Airports: Massive investment planned but actual realisation difficult

According to CARE Research, procedural hassles, requirement of large land and capital coupled with high leverage position, remain key challenges for airport development in India

Various agencies like the Airports Authority of India (AAI), state governments and private players have been actively involved in creation of airport infrastructure in the country. At present, about 64 airport projects worth investment of about Rs1.51 lakh crore are under implementation or announcement stage. However, out of this only 35% investment is likely to materialise up to FY2017, says CARE Research.


"Inordinate delays experienced by airport projects in the past, procedural hassles, requirement of large land and capital coupled with high leverage position of airport infrastructure companies, remain key challenges for the capacity expansion in the airport sector," the ratings agency said in a research note.


In the Eleventh Five Year Plan, investment in the airport infrastructure stood at about Rs42,500 crore with private sector contributing almost Rs30,000 crore. The Planning Commission has envisaged an investment of about Rs87,700 crore during the Twelfth Five Year Plan.


Unlike other infrastructure projects, the airport project requires substantial land at one location. Setting up an airport needs approval from about 16-17 agencies at central and state levels. Hence, airport projects are prone to time overruns on account of procedural delays.  Moreover, construction of airports takes at least about three years for completion from the date of commencement of construction work depending on the capacity and design of the airport.


"Going ahead, delay in land acquisition is expected to remain a major challenge for airport projects. Moreover, muted central assistance and non-viability of some projects are likely impact development of airport infrastructure. Also, high leverage of airport infrastructure companies may act as a deterrent for private participation in the near term," the ratings agency said.


According to CARE Research, out of the total planned investment, about 33 projects accounting for about 25% of the total outstanding investment are under advance stage of construction and are expected to get completed till to FY2017. Balance projects involving 75% cent of outstanding investment are at an early stage of construction and are expected to be commissioned beyond FY17. This means the actual realisation of planned investment in airports remains an arduous task, it added.


Air traffic to witness robust growth

CARE Research said it expects the total air passenger traffic in India to grow at a healthy rate during the period FY14-17. "The growth will be led by favourable policy initiatives by the government, competitive air fares offered by Low Cost Carriers, fleet expansion by airlines, growing trend of transit passengers, increasing affordability coupled with rising share of middle class and strong demographics," it added.



The total air passenger handling capacity at all airports in India grew at CAGR of 20% during the period FY06-13, while the total air passenger traffic grew at a CAGR of 12% during the same period. The growth in air passenger handling capacity is expected to lag the overall air passenger traffic growth till FY17, the ratings agency added.




3 years ago

While private airport operators operate airports in major cities which were otherwise operated by AAI, our aviation minister forces AAI to spend CSR in his constituency to build "akharas" and roads.


shadi katyal

In Reply to pravsemilo 3 years ago

Do we need such useless authorities who are nothing but a drain on the budget?
What kind of roads are we talking ,one which washes away with every seasonal rain.
Time has come to change and close some of these Ministries.


In Reply to shadi katyal 3 years ago

The issue is not just with the authorities, it is the private players also who are equally the culprit.

shadi katyal

In Reply to pravsemilo 3 years ago

Unfortunately it is true because they have to kickback or pay in advance to get such contracts. We are a corrupt nation and without any greasing hands of both bureaucracy and Ministers we cannot move ahead and very few honest people wish to touch India for investments and industry.

shadi katyal

3 years ago

I have never understood that instead of let the nation forward, we always have negative thinking on development. Has writer seen the airports of other nations ??
We have still the worst infrastructure all round and yet are busy with religious politics instead of building the nation.
Even Pakistan has built better airports and highways and we still use same old methods left by our former rulers.
When are we going to move ahead to 21sr century.
Why don't we facilitate government on acquisition of land etc.
Sorry to be blunt but do we want airports like Delhi which built on low land and floods during rains. What a showcase to the world.

Supreme Court suggests Gavaskar's name as BCCI president

The Supreme Court has proposed Sunil Gavaskar’s name as replacement for N Srinivasan as BCCI president while expressing its intention to bar CSK and RR from participating in IPL7

The Supreme Court in a big setback to N Srinivasan, proposed name of legendary cricketer Sunil Gavaskar as president of Board of Control for Cricket in India (BCCI).


