Indian Airport Sector Assessment [Type Here] Capital Fortune Private Limited

ABSTRACT Amidst increased participation from private players, the Indian Airport sector is set to play a crucial role in the growth of Indian economy. With the new government in place, Indian Infrastructure sector is set to get a major thrust. Airport sector is expected to draw an ever increasing attention of the government. This report captures the major trends, key stakeholders, challenges and future opportunities for the Indian Airport Sector. INDIAN AIRPORT

SECTOR ASSESSMENT

Capital Fortunes Private Limited (May’14)

Indian Airport Sector Assessment [Type here] Capital Fortune Private Limited

Contents 1. Overview of the Indian Airport Sector ...... 3 1.1. Traffic Trends ...... 3 1.2. Government Bodies in Airport Sector ...... 4 1.2.1. Airport Authority of India (AAI) ...... 4 1.2.2. Ministry of Civil Aviation ...... 5 1.3. Regulatory Authorities ...... 5 1.3.1. Airport Economic Regulatory Authority (AERA) ...... 5 1.4. Existing Airports and Airstrips ...... 6 1.5. Greenfield Airports ...... 6 2. Key Stakeholders in an Airport ...... 8 2.1. Government ...... 8 2.1.1. Air Traffic Control ...... 8 2.1.2. Tariff Fixation ...... 9 2.2. Developer ...... 9 2.3. Financiers ...... 10 2.4. Cargo Partners ...... 11 2.5. Food & Beverage (F&B) Partners ...... 12 2.6. Retail and Duty Free Operators ...... 12 2.7. Advertising ...... 14 2.8. Fuel Partner ...... 14 2.9. Airlines ...... 15 3. Revenue Model ...... 16 4. Privatization ...... 19 Karaikal Airport ...... 20 5. PPP Mode of Development ...... 21 5.1 Benefits of PPP mode of development in Airport Sector ...... 21 5.2 PPPs Success Stories ...... 21 5.3 Constraints in PPP model ...... 22 5.3.1. Supply side constraints ...... 22 5.3.2. Demand side constraints ...... 22 5.3.3. Policy Constraints ...... 22 5.3.4. Structural Constraints ...... 23

Indian Airport Sector Assessment [Type here] Capital Fortune Private Limited

6. Challenges Faced by the Airport Sector ...... 23 7. Future Opportunities ...... 25 8. Appendix A: Airport wise traffic of Indian Airports (2012-13) ...... 30 9. Appendix B: Airport Projects under PPP Program ...... 32 10. Appendix C: Operators of major airports across the world ...... 34 11. Appendix D: Skytrax – Global Airport Rankings ...... 36 12. References ...... 39

Indian Airport Sector Assessment [Type here] Capital Fortune Private Limited

1. Overview of the Indian Airport Sector India is a huge country, supporting the second highest number of people in the world. In an increasingly globalized economy, air transport is a vital element of the country’s transport infrastructure. Civil Aviation is a key infrastructure sector that facilitates the growth of business, trade and tourism, with significant multiplier effects across the economy. The Indian Airport Sector plays a crucial role in the growth of the country through the last decade. It is now increasingly recognized that aviation, far from being a mere mode of transportation for an elite group, is crucial for sustainable development of economy and trade & tourism. In this context, it is vital that airport infrastructure grows in anticipation of the escalating needs of the air transport industry. The ICAO estimated that $100 spent on air transport produce benefits worth $325 for the economy and 100 additional jobs in air transport result in 610 new economy wide jobs.

1.1. Traffic Trends The passenger and cargo traffic in Indian Airports sector has seen a robust growth in the last decade. The passenger traffic has grown at a CAGR of 14% over the last decade whereas the freight traffic has grown at a CAGR of 8.3%. However, the air traffic declined in the year 2012-13 as compared to 2011-12. This has been majorly due to a fall in the economic activity during this period, poor financial health of the domestic airlines and the closure of Kingfisher Airlines. During the same period, Global passenger traffic increased by 3.1 per cent compared to the year ending March 2012 with international passenger traffic growing by 4.8 per cent and domestic passenger traffic increasing by 1.6 per cent.

