES OPERATE IN THE COUNTRY

AIRPORTS

AUGUST 2015

76.00%

78.00%

80.00%

82.00%

84.00%

86.00%

88.00%

90.00%

92.00%

-5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%

Pa

ssa

nge

r L

oa

d F

acto

r

Market Share

GoAir

Market share: 8.80%

Passenger load traffic: 85.50%

Jet Airways

Market share: 19.90%

Passenger load traffic: 82.00%

Indigo

Market share: 36.90%

Passenger load traffic: 85.70%

Air India

Market share: 17.4%

Passenger load traffic: 78.50%

Spicejet

Market share: 9.80%

Passenger load traffic: 88.70%

Jetlite

Market share: 4.30%

Passenger load traffic: 81.90%

Page 11: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

1111For updated information, please visit www.ibef.org

THE SIX MAJOR AIRPORTS IN THE COUNTRY

Source: AAI, TechSci Research

Note: FY – Indian Financial Year (April – March)

AIRPORTS

Bengaluru

Passenger traffic handled in

FY14: 12.9 million

FY15: 15.4 million;

Mumbai

Passenger traffic handled in;

FY14: 32.2 million

FY15: 36.6 million

Chennai

Passenger traffic handled in

FY14: 12.9 million

FY15: 14.3 million;

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;

Hyderabad

Passenger traffic handled in

FY14: 8.7 million

FY15: 10.4 million

AUGUST 2015

Page 12: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

1212For updated information, please visit www.ibef.org

Passenger traffic in FY15

Source: Association of Private Airport Operator, TechSci

Research, Notes: CAGR – Compound Annual Growth Rate,

FY – Indian Financial Year (April – March)

Total passenger traffic stood at a 190.1 million in FY15

Passenger traffic increased by 12.47 per cent in FY145

Growth in passenger traffic has been strong since the new

millennium, especially with rising incomes and low-cost

aviation; passenger traffic expanded at a CAGR of 11.16

per cent over FY06–15

PASSENGER TRAFFIC HAS EXPERIENCED HEALTHY GROWTH … (1/2)

AIRPORTS

AUGUST 2015

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

0

20

40

60

80

100

120

140

160

180

200

FY06FY07FY08FY09FY10FY11FY12FY13FY14FY15

Passanger Traffic Growth Rate

Page 13: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

1313For updated information, please visit www.ibef.org

Source: Airports Authority of India, Ministry of Civil Aviation, TechSci Research

Notes: YoY – Year on Year, FY – Indian Financial Year (April – March)

Domestic passenger traffic expanded at a CAGR of 11.8 per

cent over FY06–15; by FY17 domestic passenger traffic is

expected to touch 209 million

International passenger traffic posted a CAGR of 9.5 per

cent over FY06-15 and is set to touch 60 million by FY17

AIRPORTS

Growth in passenger traffic set to remain strong in future

26

71

122

209

14

26

41

60

FY02 FY07 FY12 FY17E

International Passenger Throughput International (million)

Domestic Passenger Throughput Domestic (million)

11th Plan Period

12th Plan Period

10th Plan Period

During FY15, domestic passenger traffic increased by

13.80 per cent compared to 5.19 per cent in FY14

During FY15, international passenger traffic increased

by 8.9 per cent compared to 8.3 per cent in FY14

PASSENGER TRAFFIC HAS EXPERIENCED HEALTHY GROWTH … (2/2)

Growth in domestic passenger traffic has been robust

AUGUST 2015

22 26 30

32 34 38 41

43 47 515

0.9

8

70

.62

87

.06

77

.3

89

.39

105.5

2

12

1.5

1

11

6.3

7

12

2.4

1

13

9.3

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

0

20

40

60

80

100

120

140

160

180

200

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

International Domestic

Growth-International(%) Growth-Domestic(%)

Page 14: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

1414For updated information, please visit www.ibef.org

International freight traffic was 61 per cent of the

total in FY15

Source: Airports Authority of India, TechSci Research

Total freight traffic registered a CAGR of 6.7 per cent over

FY06-15

Domestic freight traffic increased at a CAGR of 8.23 per

cent over FY06-15 while international freight traffic rose 5.9

per cent over the same period

In FY15, domestic freight traffic was 0.98 million tonnes,

while international freight traffic was at 1.5 million tonnes

During FY15, domestic freight traffic at 0.98 million

increased by 17.38 per cent while international freight traffic

at 1.5 million increased by 7.08 per cent compared to FY14.

