International Firms Eye Ripe India Airport Market
Airport infrastructure and capacity constraints are becoming top priorities for the Indian government as air traffic rises. The country will become the third-largest aviation market in the next two decades, overtaking the United Kingdom in 2026, said Alexandre de Juniac, CEO and director general of the International Aviation Transport Association, during a recent visit. The Sydney-based consultant Center for Aviation estimates that India needs $30 billion to $40 billion in capital to modernize airport infrastructure in the next 10 to 15 years.
Annual domestic passengers, now at 70 million, are expected to increase to 300 million by 2022. The Indian government has provided, until March 2017, $1.16 billion for the development of airports in smaller cities through public-private partnerships (P3s). India permits foreign direct investment of 100% for greenfield projects and 74% for existing projects. Private-sector design and project management consultants have responded to a request for proposals (RFPs) from the cash-constrained, government-owned Airports Authority of India, which owns 125 airports. The contracts will last 30 to 48 months. Operations and management are not included in the RFP.
“It will need the best international firms to match this program," says Nicholas Jachiet, chairman and CEO of France-based Egis Group. The concern for AAI would be to ensure the upgraded projects were not delayed, he added.
In an effort to address congestion at Mumbai International Airport, located in India’s commercial capital, the City and Industrial Development Corp. (CIDCO) is moving forward with a $2.49-billion, 1,160-hectare development of a second airport at Navi Mumbai. “All major approvals are in place,” says Bhushan Ashok Gagrani, vice chairman and managing director of CIDCO. Predevelopment work involves changing the course of a river via a 90-degree turn for 3.2 kilometers. Work on leveling land in the core area finally has started. Work will include excavation of 92 meters of hill for a runway that will extend over the sea.
Once the site is ready, it will be handed to a P3 concessionaire. RFP respondents include GMR Group; GVK-led Mumbai International Airport Ltd.; Volputas Developers (Hiranandani Group) with Zurich Airport; and MIA Infrastructure, a consortium of Tata Realty and Vinci Airports International. Gagrani says the first phase is slated for competion in December 2019 and will accommodate a million annual passengers. By 2030, the capacity would reach 60 million. The prime consultant, a consortium led by Louis Berger Group and INECO-RITES, has prepared the airport's master plan.
Meanwhile, GMR Airports, a subsidiary of GMR Infrastructure Ltd. and operator of Delhi International Airport, recently won a competitive bid for development and operation of a greenfield airport at Goa. The 40-year concession includes an expected 20-year extension through a bidding process. GMR Group currently is conducting a financial review of four bids for Phase 3A (2016-20) development at the Indian hub to increase its domestic terminal size to 133,000 sq m from 53,000 sq m. The two top bidders soon will be identified for price negotiations. Designed by AECOM, the plan includes a fourth runway, an elevated taxiway and additional parking for 80 aircraft. It will be operational by late 2018.
Recently, the state government of Andhra Pradesh in South India signed a memorandum of understanding with the U.S.-India Aviation Cooperation Program, a P3 between the U.S. Federal Aviation Administration, the U.S. Trade and Development Agency, and other U.S. government agencies and firms. Eyeing four greenfield airports, the state identified areas of potential cooperation in the bidding process for ACP members, including master planning and design, construction and financing, safety and security, and training and skill development.
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