As per the twelfth five year plan, by the year 2016-17, the passenger traffic is expected to grow to about 269 Million (a CAGR of 14%) and the freight traffic is expected to rise to 4.4 MMTPA (a CAGR of 19%). As per a report by IATA, if Indians begin to travel with the same frequency as Americans, then the years ahead could see the market boom beyond the two billion mark.

Passengers 2003-04 2011-12 2012-13 International 16,641,449 40,796,403 43,033,830 Domestic 32,138,162 121,509,019 116,367,526 TOTAL 48,779,611 162,305,422 159,401,356 Freight (in Tonnes) International 693,223 1,467,896 1,406,334 Domestic 375,436 812,091 784,215 TOTAL 1,068,659 2,279,987 2,190,549 Source: Airport Authority of India

This growth has come on the back of strong infrastructure addition in the Airport Sector. This is illustrated by the below facts:

 Scheduled air services available to/from 82 airports (only 50 in early 2000)  Enhanced national and international connectivity - 72 foreign airlines are operating to/from various destinations  Bilaterals with 104 countries  1356 International flights utilizing 3,26,705 seats per week  3 Indian carriers are operating 990 flights to 35 destinations in 25 countries  North East Connectivity: 87 flt/wk to 286 flt/wk in 5 years (230% increase).

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As per the Twelfth Five year plan, the passenger handling capacity in India has risen to 220 million in FY 2011. During the same period the cargo handling capacity also has risen to 3.3 million MT. This shows that India currently has an excess capacity both in terms of Passenger and cargo. However, a major portion of this capacity is concentrated in the metro airports. As increasing amount of Air traffic is coming from non- metro cities, there is a need to develop Greenfield airports in non-metro cities as well. As per estimates of Ministry of Civil aviation, the total passenger traffic in India is expected to grow to around 700 million by the end of 15th five year plan.

Forecast of Air Passenger Traffic

Source: DGCA, MoCA estimates

In spite of the above said growth, India continues to be a small player in the international arena. India has 1 aircraft for every 2.89 million population which is miniscule in comparison to 1.14 million in china, 0.96 of Indonesia, 0.89 in Philippines and 0.63 in Brazil. China’s domestic traffic is 5 times the size of India’s despite having a population just 15% larger. The upside potential therefore, remains huge, driven by strong economic and demographic fundamentals. 1.2. Government Bodies in Airport Sector 1.2.1. Airport Authority of India (AAI) Airport Authority of India was incorporated in 1995 by merging the erstwhile International Airports Authority of India and National Airports Authority. AAI is the nodal body responsible for the development and maintenance of Airport Infrastructure in India. The main functions of AAI are as under:

 Design, Development, Operation and Maintenance of international and domestic airports and civil enclaves  Control and Management of the Indian airspace extending beyond the territorial limits of the country, as accepted by ICAO  Construction, Modification and Management of passenger terminals  Development and Management of cargo terminals at international and domestic airports  Provision of passenger facilities and information system at the passenger terminals at airports  Expansion and strengthening of operation area, viz. Runways, Aprons, Taxiway etc.  Provision of Communication and Navigation aids, viz. ILS, DVOR, DME, Radar etc.

AAI manages 125 airports, which include 11 International Airport, 08 Customs Airports, 81 Domestic Airports and 27 Civil Enclaves at Defense airfields. AAI provides air navigation services over 2.8 million square nautical miles of air space. In addition, AAI provides Air Navigation Services at all civil airports in the country. Air Navigation Services are also provided by the AAI at 9 other airports that are not managed by AAI.

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AAI reported a profit after tax of ₹ 735 Crore in FY 2012-13. This was lower than ₹ 859 Crore which was reported in FY 2011-12. This was majorly due to the decreased air traffic in both passenger and cargo segment in the FY 2012-13. However, the revenue in FY 2012-13 grew to ₹ 6917 Crore from ₹ 5878 Crore in 2011-12. AAI earned ₹ 2104.95 Crore only by leasing of IGI Airport, Delhi (₹ 1533.16 Crore) and CSI Airport, Mumbai (₹ 571.79 Crore). Out of the 125 airports managed by AAI, only 12-13 are profit-making and rest are loss-making airports, based on the financial results of 2008-09. AAI is maintaining all these loss-making airports to serve the social obligations of providing nation-wide connectivity including airports in remote and inaccessible areas especially the North East, hilly, island regions and tourism places. 1.2.2. Ministry of Civil Aviation The Ministry of Civil Aviation is responsible for formulation of national policies and programs for the development and regulation of the Civil Aviation sector in the country. It is responsible for the administration of the Aircraft Act, 1934, Aircraft Rules, 1937 and various other legislations pertaining to the aviation sector in the country.