By 2023, total freight traffic is expected to touch 4.14 million

tonnes growing at a CAGR of 7.27% between FY2016-23.

In addition, International freight traffic is expected to grow at

a CAGR of 7.13% while Domestic freight traffic is expected

to grow at a CAGR 7.50% between FY2016-23.

FREIGHT TRAFFIC GREW AT A CAGR OF 6.2 PER CENT DURING FY06 TO FY14 … (1/2)

AIRPORTS

AUGUST 2015

92

0

10

23

11

47

11

49

12

71

14

96

14

68

14

07

14

40

15

42

48

4 53

0 56

8

55

2 68

9

85

2

81

2

78

4

84

0 98

6

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

0

500

1000

1500

2000

2500

3000

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

International ('000 Tonnes) Domestic('000 Tonnes)

Growth-Internation(%) Growth Domestic(%)

Page 15: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

1515For updated information, please visit www.ibef.org

Freight traffic (million tonnes)

Source: Airports Authority of India, TechSci Research

Note: FY – Indian Financial Year (April – March)

Freight traffic is expected to be five times the current level

by the end of the next two decades. It is expected to be 11.4

million tonnes by 2032

Growth in import and export in India will be the key driver for

growth in freight traffic as 30 per cent of total trade is

undertaken via airways

AIRPORTS

AND IS POISED TO GROW FURTHER … (2/2)

AUGUST 2015

1.4

0

1.5

5

1.7

2

1.7

0

1.9

6

2.3

5

2.2

8

2.1

9

2.2

8

2.5

3

-10%

-5%

0%

5%

10%

15%

20%

25%

0.00

0.50

1.00

1.50

2.00

2.50

3.00

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

Million Tonnes Growth(%)

Page 16: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

1616For updated information, please visit www.ibef.org

Total aircraft movement in FY15 (‘000)

Source: Association of Private Airport Operators,

Airports Authority of India, TechSci Research

Notes: CAGR – Compound Annual Growth Rate

FY – Indian Financial Year (April – March)

Total aircraft movement recorded a CAGR of 5.1 per cent

over FY07-15

Both international and domestic aircraft movement have

nearly doubled over this period

In FY15, total aircraft movement increased by 4.5 per cent

to 1.6 million

AIRPORTS

GROWTH IN AVIATION HAS ALSO LED TO HIGHER AIRCRAFT MOVEMENT … (1/2)

AUGUST 2015

10

78

13

08

13

06

13

31

13

94

15

44

1478.9

15

36

.59

16

06

.04

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0

200

400

600

800

1000

1200

1400

1600

1800

FY07FY08FY09FY10FY11FY12FY13FY14FY15

Total Aircraft Movement Growth Rate(%)

Page 17: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

1717For updated information, please visit www.ibef.org

Aircraft movement growth

Source: Association of Private Airport Operators, TechSci Research

Notes: YoY – Year on Year; FY – Indian Financial Year (April – March)

Domestic aircraft movement increased at a CAGR of 4.86

per cent over FY07-15 while international aircraft movement

expanded 6.07 per cent (CAGR) over the same period

In FY15, domestic aircraft movement increased by 4.94 per

cent, while international aircraft movement expanded by

3.02 per cent

During FY15, the total number of domestic aircraft

movement increased to 1.3 million, an increase of 4.94 per

cent compared to FY14

During FY15, the total number of international aircraft

movement increased to 0.35 million, an increase of 3.02 per

cent from FY14

AIRPORTS

GROWTH IN AVIATION HAS ALSO LED TO HIGHER AIRCRAFT MOVEMENT … (2/2)

AUGUST 2015

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0

200

400

600

800

1000

1200

1400

1600

1800

2007 2008 2009 2010 2011 2012 2013 2014 2015

International ('000) Domestic('000)

Growth-Domestic(%) Growth-International(%)

