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Sections
Charts
Figures
Continued
Figures
Tables
Full capacity
Investment in airport
infrastructure at Growth in traffic Growth in aero revenue
existing site Saturation
Investment in greenfield
Investment in connectivity by government &
airport
investment in real estate, hotels, commercial
devlopment in and around airport by the
developer
Full capacity
Airports are providers of infrastructure assets to the airline industry being key contributors to local and regional
infrastructure. Airports are gateways to developing local businesses. Though airports and the airline industry are
linked and interdependent, the business model for both is quite different. The airline industry can respond to
dynamic market conditions by moving quickly to increase or decrease capacities through leasing/sale or
retirement of aircraft. Development of airport infrastructure requires long-term planning, as capacities cannot be
increased quickly due to the minimum setup time required for expanding the infrastructure. Airport planning
exercise is regularly prepared from a 30- to 50-year view with modular expansion capabilities. Airports have
common business characteristics but each airport operates under its own local context. Local factors like
economic activity in the region, legal practices and regulatory environment can significantly affect its financial
performance.
In the last 20 years, airports have evolved, globally, from being government-controlled infrastructure providers to
global business-oriented profitable service providers. Consequently, similar to other corporations, they experience
pressure from various stakeholders for operating efficiently and profitably. In India, airport corporatisation started
in the mid-90s with the Cochin International Airport Ltd.
Capacity expansion at low costs - Keeping capital costs under control is a huge challenge for airports as
operations are asset-intensive and expensive. Assets need to be maintained and enhanced over a period for
sustaining the quality of service for the changing customer base. Airports should be planned with a 30-50 year
view to avail adequate land for any large expansion plans; modular expansion is possible for smaller increase in
capacities. Nearly 30 per cent of expenses are due to depreciation and amortisation. The airports are also required
to invest in new technology and provide for security at the airport. As per International Civil Aviation
Organization (ICAO), 86 per cent of airports around the world in 2005 were profitable.
Managing relationships with government authorities CRISIL Research believes airport operators have to
walk a tight rope of managing relationships with various government authorities, as their cooperation is important
for fixing tariff for aeronautical services, funding of airport expansion projects and timely completion of
connectivity projects. In addition, airport operators need to be proactive in explaining their point of view to
government authorities in fixing tariffs for all regulated charges and charges such as user development fees.
Ability to attract economic activity CRISIL Research believes that the airports ability of developing
economic activity at the airport location in terms of cargo operations, commercial office space, hospitality, retail
and other aviation related activities will be crucial for increase in non-aeronautical revenues and profitability.
Airport operators need to offer effective and customised solutions to potential customers for attracting them to the
airport.
Ministry of Civil
Aviation
ATC CISF
Air carriers
- Air India Ltd
- Indian Airlines Ltd
- Pawan Hans Helicopters Ltd
Airport operator
- Airports Authority of India
Functions of DGCA
Registration of civilian aircraft.
Formulation of standards of airworthiness for civilian aircraft registered in India and grant certificates of
airworthiness to such aircraft.
Licensing of pilots, aircraft maintenance engineers and flight engineers, and conducting examinations and
checks for that purpose.
Licensing of air traffic controllers.
Certification of aerodromes and communication navigation surveillance (CNS)/ air traffic management
(ATM) facilities.
Ensuring the proficiency of flight crew and also of other operational personnel such as flight dispatchers and
cabin crew.
Granting of Air Operators Certificates to Indian carriers and regulation of air transport services operating
to/from/within/over India by Indian and foreign operators, including clearance of scheduled and non-
scheduled flights of such operators.
Conducting investigation into accidents/incidents, and taking accident prevention measures including
formulation of implementation of safety aviation management programmes.
Carrying out amendments to the Aircraft act, the Aircraft rules and the civil aviation requirements for
complying with the amendments to ICAO annexes, and initiating proposals for amendment to any other act
or for passing a new act in order to give effect to an international convention or making amendment to an
existing convention.
Function of BCAS
Laying down aviation security standards in accordance with the Chicago Convention of ICAO for airport
operators, airlines operators, and their security agencies responsible for implementing aviation security
service (AVSEC) measures.
Monitoring the implementation of security rules and regulations and carrying out survey of security needs.
Ensure that the persons implementing security controls are appropriately trained and possess all competencies
required to perform their duties.
Planning and coordination of aviation security matters.
Conducting surprise/dummy checks to test professional efficiency and alertness of security staff, mock
exercise to test efficacy of contingency plans and operational preparedness of the various agencies.
AAI derives nearly 30 per cent of its revenues from the route navigation facilities provided by the ATC. The
passenger service fee and the landing parking and terminal navigation fee each constitute 14 per cent of the
revenues. The revenue share from airports operated by private players under the PPP model form another 17 per
cent of the revenues of AAI.