This Ministry exercises administrative control over attached and autonomous organizations like:

 The Directorate General of Civil Aviation  Bureau of Civil Aviation Security  Indira Gandhi Rashtriya Udan Academy  National Aviation Company of India Limited  Airports Authority of India  Pawan Hans Helicopters Limited  Air India Ltd.  The Commission of Railway Safety, which is responsible for safety in rail travel and operations in terms of the provisions of the Railways Act, 1989 also comes under the administrative control of this Ministry.

In pursuance of Policy for Greenfield Airports, the Central Government had accorded “in-principle” approval for setting up of a Greenfield airports at Mopa (Goa), Navi Mumbai, Sindhudurg and Shirdi (Maharashtra), Bijapur, Gulbarga, Hassan, Simoga (Karnataka), Aranmula-Patnanamthitta District, Kannur (Kerala), Pakyong(Sikkim), Durgapur (West Bengal), Dabra (Madhya Pradesh), Palladi (Rajasthan), Kushinagar (Uttar Pradesh), Karaikal (Puducherry).

In addition, MoCA is in the process of formulation of Policy for Economic Regulation for airport, in India. Further MoCA is also in the process of formulation of ‘Hub Policy’ which will boost the aviation hubbing in India. 1.3. Regulatory Authorities 1.3.1. Airport Economic Regulatory Authority (AERA) The Airports Economic Regulatory Authority (AERA) is a statutory body formed in December 2008. The major functions of the AERA as enshrined in the Airports Economic Regulatory Authority of India Act, 2008 are:  To determine the tariff for the aeronautical services taking into consideration o The capital expenditure incurred and timely investment in improvement of airport facilities o The service provided, its quality and other relevant factors o The cost for improving efficiency

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o Economic and viable operation of major airports o Revenue received from services other than the aeronautical services o The concession offered by the Central Government in any agreement or memorandum of understanding or otherwise o Any other factor which may be relevant for the purposes of this Act  To determine the amount of the Development Fees in respect of major airports  To determine the amount of the Passengers Service Fee levied  To monitor the set Performance Standards relating to quality, continuity and reliability of service as may be specified by the Central Government or any authority authorized by it in this behalf

1.4. Existing Airports and Airstrips At present there are around 449 airports/airstrips in the country. Among these, the AAI owns and manages 92 airports and 28 civil enclaves at defense airfields and provides air traffic services over the entire Indian airspace and adjoining oceanic areas.

AAI classifies the Airports as per their utility in the following manner:

1. International Airports: These are declared as international airports and are available for scheduled international operations by Indian and foreign carriers. Some of the major international airports in India are Mumbai, Delhi, Chennai, Calcutta, Hyderabad, Bengaluru and Thiruvananthapuram. 2. Custom Airports: These have custom and immigration facilities for limited international operations by national carriers and for foreign tourist and cargo charter flights. These include Bangalore, Hyderabad, Ahmedabad, Calicut, Goa, Varanasi, Patna, Agra, Jaipur, Amritsar and Tiruchirappali 3. Model Airports: These are domestic airports which have minimum runway length of 7500 feet and adequate terminal capacity to handle Airbus 320 type of aircraft. These can cater to limited international traffic, if required. These include Lucknow, Bhubaneshwar, Guwahati, Nagpur, Vadodara, Coimbatore, Imphal and Indore. 4. Other Domestic Airports: All other airports are covered in this category. 5. Civil Enclaves in Defense Airport: There are 28 civil enclaves in Defense airfields. Major civil airports in India are Srinagar, Leh, Agra, Gwalior, Port Blair.

Most of the traffic is carried by the metro airports. The six major international airports (Delhi, Mumbai, Chennai, Bengaluru, Kolkata, and Hyderabad) carried 67.6% of the total passenger traffic in 2012-13. Amongst the non-metro airports, Cochin was the busiest airport carrying almost 5 million passengers in 2012-13. Details of traffic carried by all airports in the year 2012-13 has been provided in Appendix-A. 1.5. Greenfield Airports In the past, government policy relating to Greenfield airports was restrictive and aimed at protecting the financial viability of the existing airports. However, the spurt in traffic requires a liberalized approach towards setting up of Greenfield airports with a view to bridging the growing deficit in airport infrastructure. Ministry of Civil Aviation released a policy on Greenfield airports in 2011 to expedite the process.

