The economic multiplier effect of airport construction is estimated to be around six times the capital invested in an airport
Jayant Sinha & Akhilesh Tilotia
In the previous century, Jawaharlal Nehru proclaimed dams and factories as the ‘temples of modern India’. As the Indian economy becomes more service intensive and rapidly globalises to become a major player in goods and services, trade and foreign investments, connectivity is of paramount importance. In this century airports can be said to be the ‘temples of New India’ welcoming trade, ideas and investments.
India is expanding the reach of its Ude Desh Ka Aam Naagrik (UDAN) scheme which brings airline services closer to many cities. Air travel is becoming cheaper as fuel prices remain low and operating costs are brought down through industry-friendly policies, airlines are significantly expanding capacity bringing many new passengers to the aviation network. A sophisticated analysis done by Google (using location and texts of search queries for travel in general and aviation in particular) for the Ministry of Civil Aviation estimates that India, over the next 10-15 years, will need between 150 and 200 airports to cater to its fast-rising aviation demand, more than double the current 90-plus in operation.
As India grows from 200 million passenger trips a year to more than a billion trips over the course of the next 15-20 years, India will need a matching 5X growth in airport capacity. Airports in India are already congested and strong traffic growth will further create congestion: congestion can be due to lack of land availability for runways, air traffic congestion due to restrictions of buildings or airspace, terminal capacity issues or poor city-side connectivity, especially if the city has densely grown around an airport.
A good rule of thumb is that the annual passenger traffic in a city will be around three to four times the city’s population: a city of 15-20 million like Delhi or Mumbai already has traffic of around 50-60 mn. For state capitals like Jaipur (with a population of 4 million) or Ranchi (2 million), it is conceivable in that in the next decade or two, the annual airport passenger traffic can rise to between 8 mn and 16 mn a year, from the current 2-4 mn a year. Many current city airports will peak out at a capacity of between 2 and 5 mn passengers a year; incremental capacity creation may increase their capacity by another 20-50 per cent but not meaningfully more.
Many cities, especially state capital and key financial or trading cities in the states, will become multi-tens of millions of passenger a year airport. De-bottlenecking or efficiency enhancing capital investments can take us only so far. If we take a three to five-year view, some of these problems can be solved via de-bottlenecking and creating efficiencies. However, if we take a 10 to 20-year view, in many cases, the answer will require creating a new airport further out from the city. Many cities in India are already seeing the development of a second airport: Mumbai-Navi Mumbai, Delhi-Jewar, Goa-Mopa, Visakhapatnam-Bhogapuram are all current examples.
Many other cities will soon find that they will need immediate investment in new terminals or if the city urban planners forecast out longer than a few years or a decade, a new airport. It will not be surprising if over the course of the next 15-20 years, 15-20 cities in India will have second airports.
This, in and of itself, may not come as a surprise since multiple airports are common at cities such as London and New York. There will however be a crucial difference between the growth of second (or third) airports globally and the rise of multiple airports in India. Unlike in the West where the second airport is secondary or significantly smaller to the primary airport, in India, in most cases, the second airport will, generally within a decade or so of its starting operations, dwarf the current primary airport. This is currently not the accepted reality of urban planning as master plans do not necessarily take this dimension into account.
If airport infrastructure in cities has to be completely reimagined, this opens up many possibilities of redesigning the overall transport plan of the city and the connectivity plan for the country. Creating mega multi-modal transport locations say 10-15 kms outside the current city limits (which integrate train, bus and airport infrastructure) can help shape the direction for the city to expand into. This will be cheaper and effective in decongesting the current city by creating new urban areas.
Investment in airports (and multi-use parks) offers immense direct and indirect benefits. Given the large construction and build-up requirements, airport construction can spur job creation, provide a stimulus to the construction and associated material (steel, cement, aviation equipment) industry and create significant value for landowners when work on greenfield airports is started. The economic multiplier effect of airport construction is estimated to be around six times the capital invested in an airport.
Airports become gateways of global connectivity and create strategic economic hubs. Development of airport in a city leads to construction of commercial and residential real estate closer to the airport. Airports transform the economic geography of a city by triggering development around a transport hub. A well-designed aerotropolis around an airport can become an economic engine in and of itself: Incheon (Seoul, South Korea), Schiphol (Amsterdam, the Netherlands) and the new Beijing airport are world-leading examples of aerotropolis development. Massive developments around Gurgaon (Delhi), Devanahalli (Bangalore) and Shamshabad (Hyderabad) point to how economic growth is kick-started and sustained by the airport: such development creates new infrastructure and connectivity which promote, economic activity, jobs and wealth.
An airport can become a nodal point for intra-city connectivity with various modes of transport (heli-taxis, railways, metro, buses, autos, private vehicle connectivity, etc) converging to bring down cost and time involved for passenger and freight movement. Collaboration across the citizens, local businesses, and various ministries across both centre and states is required to make reimagine the future of our urban economic geography.
Jayant Sinha is India’s Minister of State for Civil Aviation and a Member of Parliament from Hazaribagh, Jharkhand. Akhilesh Tilotia is his officer on special duty and the author of The Making of India: Gamechanging Transitions. These are personal views of the authors.