(per cent)
Route Navigation
Facilities Charges
Revenue from JVs
30
17
Others
10
Cargo Revenue
4
Commercial services
10 Landing, Parking &
Passenger Service TNL Fees
Fees 14
15
Source: AAI
There are 89 food and beverage outlets, 85 retail and convenience outlets covering an area of about 0.2 million
square feet. There is an executive conference centre in the airport, including 23 meeting rooms.
Parking, Car
rentals and Other
other 9
Other Landing fees
concessions
8 15
Landing fees 49
11
Terminal,
maintenance Parking, Car
Terminal,
buildings and rentals and
maintenance
other rentals other
buildings and
23 concessions
other rentals
32 53
Atlanta Airport has seen an increase in non-aeronautical revenue share as a percentage of total revenues from 49
per cent in 2002 to 53 per cent in 2008.
95 8
90 6
85 4
80 2
75 0
70 -2
2002 2003 2004 2005 2006 2007 2008
6
1.00
5
0.95 3
2
0.90
0
0.85
-2
0.80 -3
2002 2003 2004 2005 2006 2007 2008
Frankfurt Airport
Frankfurt Airport is one of the world's most important air transportation hubs. It is spread over 19 square kilo
metres. The aerotropolis at Frankfurt Airport has more than 500 companies, 200 retail stores, three fire stations
and a clinic. Fraport is expanding Frankfurt Airport into Frankfurt Airport City an ideal real-estate location and
gateway of mobility.
Fraport AG, one of the leading groups of companies in international airport business, operates Frankfurt Airport.
The Fraport Group holds controlling stake in airports of Frankfurt, Lima, Antalya, Frankfurt Hahn, Burgas,
Varna and minority or management contracts in airports of Delhi, Cairo, Hanover and Saarbrucken. In addition to
covering the full range of airport services, Fraport AG is involved in airport retailing and real-estate development.
Approximately 23,000 people are employed by the Fraport Group in Frankfurt. Going forward, with expansion
plans, it is expected to create 1,00,000 additional jobs around the airport complex and 25,000 jobs directly at the
airport. MNCs like Deutsche Lufthansa AG, LSG Lufthansa Service GmbH and International Mail Center have
their operations in Frankfurt Airport City.
Frankfurt Airport City has an area of 316 acres for cargo handling operations. Its retail operation ranges from
duty-free products, food & beverage, fashion products and various travel related services.
Figure 6: EBITDA share of activities compared Figure 7: Revenue share of activities compared
to overall EBITDA to total revenue
60 40
32
45
24
30
16
15
8
0 0
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Aviation Operation Retail & Properties Aviation operation Retail & Properties
Ground Handling External Activities Ground handling External activities
Source: Fraport Annual Report, 2008 Source: Fraport Annual Report, 2008
57 8 2.5 16
6 2.0 12
54
4 1.5 8
51
2 1.0 4
48
0 0.5 0
45 -2 0.0 -4
2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008
3
0.48
2
0.42
0
0.36
-2
0.30 -3
2002 2003 2004 2005 2006 2007 2008
After the Seoul Olympics of 1988, Gimpo International Airport (old airport) could not keep pace with the increase
in international air traffic. The Incheon airport was constructed on reclaimed land between Yeongjong Island and
Youngyu Island. It took 8 years to construct the airport, and an additional 6 months to test operate. The airport
was officially opened in March 2001. The total passenger movement at Incheon airport in 2008 was 29.9 million.
The airport houses various cafeterias, pastry shops and bakeries, coffee shops, banks, restaurants, music stores,
book stores, beauty salons, supermarkets, pharmacies, duty-free shops, convenience stores and a currency
exchange centre. The baggage handling system at Incheon International Airport is designed to process 31,000
pieces of luggage per hour.
The Cargo terminal complex comprises three cargo terminals, five separate warehouses, 24 parking stands, and
administration offices. The cargo terminal complex is designed to process 1.7 million tonnes of cargo per year.
The airport is served by frequent bus service from all parts of South Korea as well as by traditional ferry service
between Yeongjong pier and Incheon. Airport limousines operate round the clock from Seoul to Incheon, and
several backup highway buses escort people from places within and outside Seoul. Passenger mover system links
the main passenger terminal and is connected to the International Business Center (IBC).
The construction work of Phase 3 expansion of the airport is expected to start in the first half of 2011 and is
scheduled for completion in 2015. The third stage work on the airport involves expansion of the second passenger
terminal and the existing cargo terminal, and enlargement of the apron area. Besides this, roads, rail, and other
transportation connections to the second passenger terminal will also be expanded.
Further, at the end of phase IV, which is scheduled to be completed in 2020, the airport will be able to handle 100
million passengers and 7 million metric tonnes of cargo annually.