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Greenfield airports to be set up by AAI would be preferably constructed through Public Private Partnership (PPP) and such airports would be financed substantially through PPP concessions. However, land for such airports would have to be provided by AAI. Further, financing gaps, if any, can be bridged through the Viability Gap Funding scheme, which provides for a capital grant of upto 20% of the project cost. The concessions for development of Greenfield airports would be awarded through open competitive bidding. In the north eastern areas where it may not be feasible to follow the PPP route, AAI could set up Greenfield airports by itself, as may be approved by the Government on a case to case basis.

Apart from AAI, any Private Company or the State Government or a combination of the two, can also set up a Greenfield Airport. The entity would have to procure a license from the DGCA for the same. In such a case, the entity would be responsible for the development and operation of the airport. State Governments cannot enter into any concession agreement with the Airport Company as they do not have the powers to grant airport concessions as per the provisions of the Aircraft Act, 1934. However, the State Governments can provide any or all of the following incentives/ assistance to any entity which has procured a license from DGCA to build an Airport:

 Land, concessional or otherwise;  Real estate development rights in and around the airports;  Airport connectivity; rail, road;  Fiscal incentives by way of exemptions from State taxes; and

On any Greenfield airport to be developed under these Policy Guidelines, activities relating to Air Traffic Services (ATS), security, customs and immigration would be reserved for central government agencies. While granting a license, DGCA has to keep the following conditions in view  No Greenfield airport would be allowed within an aerial distance of 150 Km of an existing civilian airport.  In case a Greenfield airport is proposed to be set up within 150 Km of an existing civilian airport, the impact on the existing airport would be examined. Such cases would be decided by the Government on a case to case basis.

The government has given an in principle approval to the following airports:

S.NO. STATE CITY APPROVAL YEAR CURRENT STATUS 1. Goa Mopa 2000 Project Pending 2. Maharashtra Navi Mumbai 2007 Qualification Stage 3. Kerala Kannur 2008 Construction Stage 4. Sikkim Paykong - Construction Stage 5. Gulbarga Construction Halted 6. Bijapur Project Pending Karnataka 2008 7. Hassan Project Pending 8. Shimoga Construction Halted 9. Sindhudurg Pre-construction Stage Madhya Pradesh 2008 10. Gwalior Construction Stage 11. West Bengal Barddhaman - Construction Stage 12. Rajasthan Paladi - Construction Stage 13. Uttar Pradesh Kushinagar 2010 Qualification Stage

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14. Pudduchery Karaikal 2011 Construction Stage Source: Press Information Bureau, GoI

2. Key Stakeholders in an Airport 2.1. Government The government plays a key role in the operation of an Airport. Right from the conceptualization of an airport to its actual operation, government is involved during each and every stage of the process.

The role and functions of the Central Government extend to the following matters:  Investment in airport infrastructure  Clearance of Greenfield airport projects: The Ministry of Civil Aviation should try to facilitate the speedy clearance of projects from different Ministries  Airspace management, safety and security of airports  Bilateral air services agreements, including those involving international cooperation for modernization and up-gradation of airports  Licensing of airports and ATC personnel  Environmental aspects and removal of obstructions around airports  Approval of aeronautical charges

The State Governments deals with the following aspects:  Acquisition of private land and allotment of government land: In case Government land is allotted by a State Government for an airport owned by a private party, it may be made available at the same rate as is charged from other industrial ventures in the State. Government will ensure that legislative and administrative mechanisms for speedy acquisition of land are devised.  Supply of water and power, and provision of sanitation and sewage services  Provision of surface access through multi-modal linkages  Prevention of environmental pollution  Maintenance of law and order  Protection of airports from encroachments and vandalism.

The Ministry of Civil Aviation will liaise with the State Governments in order to ensure provision of all these essential services and basic facilities. The State Civil Aviation Secretaries will act as coordinating officers for single-point liaison with all the State-level departments and authorities.