Page 18: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

1818For updated information, please visit www.ibef.org

Note: AAI – Airports Authority of India

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

AIRPORTS

AAI DOMINATES, BUT PRIVATE SECTOR PARTICIPATION IS RISING

Major private sector players

Development of Hyderabad International Airport; modernisation

of Delhi International Airport

Modernisation of Mumbai International Airport

Development of Bengaluru International Airport

Development of Bengaluru International Airport

Development of Bengaluru International Airport

Development of Simoga and Gulbarga airports in Karnataka

AUGUST 2015

Page 19: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

1919For updated information, please visit www.ibef.org

NOTABLE TRENDS IN THE AIRPORTS SECTOR

Rising private

participation and

Investments

• Currently, five international airports have been completed successfully under PPP mode

• Investment made by the private sector during the Twelfth Five Year Plan (2012–17) is

expected to increase by 69.1 per cent to USD9.3 billion over that during the Eleventh Five

Year Plan

Greater use of non-

scheduled airlines• Rising business activity leading to higher demand for non-scheduled airlines

• 122 operators with combined fleet of 406 aircrafts in FY15

User development fees

Focus on non-

aeronautical revenue

• Indian airports are emulating the SEZ-aerotropolis model to enhance revenues; focus on

revenues from retail, advertising, vehicle parking, etc.

• Absence of complementary meals in low-cost airlines have boosted the food and

beverages retail segment at airports

AIRPORTS

Source: DGCA

Note: FY – Indian Financial Year (April – March)

• Increasing use of development fees by airport developers and operators

• Airport Development Fee: Delhi, Mumbai airports to fund expansion

• User Development Fee: Hyderabad, Bengaluru airports for maintenance

AUGUST 2015

Page 20: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

PORTER FIVE FORCES ANALYSIS

AIRPORTS

AUGUST 2015

Page 21: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

2121

PORTERS FIVE FORCES ANALYSIS

AIRPORTS

Competitive

Rivalry

(High)

Threat of New

Entrants

(Low)

Substitute

Products

(Low)

Bargaining

Power of

Customers

(Low)

Bargaining

Power of

Suppliers

(High)

Competitive Rivalry*

• Competition among major players is very high, especially in LCC’s (Low cost

carrier) section because the airlines compete for the middle income group

customers and passengers of air-conditioning segment of railways. This group

has low brand loyalty and is highly price sensitive

• Competition might intensify further in LCC segment with Air Asia India being

granted DGCA’s operator license

Threat of New Entrants* Substitute Products*

Bargaining Power of Suppliers* Bargaining Power of Customers*

• Threat remains low because of the

nature of the industry (Regulatory

hurdles, Capital-intensive)

• Air Asia India has been granted

DGCA approval (Price War)

• Bargaining power of suppliers

remain high as there are only few

fuel and aircraft suppliers

• Talent pool of pilots, engineers and

other staff is also limited

• Bargaining power of customers

remains low as the demand for low

cost air travel is quite high

• The costs of switching airplanes

and services offered hardly differ

with each other

• Threat remains low in this sector

also as no other means of

transport is as swift, and

convenient as airlines

• It saves time

For updated information, please visit www.ibef.org

Source: Central Asia-Pacific Aviation, TechSci Research

Note: *(Notes w.r.t airlines)

AUGUST 2015

Page 22: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

STRATEGIES ADOPTED

AIRPORTS

AUGUST 2015

Page 23: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

2323

STRATEGIES ADOPTED*

AIRPORTS

• 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

• Further, rise of LCC’s 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 LCC’s are expected to increase their regional, international (Asia-pacific, Middle East)

operations

• Indian LCC’s are looking forward to increase their low cost products on routes which will take up to

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 LCC’s, there is shortage of low cost airports. Government

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

For updated information, please visit www.ibef.org

Source: Central Asia-Pacific Aviation, TechSci Research

Note: *(Notes w.r.t airlines), LCC – Low Cost Carrier

Expansion

Ancillary services

Increasing operations

Government’s push

AUGUST 2015

• Indian LCC’S are looking forward to increase their ancillary services, without tampering their

business models. This includes services like lounge access, priority boarding, customer loyalty