Similarly, the total aircraft movement showed a degrowth of 8 per cent in 2008-09 compared to the previous year
with a 5-year CAGR of 17.5 per cent. The total freight movement decreased from 0.18 million tonnes in 2007-08
to 0.16 million tonnes in 2008-09, a degrowth of 11 per cent compared to the previous year. The CAGR in freight
for last 5 years is 11.5 per cent. The existing airport (HAL Airport) has the capacity to handle 3.6 million
passengers per annum.
60
8
40
6
20
4
0
2
-20
0 -40
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
in ('000) Nos
900
800
700
600
500
400
300
200
100
0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
120 60
45
90
30
60
15
30
0
0 -15
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
45
90
30
60 15
0
30
-15
0 -30
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
Infrastructure facility
The airport development master plan has been staggered across several phases. The initial phase was completed in
March 2008. The major developmental work carried out in the initial phase includes a passenger terminal for
domestic as well as international passengers, a 4,000-metre long runway, two major general cargo warehouses and
a car park.
The passenger terminal is a single, two-level building capable of accommodating international and domestic
operations. The total floor area is approximately 71,000 square metres. The terminal building is designed for a
peak hour passenger handling capacity of approximately 3,000 passengers. BIAL has a 4,000-metre runway, with
a width of 60 metres including shoulders; code 4 E, B - 747 compatible. The cargo complex has the capacity to
handle 3,00,000 tonnes of cargo annually while the airport complex has a parking facility for 2,000 cars.
Alliances
50
6 40
30
4 20
10
2 0
-10
0 -20
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
in ('000) Nos
600
450
300
150
0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
80 50
40
60
30
40 20
10
20
0
0 -10
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
30
50
20
30
10 10
0 -10
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
The terminal has an area of 1,17,000 square metres, with a peak hour passenger handling capacity of 3,200. The
area of the apron (area set aside for loading, unloading and maintenance of aircraft) is 1,37,000 square metres,
with ILS CAT 1 airfield ground lighting facility.
Retailing
GHIAL has plans to house some of the best international brands and products ranging from perfumes, cosmetics,
fashion accessories, confectionary, destination products, apparel, etc, competing with some of the top international
airports. For the development of the retail duty-free area, the company has appointed Nuance-Shoppers Stop
consortium after a competitive bidding process. Landmark and Odysseys have set up bookstores at the airport,
offering options to passengers. The airport operator has taken care to ensure the availability of high-end and mid-
range brands with different price points for catering to all categories of passengers.
Other facilities
Apollo Hospitals will provide medical facilities at the airport. This will serve as an emergency treatment centre
capable of handling any medical condition of passengers while in the airport premises.
Thomas Cook provides travel services like travel assistance and solutions, tour operator services, flight bookings,
rail bookings, hotel bookings, visa, passport assistance and travel insurances at the airport.
Avis, Hertz and Budget provide car rental services at the airport. Leading service providers like V Link and Easy
Cabs provide Radio Taxi service at the Rajiv Gandhi International Airport for the convenience of passengers.
GHIAL makes available air-conditioned bus services to and from various locations in the city at reasonable costs
for improving connectivity to the airport and reducing costs for price sensitive passengers.
Future plans
GMR Hyderabad International Airport Ltd (GHIAL) and MAS Aerospace Engineering (MAE), a wholly owned
subsidiary of Malaysia Airlines, have signed an agreement to set up a 50:50 joint venture Airframe Maintenance,
Repair and Overhaul (MRO) Company in Hyderabad.
The JV Company, known as MAS-GMR Aerospace Engineering Company Ltd., will be built on the eastern side
of the Rajiv Gandhi International Airport, Hyderabad.
The facility will cater to both narrow and wide-bodied aircraft checks; it will be operational by the third quarter of
2010. Built specially to service aircrafts in the Indian subcontinent, the facility will have the capacity to service
between 60-80 aircrafts annually.
Table 4: GHIAL has the following tie-ups with a range of service providers
Function Service provider
Cargo operations Menzies Aviation Plc, UK
Fuel farm Reliance Industries
Flight catering LSG & Sky Gourmet
Business hotel Accor Group with Novotel brand
Aircraft MRO Lufthansa Technik, Germany and Air India
Ground handling AI , IA & SATS and Menzies & Bobba Aviation
Car parking Tenaga Parking, Malaysia
Retail fuel operator within the airport for non-aviation fuel Bharat Petroleum
Medical centre Apollo Hospital
Duty-free shopping Nuance AG, Switzerland & Shoppers Stop
Advertising Laqshya Media Pvt Ltd
Food & beverages HMS Host, Blue Foods Pvt Ltd, Cookie Man (Add others if present)
Aviation academy Sabena Flight Academy, Belgium
Coffee shop Caf Coffee Day, Hard Rock Cafe
Telecom services Tata Teleservices
Source: GHIAL website
2.5 60
45
2.0
30
1.5
15
1.0
0
0.5
-15
0.0 -30
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
200
150
100
50
0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
60
21
40
14
20
7
0
0 -20
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
25
60
20
40
15
20
10
0
5
0 -20
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
The parking area can accommodate 2,000 vehicles. In addition, it has a state-of-the-art centre for perishable cargo,
which has the capacity to handle 30,000 tonnes annually. CIALs air cargo facility is capable of handling 75,000
tonnes per year.