2.1.1. Air Traffic Control Primary objective of Air Traffic Control is to prevent collisions between aircraft. The need to safeguard passengers, crew and aircraft is met by ground based infrastructure, in which air traffic controllers issue mandatory instructions to pilots. The aim of Air Traffic Control Service is to ensure a safe, orderly and expeditious flow of air traffic. In order to achieve this objective, the Air Traffic Controller issues clearances to provide safe separation between aircraft at any given time. Internationally agreed standards and procedures are followed to accommodate the aircraft movements in a safe and orderly manner.

AAI as Air Navigation Service Provider, is responsible for the provision of Air Traffic Management (ATM) Services in the designated airspace. Irrespective of who operates the airport, the ATM function rests with the AAI. AAI has embarked upon ANS infrastructure up-gradation strategy with the objective of ensuring safety, efficiency, cost-effectiveness of aircraft operations with environmental benefits on a long-term

Indian Airport Sector Assessment [Type here] Capital Fortune Private Limited and sustainable basis. AAI has drawn the concept of future India Air Navigation (FIAN), and is on the threshold of introducing Air Traffic Flow Management over busy routes, dedicated helicopter routes, providing automation systems at 35 non metro control towers, and the use of space based augmentation system (GAGAN).

2.1.2. Tariff Fixation In AAI, the tariff for airport charges (Landing, Parking, and Housing) is being fixed on ‘Single Till’ basis with the approval of the GoI so far. For the purpose of fixation of tariff, the total revenue and expenditure of AAI as a whole are taken into consideration (i.e. revenue and expenditure of all AAI airports are clubbed together and brought under one basket and tariff for the gaps is determined accordingly after taking into considering reasonable Rate of Return. The Tariff so determined, is charged uniformly to different AAI airports. Similarly, the tariff in respect of RNFC and TNLC is also levied uniformly at all airports. However, these guidelines are modified for airports where AAI has entered into a joint venture for the up-gradation and maintenance of the airport, for eg. DIAL, MIAL etc. Some of the guiding principles kept in mind while deciding the tariff policy are:  Allow the airport operator to take reasonable Rate of Return on their investment. It adopts Rate of Return Approach rather than Price Cap or Light Touch Approach  With the arrival of private players in the airport sector in the recent past, fixation of airport-wise tariff has become a necessity. Thus, it is suggested that henceforth, AAI be allowed to adopt ‘Dual Till’ Approach for fixation of airport-wise tariff for major airports, which will facilitate AAI to utilize the non-traffic revenue generated at these major airports not only for further development of the airport but also to maintain large number of loss-making airports in the country  All direct costs relating to passengers should be recovered from the passengers directly like PSF, UDF etc. and indirect costs relating to passengers should be recovered from the airline operators  The Service Quality Norms/Standards should be airport specific and made applicable as mandatory. In case of failure to meet the requisite norms / standards appropriate penalty may be levied on the airport operator.

2.2. Developer The developer of an airport is primarily responsible for the physical construction of the airport. The responsibilities might include construction Integrated Terminal, ATC complex including control Tower, Administrative Offices including Internal and External Electrical installations, Electrical Substation buildings and substation equipment, HVAC system, Plumbing, Fire alarm, Fire-fighting System, CCTV, PA system, Flight Information Display System, Interior Design, internal and external finishing, Building Internal Signage including fascia signage, Integrated Building Management system including access control system, Hydro pneumatic pumping system for the buildings, STP, Landscaping and Rainwater Harvesting system, etc.

A developer might be involved to varying extent in an airport project as mentioned below:  Engineering, Procurement and Construction – In this type of project, the developer is only responsible for the construction of the airport. The control of the airport is handed over to AAI post construction. For eg. In Pakyong Airport, Sikkim, Punj Lloyd has been given the contract to build the airport  Developer holds equity – Most of the PPP projects fall under this category. In this type of a project, the developer holds a certain amount of equity in the SPV which is formed for the purpose of developing the airport. The developer is given the responsibility of constructing and maintaining the

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airport for a fixed period of time as mentioned in the concession agreement. The developer shares a fixed share of revenue with the government. There are many variants of this model which can be used like BOT, DBFOT, BOOT etc. For eg. MIDC has tied up with IRB Infrastructure Developers Ltd. on a BOT basis to develop the Sindhudurg Airport.  Private Airport – This is a relatively new and developing trend. In this type of project, the developer takes all the responsibilities of constructing and maintaining the airport. The developer only has to take required clearances from the appropriate authorities to take up an airport project. For eg. Super Airport Infrastructure Pvt. Ltd. is building India’s first fully private airport in Karaikal, Pudduchery.