memberships and customer meals

• Both Indigo and GoAir are eyeing a larger share of corporate market

Page 24: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

GROWTH DRIVERS

AIRPORTS

AUGUST 2015

Page 25: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

2525

STRONG DEMAND AND POLICY SUPPORT DRIVING INVESTMENTS

For updated information, please visit www.ibef.org

AIRPORTS

Strong

government

support

Growing demand

Inviting Resulting in

Growing demandIncreasing

investments Policy support

Expanding middle

income group and

working population

Rising domestic

and foreign

tourists and

travellers

Strong growth in

external trade

Greater

government focus

on infrastructure

Increasing

liberalisation,

Open Sky Policy

Policy sops, FDI

encouragement

AAI driving large

modernisation,

development

projects

Increasing private

sector

participation

Strong projected

demand making

returns attractive

AUGUST 2015

Page 26: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

2626For updated information, please visit www.ibef.org

PASSENGER TRAFFIC SPIKES UP AS DEMAND FOR AIR TRAVEL SOARS … (1/2)

Rising per capita income and growing working

population

• Per capita income is expected to increase at a CAGR

of 7.37 per cent during 2005-2015E

• The population belonging to the working age group

(15–64 years), at 65.7 per cent of the total population

currently, is expected to grow; this indicates the

employee base and the frequency of business travel

are expected to increase

AIRPORTS

GDP growth and per capita income

Source: IMF, World Travel and Tourism Council, TechSci Research

Note: E - IMF estimates

AUGUST 2015

2,2

60

2,5

09

2,7

89

2,9

14

3,1

41

3,4

57

3,7

08

3,9

00

4,0

77

4,3

07

4,6

01

0

2

4

6

8

10

12

0

1000

2000

3000

4000

5000

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

E

Gross domestic product based on purchasing-power-parity (PPP) per capita GDP( In USD)

Real GDP Growth Rate (%)

Page 27: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

2727For updated information, please visit www.ibef.org

PASSENGER TRAFFIC SPIKES UP AS DEMAND FOR AIR TRAVEL SOARS … (2/2)

Rising domestic and foreign tourists

• Improving tourism infrastructure

• Successful ad campaigns abroad

• The share of travel & tourism in India’s GDP showed

7.5 per cent growth in 2014; and is expected to grow

by 7.0 per cent per annum by 2014-2023E

More business travellers as well

• India is one of the fastest growing economies

• Business travel & tourism spending decline by CAGR

1.81% between 2007-15.

• Emergence of business hubs like Mumbai (Finance),

Bengaluru (IT), Chennai (IT), Delhi (Manufacturing, IT)

• Business travel market grew to USD28.8 billion in

2015 from USD24.9 billion in 2014, making India the

10th largest business travel market in the world in

2015.

AIRPORTS

Travel and tourism spending (USD billion)

Source: World Travel and Tourism Council,

Make in India, Global Business Travel Association, TechSci Research

Notes: IT – Information Technology, F – Forecast

AUGUST 2015

42

.1

46.2

48

.7 60

.9 69

.3

68

.7 77

.87 90

.16

96

.01

22

.1

24

.4

18

.6

22

.3

25

.5

26

.4

20

.80

17

.78

19

.10

0

20

40

60

80

100

120

2007 2008 2009 2010 2011 2012 2013 2014 2015

Leisure Travel & Tourism Spending( In USD Bn)

Business Travel & Tourism Spending(In USD Bn)

CAGR: 10.85%

CAGR: (1.81%)

Page 28: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

2828For updated information, please visit www.ibef.org

MORE PASSENGERS AND RISING TRADE AIDING HIGHER AIRCRAFT MOVEMENT

Growing trade benefits of freight movement

• Over FY09-15,

• India’s exports expanded at a CAGR of 8.93

per cent to USD309.5 billion in FY15.

• Imports registered a CAGR of 6.68 per cent

which has reached to USD447.52 billion in

FY15

• Growing trade augurs well for airports as they handle

about 30 per cent of India’s total trade (by value)

AIRPORTS

Rising exports and imports (USD billion)

Source: Ministry of Commerce, TechSci Research

Notes: CAGR – Compound Annual Growth Rate,

FY – Indian Financial Year (April – March)