The court said it is intending to bar Chennai Super Kings (CSK), owned by India Cements, which is promoted by Srinivasan, and Rajasthan Royals (RR), whose players and team officials are allegedly involved in the scandal, from participating in the Indian Premier League (IPL)-7 tournament slated to begin on 16th April.


A bench headed by Justice AK Patnaik proposed the name of veteran cricketer and commentator Sunil Gavaskar to head the Board during the pendency of the case in the apex court.


The bench asked the Board to give its response by Friday on its proposals after which it will pass an interim order.


Reacting to the apex court's proposal, Gavaskar said he will be 'honoured' and 'happy' to adhere to the directives of the highest court of the land. “First and foremost, if the highest court suggests something, you have to do so but that has to be on record. I am currently contracted with BCCI as a commentator. But if Supreme Court wants me to do that, I will do it,” he told reporters.


The bench also proposed to pass an order barring India Cements officials from getting involved with the functioning of BCCI after senior counsel Harish Salve, appearing for Cricket Association of Bihar, pointed out that many such officials are at present part of the BCCI team.


Salve also raised questions on the conduct of captain of Indian Cricket team, MS Dhoni, who is also vice-president of India Cements, saying that he is guilty of corrupt practices.


Sensex, Nifty on an uptrend: Thursday closing report

Market highly overbought soon may see some decline

In spite of being a day of expiry of futures and options, the market witnessed a range bound session until 2.00pm today. After that the indices suddenly spurted and then slumped again. The Indian benchmarks continued to hit an all time high for the fourth consecutive session.


Sensex opened at 22,116 and moved in the range of 22,094 and 22,308 and closed at 22,214 (up 119 points or 0.54%) while the Nifty which opened at 6,613 moved between 6,600 and 6,674 and closed at 6,642 (up 40 points or 0.61%). The NSE recorded a volume of 96.26 crore shares. Volume was high because of expiry.


Banking shares mainly public sector undertakings (PSUs) are in focus after Goldman Sachs upgraded ratings of state-owned banks. Macro recovery and potential for post-election reforms could lead to a gradual reduction in stressed loans, it said. Significant reforms under a stable government could lead to valuation re-rating in particular for PSU banks, that could provide a 66% average upside as stressed loans could fall sharply to 4.7% from 10.5% by FY18, Goldman says. Among the top 10 gainers in the ‘A’ group on the BSE were, Indian Overseas Bank (4.91%) to close at Rs50.25 on the BSE while SBI rose 4.04% to close at Rs1839.55.


Today again, Dr Reddys Lab was among the laggards in the BSE-30 stock.  Dr Reddys Lab fell 1.86% to close at Rs 2,587.10 on the BSE.


Suzlon Energy, one among the top 10 losers in the ‘A’ group on the BSE, fell 1.94% to close at Rs9.62 on the BSE. A proxy advisory firm, Institutional Investor Advisory Services India (IiAS) which gives voting recommendations to shareholders on company resolutions, has communicated to the shareholders to vote against the re-appointment of the chairman Tulsi Tanti as its managing director. “Under Tulsi Tanti’s leadership, the company’s performance has continued to falter and the company is now under a corporate debt restructuring (CDR) programme. IiAS believes that promoters’ interests will also be served by bringing in new management,” the advisory firm said, in a press release.


US indices closed in the negative on Wednesday. Orders for big-ticket items rose 2.2% in February, powered by higher bookings for autos and aircraft. Stripping out the volatile transportation sector, orders rose a smaller 0.2%.


Asian indices closed mostly in the green. Nikkei 225 (1.01%) was the top gainer while Shanghai Composite     (0.83%) was the top loser.


On Thursday, data showed mainland China industrial profits increased 9.4% in the two months through February year-on-year, compared with 17% growth a year earlier.


European indices were trading in the red while US Futures were trading in the green.


UK retail sales rose more than three times as much as economists forecast in February as Internet sales and spending on food surged, signaling the recovery maintained its momentum in the first quarter.


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