Future plans
CIAL has plans to develop a full-fledged airport city (Aerotropolis), surrounding the airport with state-of-the-art
facilities. The master plan envisages the establishment of aircraft maintenance repair and overhaul facility,
aviation academy, star/budget hotels, 18-hole golf course, convention/exhibition centre, logistics centre,
amusement park, cultural village, etc. Besides these, the company has earmarked a sizeable part of land for
developing an advanced information technology (IT) park. The proposed aerotropolis is set to come up on 450
acres of land.
25
160
20
120
15
10
80
5
40
0
0 -5
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
320 25
20
240
15
160 10
5
80
0
0 -5
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
18 40
16 35
30
14
25
12
20
10 15
8 10
5
6
0
4
-5
2 -10
0 -15
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
in ('000) Nos
2000
1500
1000
500
0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
Construction of new terminal building T1 and modernisation of the existing terminal T2 were completed under
Phase 1 in December 2008. The new terminal building T1 has an area of 3,50,000 square feet with a capacity to
handle 10 million passengers. It also includes 72 check-in counters, 16 security Channels and an in-line baggage
screening facility.
The modernisation of terminal T2 (international terminal) has increased its annual capacity from 5 million
passengers to 8 million passengers. It has also added/expanded the following facilities to its infrastructure:
In addition to the passenger terminal, a new runway, 4,430 metres in length, Code F, A-380 compliant and CAT
III B lightning facility was also constructed.
The construction of a new terminal (T3) is currently being carried on and is expected to be completed by March
2010. T3 will be capable of handling 34 million passengers per annum and will have an area of 5.2 million square
feet.
Terminal T3 will include 168 check-in and self check-in counters, 146 immigration counters and high speed metro
link from the city centre. It will also accommodate 4,300 vehicles along with a wide range of restaurants,
shopping and recreation facilities.
A total of 45 acres of land will be developed in Phase I, of which 39 acres is being developed for hospitality
services. The airport complex is being designed to handle capacity of 100 million passengers per annum at the end
of 5 phases.
DIAL is also planning to develop an Aerocity around the Delhi airport, which will feature hotels, convention
centres, malls and other business and recreational facilities for travellers. A total of 3,000 rooms, including budget
hotels, are planned along the airfield complex.
Alliances
Source: AAI
1500
1000
500
0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
200 25
20
160
15
120 10
80 5
0
40
-5
0 -10
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: AAI
Source: AAI
Under the interim phase, refurbishment of Terminal 2 and upgradation of airside runway facilities such as rapid
exit taxiways were undertaken. As a part of the refurbishment process, a plush new food court was inaugurated on
October 3, 2008 at Terminal 2.
Further, in November 2008, a new taxiway N9 was inaugurated. The location of this taxiway has been aptly
designed to facilitate all wide-body aircrafts to vacate the runway after landing with ease. Moreover, N9 would be
the first compliant taxiway for Code-F aircraft (such as A-380 and others alike) at CSIA that requires the width of
the taxiway to be 25 metres and shoulders 17.5 metres on each side. Its length is 180 metres. With the extended
parallel taxiway A4 and taxiway N9 in place, runway occupancy time for aircraft landing and taking off, is likely
to be reduced considerably.
Also, parking at the airport is proposed to be increased to 12,000 vehicles by 2010 compared to the current
capacity of 3,600 vehicles.
The construction of the new terminal building (T2) at Sahar is already underway. On completion, the new
terminal building will cater to both domestic and international passengers, with a capacity to accommodate 40
million passengers per year operating 24 hours a day. The terminal building will have a total floor area of nearly
4.3 million square metres spread across four levels. The other key features of the terminal are 52 Contact positions
with Passenger Boarding Bridges, 184 Check-in counters, 14 Reclaim Belts and 700,000 square feet of Retail,
F&B, Lounges and Travel Services.
Alliances
Table 11: MIAL has tie-ups with the following service providers
Function Service provider
Duty-free shops DFS Galleria
Retail Aldeasa ITDC
Food & beverage Caf Coffee Day, Ritazza, Hot Dog
Source: CSIA website