Higher aircraft

movement

Increasing airline

operators

Rise in freight trafficGrowth in passenger

traffic

FDI in aviation and

liberalised aviation

policy

AUGUST 2015

18

5.2

9

178.7

5

24

9.8

2

30

5.9

6

300.4

31

4.4

1

30

9.5

6

30

3.6

9

28

8.3

7

36

9.7

7 48

9.3

2

49

0.7

4

45

0.2

44

7.5

2

0

100

200

300

400

500

600

FY09 FY10 FY11 FY12 FY13 FY14 FY15

Exports Imports

Page 29: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

2929For updated information, please visit www.ibef.org

POLICY SUPPORT AIDING GROWTH IN THE AIRPORTS SECTOR … (1/2)

Greater focus on

infrastructure

• Government of India (GOI) envisions airport infrastructure investment of USD11.4 billion

under the Twelfth Five Year Plan (2012-17)

• The Ministry of Civil Aviation has approved annual planed outlay of USD1.6 billion for

FY14 for the development of airport infrastructure

Liberalisation, Open

Sky Policy

• With the opening of the airport sector to private participation, six airports across major

cities are being developed under the PPP model

• Currently, 60 per cent of airport traffic is handled under the PPP model, while the

remaining 40 per cent is managed by the AAI

• Increased traffic rights under bilateral agreements with foreign countries

Encouragement to FDI• 100 per cent FDI under automatic route for Greenfield projects

• 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

AIRPORTS

AUGUST 2015

Page 30: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

3030For updated information, please visit www.ibef.org

POLICY SUPPORT AIDING GROWTH IN THE AIRPORTS SECTOR … (2/2)

Taxes and duties• 100 per cent tax exemption for airport projects for a period of 10 years

• Indian aircraft Manufacture, Repair and Overhaul (MRO) service providers are exempted

completely from customs and countervailing duties

Budgetary support

• 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

• 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)

AIRPORTS

AUGUST 2015

Page 31: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

3131For updated information, please visit www.ibef.org

AAI LEADS THE WAY IN AIRPORTS INFRASTRUCTURE INVESTMENT

Source: TechSci Research

AIRPORTS

Metro airports• The AAI aims to bring around 250 airports under operation across the country by 2020

• The AAI has developed and upgraded over 23 metro airports in the last five years

Non-metro airports

• The Airports Authority of India (AAI) is planning to spend USD1.3 billion on non-metro

projects over the five years (2013–17); it is mainly focusing on the modernisation and up

gradation of airports; New airports at Itanagar, Kohima and Gangtok are also planned

• The Government of Andhra Pradesh plans to develop greenfield airports in six cities

(Nizamabad, Nellore, Kurnool, Ramagundam, Tadepalligudem, and Kothagudem) under

the PPP model

Northeast India

• Over 30 airport development projects are under progress across various regions in

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

AUGUST 2015

Page 32: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

3232For updated information, please visit www.ibef.org

PRIVATE SECTOR INVESTMENT IN AIRPORTS RISING … (1/2)

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

AIRPORTS

• Increasing share of private sector in equity component of major airports –

• 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)

Source: TechSci Research

AUGUST 2015

Page 33: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

3333For updated information, please visit www.ibef.org

PRIVATE SECTOR INVESTMENT IN AIRPORTS RISING … (2/2)

Source: TechSci Research

AIRPORTS

Participation in international

airport projects

Terminal 3

construction in

Delhi completed in

2010

Terminal 3 - Total

cost

USD2.7 billion

(including Terminal 3

and 1- D)

Greenfield projects with private sector participation

PPP format likely to

continue

USD5.8 billion of

investments likely

Delhi

(Modernisation,

Terminal 3)

Mumbai

(Modernisation)

Hyderabad

Bengaluru

Bijapur Airport

Shimoga

Airport

Hassan Airport

Gulbarga

Airport

AUGUST 2015

Page 34: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

3434For updated information, please visit www.ibef.org

Source: Association of Private Airport Operators, TechSci Research

Notes: BOOT - Build Own Operate Transfer; BOO - Build Own Operate

Presently India has five PPP airports each at Mumbai, Delhi, Cochin, Hyderabad and Bengaluru, which together handle over