Some of the major developers in the Airport space are:

S.No. Country Developer Project 1. GMR Infrastructure Ltd. Delhi Airport 2. GVK Mumbai Airport 3. IRB Infrastructure Developers Ltd. Sindhudurg Airport 4. Indian Punj Lloyd Pakyong Airport 5. Super Airport Infrastructure Pvt. Ltd. Karaikal Airport 6. MARG Ltd. Bijapur Airport 7. Regional Airport-Holdings International Ltd. Gulbarga Airport 8. Fraport AG Delhi Airport 9. Changi Airport Group Durgapur Airport 10. International Flughafen Zurich AG Bangalore Airport 11. Maytas Infrastructure Ltd. Gulbarga Airport 12. Siemens Bangalore Airport Source: Primary Research

2.3. Financiers Airport is a very capital intensive project which requires large initial investment. These projects have a large element of sunk cost, a very long gestation period and highly uncertain returns on investment based on several assumptions of traffic growth that may fail to materialize. The Sector would require huge investments in the years to come to match the increasing traffic. It is anticipated that by 2020 a total of $30 billion would be required to fund airport infrastructure. In addition up-gradation of Air Navigation Systems would require another 600 crores.

The level of Government support has decreased over the last decade. The ambitious GAGAN Project however, due to its strategic importance would be partly funded by the Government. Only strategically important airports and infrastructure that caters to the underserved areas like North East would be provided budgetary support. Government budgetary support to the sector would generally be limited to funding of socially necessary activities, skill development of personnel and strategic functions. Fortunately, the Ministry has forged powerful models of PPP and Full Private participation to fulfill these funding needs. During the 12th five year plan, AAI would contribute ₹ 17,500 Crore towards airport infrastructure. This will be funded through its internal revenue and GBS. A general policy decision needs to be taken that the AAI will only invest in projects with demonstrated economic viability and positive rate of return. Wherever Government compels AAI to invest in non-viable projects for the fulfillment of social

Indian Airport Sector Assessment [Type here] Capital Fortune Private Limited objectives, the initial capital cost of the project and the recurring annual loss sustained by the AAI on this account will be reimbursed.

The Airport Sector is on its way to commercial self-sustainability with movement towards city side development and adoption of profitable financial practices duly regulated by AERA. 100% FDI has been allowed in the existing airports; FIPB approval is required for any FDI beyond 74%. However, 100% FDI under automatic route is permissible for Greenfield airports. 2.4. Cargo Partners Indian Airports handled around 2.19 million tonnes of freight in 2012-13. While cargo carried by air in India weighs less than 1% of the total cargo exported, it accounts for 35% of the total value of exports. Better cargo handling facilities lead to enhanced levels of importation, especially of capital goods and high-value items. The demand for air freight is limited by cost, typically priced 4–5 times that of road transport and 12–16 times that of sea transport. These values differ from country to country, season to season and from product to product and for different volumes also.

Source: AAI The air route of transportation can play a more important role in the future trade policy of the country. The only aspect which needs to be planned and developed is the infrastructural facilities at the airports to handle various types of cargo traffic with efficiency and speed. The potential for air-cargo growth in India can be gauged from the fact that some of the global airports such as Hong Kong, Dubai and Incheon (Seoul) handle cargo volumes which are much more than at Indian airports. The present operating parameters (daily throughput, dwell times) at most air-cargo terminals of the country are far from international best-practices. Some of the policy reforms which are proposed in this area are:

 Special attention needs to be given to the speedy handling of cargo and reducing its dwell time. The objective is to reduce dwell time of exports from the present level of 4 days to 12 hours, and of imports

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for the present level of 4 weeks to 24 hours to bring us in line with internationally achieved norms. Cargo clearance should be on 24-hour basis  Infrastructure relating to cargo handling like satellite freight cities with multimodal transport, cargo terminals, cold storage, automatic storage and retrieval systems, mechanized transportation of cargo, computerization and automation, etc., will be set up on top priority basis. Such facilities have to come up at smaller places too  The Electronic Data Interchange systems will be developed and linked amongst all stake-holders in the trade.