60 per cent of country’s air traffic

AIRPORTS

SUCCESSFUL PPP AIRPORTS IN INDIA

Name of airport OperatorType of project/

PPP structureRevenue sharing

Chhatrapati Shivaji

International Airport

Mumbai International Airport Ltd

(MIAL)Brownfield/BOOT

38.7 per cent of gross revenue to be

shared with AAI

Indira Gandhi

International Airport

Delhi International Airport Ltd

(DIAL)Brownfield/BOOT

45.9 per cent of gross revenue to be

shared with AAI

Rajiv Gandhi

International Airport

GMR Hyderabad International

Airport Ltd (GHIAL)Greenfield/BOOT

Concession fees - 4 per cent of

gross revenue to be shared with AAI

Bengaluru

International Airport

Bengaluru International Airport

Ltd (BIAL)Greenfield/BOOT

Concession fees – 4 per cent of

gross revenue to be shared with AAI

Cochin

International Airport

Cochin International Airport Ltd

(CIAL)Greenfield/BOO

Payment of dividend to the

Government towards their 26 per

cent of equity capital

AUGUST 2015

Page 35: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

3535For updated information, please visit www.ibef.org

Source: TechSci Research

AIRPORTS

FOREIGN PLAYERS ARE SHOWING INCREASING INTEREST IN THE SECTOR

Major foreign players Airport Stake (%) Description

Airports Company South

Africa Global

Mumbai International

Airport Pvt Ltd10 Operates and owns ten airports in South Africa

Malaysia Airports Holdings

Berhad

Delhi International Airport

Pvt Ltd10

Operates and manages 5 international gateways,

16 domestic airports, to 18 short take-off and

landing ports (Short Take-off and Landing ports)

that serves the rural and remote areas in

Malaysia

Hyderabad International

Airport Pvt Ltd11

Frankfurt Airport Services

Worldwide

Delhi International Airport

Pvt Ltd10

Global airport operator that offers airport

management services including terminal and

traffic management, baggage and cargo

handling, and aviation ground handling

AirAsia Joint venture with Tata

sons and Arun Bhatia49

AirAsia is a Malaysian low-cost carrier. It has

formed a joint venture AirAsia (India) Pvt Ltd with

Tata Sons (30 per cent stake) and Arun Bhatia

via Telestra Tradeplace (21 per cent stake) in

March 2013

AUGUST 2015

Page 36: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

OPPORTUNITIES

AIRPORTS

AUGUST 2015

Page 37: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

3737

OPPORTUNITIES

For updated information, please visit www.ibef.org

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

AIRPORTS

• The Indian aviation sector

likely to see investments

totalling USD12.1 billion

during the Twelfth Five Year

Plan

• Of the total investment,

USD9.3 billion is expected to

come from the private sector

• Success of PPP formats will

raise investment in existing

and greenfield airports

• The Indian Aviation Industry

aims to boost MRO business

in India, which is currently

worth US500 million and is

estimated to grow over US1.5

billion by 2020

• MRO facilities are developed

at Gurgaon and Nagpur

• Indian airline companies

spend over 13–15 per cent of

their revenues on

maintenance, which is the

second-highest cost

component after fuel

• Airport developers can now

draw on wider revenue

opportunities such as retail,

advertising and vehicle

parking

• Future operators will benefit

from greater operational

efficiency due to satellite

based navigation systems like

‘Project Gagan’ which is in

development phase

Policy support and demand

growth unlocking large

investment potential

Huge potential to develop

India as an MRO hub

Leverage on non-

aeronautical revenues,

improved technology

AUGUST 2015

Page 38: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

SUCCESS STORIES

AIRPORTS

AUGUST 2015

Page 39: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

3939For updated information, please visit www.ibef.org

IGI INTERNATIONAL AIRPORT, DELHI - A COMPELLING SUCCESS STORY

Source: Delhi International Airport Ltd, Association of Private Airport Operators,

Airports Authority of India, TechSci Research;

Note: ACI – Airports Council International

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

AIRPORTS

Phase I

Operational status Completed on Mar-2010 Ongoing 20-year project

Area (acres) 1,907 5,106

Passenger handling

capacity per annum34 million

100 million (by 2020)

(60 million as on October

2013)

Final

Phase 1 of modernisation of IGI International Airport (at a cost of INR86 billion) involved

renovation of terminals 1A, 1B, 1C and Terminal 2. It also included construction of a

new domestic terminal along with an integrated passenger terminal (Terminal 3)

Facts and features

Passenger Traffic: 40.9 mn (FY15)

Aircraft movement: 0.3 mn (FY15)

Cargo: 0.7 mn tonnes (FY15)

Terminal 3

Retail space: 0.2 mn sq feet

Apron area: 6.7 mn sq feet

Multi level car park: 4,300 cars/day

(mn: million; sq: square)

AUGUST 2015

Page 40: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

4040

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

For updated information, please visit www.ibef.org

CSI INTERNATIONAL AIRPORT, MUMBAI - HARNESSING THE POWER OF PPP

Source: Airports Authority of India, Mumbai International Airport Ltd, TechSci

Research

Note: ACI – Airports Council International

AIRPORTS

Cargo handling capacity

per annum

Passenger handling

capacity per annum

1 million tonnes

40 million

Facts and features

In FY15, CSI handled –

• Passenger traffic: 36.6 million

• Cargo movement: 0.7 million tonnes

• Modernisation of the Mumbai International Airport will

entail investments worth USD1.3 billion over a period of

20 years

• Government of India to provide USD1.1 billion

• Parts of the project completed till now:

• Phase I (2008): New airport lounges, retail outlets,

duty-free shops, temporary cargo facilities, and

multilevel car parks

• Phase II (2010): Involved construction of a new

terminal at Sahar, a parallel runway, and new

cargo facilities

AUGUST 2015

Page 41: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

USEFUL INFORMATION

AIRPORTS

AUGUST 2015

Page 42: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

4242

INDUSTRY ASSOCIATIONS

Airports Authority of India (AAI)

Rajiv Gandhi Bhawan, Safdarjung Airport,

New Delhi –110 003

Phone: 91 11 24632950

Directorate General of Civil Aviation (DGCA)

Aurbindo Marg, Opp. Safdarjung Airport,

New Delhi –110 003

Phone: 91 11 24622495

Fax: 91 11 24629221

E-mail: [email protected], [email protected]

For updated information, please visit www.ibef.org

AIRPORTS

AUGUST 2015

Page 43: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

4343

GLOSSARY

For updated information, please visit www.ibef.org

AAI: Airports Authority of India

ACI: Airport Council International

CAGR: Compound Annual Growth Rate

FDI: Foreign Direct Investment

FY: Indian Financial Year (April to March)

So FY10 implies April 2009 to March 2010

GOI: Government of India

INR: Indian Rupee

MRO: Maintenance, Repair and Overhaul

PPP: It could denote two things (mentioned in the presentation accordingly) –

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)

AIRPORTS

AUGUST 2015

Page 44: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

4444

Exchange rates (Fiscal Year)

For updated information, please visit www.ibef.org

EXCHANGE RATES

Year INR equivalent of one USD

2005 43.98

2006 45.18

2007 41.34

2008 43.62

2009 48.42

2010 45.72

2011 46.85

2012 53.46

2013 58.44

2014 61.03

2015(Expected) 61.03

Exchange rates (Calendar Year)

AIRPORTS

Source: Reserve bank of India,

Average for the year

AUGUST 2015

Year INR equivalent of one USD

2004–05 44.81

2005–06 44.14

2006–07 45.14

2007–08 40.27

2008–09 46.14

2009–10 47.42

2010–11 45.62

2011–12 46.88

2012–13 54.31

2013–14 60.28

2014-15(Expected) 60.28

Page 45: AIRPORTS - Business Opportunities in India: Investment ... · • Airports Authority of India (AAI) was – • Established in 1994 under the Airports Authority Act • Responsible

4545

India Brand Equity Foundation (“IBEF”) engaged TechSci Research to prepare this presentation and the same has

been prepared by TechSci Research in consultation with IBEF.

All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The

same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any

medium by electronic means and whether or not transiently or incidentally to some other use of this presentation),

modified or in any manner communicated to any third party except with the written approval of IBEF.

This presentation is for information purposes only. While due care has been taken during the compilation of this

presentation to ensure that the information is accurate to the best of TechSci Research and IBEF’s knowledge and

belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice.

TechSci and IBEF neither recommend nor endorse any specific products or services that may have been mentioned

in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result

of any reliance placed on this presentation.

Neither TechSci nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission

on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.

For updated information, please visit www.ibef.org

DISCLAIMER

AIRPORTS

AUGUST 2015