Given its geographic location, India can aspire to become an international cargo hub. To begin with, India needs to facilitate trans-shipment of cargo to and from our neighboring countries, many of whom do not have regular air services to key markets in Europe and America. Some of the major airlines providing cargo services in India are:

International: Air France, Air China, AeroLogic, Blue Dart, Federal Express, United Parcel Service, Lufthansa Airlines, Qatar Airlines

Domestic: Go Air, Indigo, Spice Jet

Apart from these, the airports have tied up with various companies to handle cargo operations on the ground. Some of the major players in this area are:

 Bidvest  Menzies 2.5. Food & Beverage (F&B) Partners In-flight catering forms an important part of the overall experience of a flight journey. It is an essential component of an airline’s marketing strategy, especially in view of the stiff airline competition. Airlines insist on menus that follow specific safety standards and local availability of ingredients, as well as caterers complying with HACCP (Hazard Analysis and Critical Control Points) / International Hygiene codes. With the advent of low cost carriers, in-fl ight catering which was earlier dominated by the fi ve-star hospitality players was thrown open to fast food chains and FMCG players. Some of the major F&B service providers at Indian airports are:  EIH Ltd. (Oberoi Flight Services)  Sky gourment Catering Pvt. Ltd.  Ambassador Skychef  Tajsats Air Catering  LSG Sky chefs  HMSHost Services India Pvt Ltd  Café Coffee Day 2.6. Retail and Duty Free Operators The worldwide airport duty free market was worth around USD23 billion in 2010 (source: Generation Research). CAPA estimates the value of airport-based duty free sales in India in 2010/11 at USD215 million, or less than 1% of the total, yet India accounts for around 3% of global airport passenger traffic. Clearly, retailing at Indian airports is lagging the rest of the world. The growth of retail sales at the end of the decade has been spectacular. This has been driven by the introduction of private capital for airport development and operations, the building of brand new airports plus terminal revamps, and more

Indian Airport Sector Assessment [Type here] Capital Fortune Private Limited international airport operators and duty free retailers entering the market. Between FY2006 (when Delhi and Mumbai were privatized) and FY2011 passenger numbers grew by 97%, but non-aeronautical revenue increased by 340%, of which retail was an important driver component. Indian airports have earmarked a large portion of the airport area for retail activities. The recently opened T2 terminal at Mumbai's Chhatrapati Shivaji International Airport for instance, has about 700,000 sq. ft. area - the size of over 10 soccer fields - dedicated to retail, food and beverage, lounge and travel services. Similarly, the retail space in Delhi's T3 terminal is spread over 290,000 sq. ft.

Annual Estimated Duty Free Spend at Indian Airports FY2011

Source: CAPA Research

However, when placed in a global context, there is quite clearly significant room for further growth. Dubai Duty Free reported sales of USD1.46 billion from its single airport operation in 2011, while revenue across all Chinese airports combined is estimated at USD1.9 billion.

Liquor is the leading duty free category in India, accounting for 63% of sales (source: CAPA), compared with 17% globally (source: Generation Research). Apart from liquor, many global brands have set up duty free shops at Indian airports. Some of the major brands include RayBan, D&G, Prada, Emporio Armani, Nike, Swarovski, Apple, Sony etc. Though the rent per square foot is higher for the stores at airport, but the returns per square foot are also higher compared to the stores which are present in cities. For Croma, an Indian electronics retail store, the annualized realization is close to ₹ 1.2 Lakh per sq. ft. at airports, while in the cities it is close to ₹ 30,000 to 40,000 per sq. ft.

Indian Duty Free Sales by Category: FY2011

*Supermarket refers primarily to Cochin, which sells grocery items in the arrivals area.

Source: CAPA Research

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Positive air traffic forecasts, per capita incomes in India expected to more than triple over the next 10 years and increase in privatization of airports raise the prospect of rapid growth in the Airport’s retail sector. However, whether the rest of the airports in the country which are operated by AAI can achieve their unconstrained potential is subject to a number of factors such as the ability to introduce a stronger commercial focus at the management level of the airports and construction of sufficient capacity to meet demand. The AAI’s track record in retail development lags the PPP airports, with average duty free spend per passenger of USD3.05, compared with USD7.08 at PPP airports. The downside risks are higher for the non-metro airports than Chennai and Kolkata, but even here we would need to see a much more aggressive commercial approach by the AAI. However if the AAI is able to leverage this potential it stands to be one of the greatest beneficiaries of the travel retail phenomenon. The net income generated from retail spend could transform the financial status the authority and help to fund its massive capex requirements. This can in turn reduce the pressure on increase of aeronautical charges and improve the profitability of airlines.

2.7. Advertising Utilizing the airport space for commercial advertising has become an important source of revenue for the major metro airports. Some of the major advertising agencies in India are:

 JCDecaux  Times Innovative Media Limited  Laqshya Media Pvt Ltd  TDI International India P Limited

Some of the advertising products offered at the IGI Airport, Delhi include New Product Launches, Consumer Engagement, Branding in dynamic screens, Innovative display, Sampling and exhibitions, Visibility in flyers etc. Delhi airport charges ₹ 150,000 per day for setting up a counter. 2.8. Fuel Partner A major difficulty being faced by airlines is the high cost of Aviation Turbine Fuel (ATF), which is further aggravated by taxes. Viewed in inter-modal context, it is desirable to rationalize ATF pricing and to review the tax structure so that Airline operation becomes viable. The cost of ATF constitutes 40–50 per cent of the total operating cost and thus is a formidable challenge for the financial health of airlines. This has been a long standing issue that requires an immediate resolution. ATF prices in India are distorted because it is subjected to a multitude of cascading taxes by different government entities despite being an input fuel (similar to coal and gas); it is subjected to sales tax as high as 30 per cent. It is nearly 60 per cent costlier than competing hubs like Dubai, Singapore and Kuala Lumpur and hurts India’s competitiveness. Either ATF should be included in unified Goods and Services Tax or ATF should be accorded the status of “Declared Good” that carries lower and uniform tax rate. The comparison of ATF prices in India with competing hubs has been detailed below:

Location Price/Kiloliters (USD) India 1,400 Singapore 825 Bangkok 880 Kuala Lumpur 810 Dubai 840 Source: Twelfth Five Year Plan

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Major providers of aviation fuel in India are:  IndianOil Aviation  Bharat Petroleum  Hindustan Petroleum  Reliance Industries Limited

The total ATF consumed in India in 2012-13 stood at 5268 Thousand Tonnes. IndianOil Aviation has a 61.8% percent market share in the aviation fuel market. Delhi is the biggest consumer of ATF with an annual consumption of 1462 Thousand Tonnes in 2012-13. Some of the major airline operators like SpiceJet, Kingfisher Airlines, InterGlobe Aviation, Go Airlines and Air India have been given the permission to import ATF as actual user on actual use basis. 2.9. Airlines Airlines form the crux of any airport. Revenues from scheduled airline operators form the biggest chunk of the revenue from the civil aviation sector. However, the airlines industry has been going through turbulent times facing multiple headwinds. Kingfisher airlines have been grounded since 2013 and Air India is also having a tough time in sustaining itself.

Market share for the 6 Major Indian Airlines

Source: DGCA

However, the underlying fundamentals remain strong and promise a strong growth in the aviation sector. Some of the key growth drivers which can influence future demand are:

 Rising domestic Gross Domestic Product (GDP) - Growth rate of the economy has been steadily rising. For instance, in the period 1990-91 to 2003-04, the CAGR of India’s GDP works out to 5.7% which then rose to 8.6% during 2004-05 to 2010-11  Expanding middle-income group - NCAER analysis reveals that the middle income group population in 2010 stood at 160 million individuals i.e. 13.3% of the total population, which is expected to rise to 547 million in 2025 (i.e. 37.2% of the total population)  Demographic dividend - 62% of the population is in the working age group of 15-60 years and this proportion is set to increase in future indicating a larger employee base, greater business travel and greater economic activity  Rising urban population - Mckinsey Global Institute’s projections state that India’s urban population will be 590 million by 2030 i.e. about 40 percent of the total population of India. The number of million

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plus cities will increase to 68 by 2030 of which 13 cities will have more than 4 million and six cities will have more than 10 million persons.  Significant market developments - Low Cost Carrier (LCC) model which made air travel affordable for common man got established firmly in the domestic market since 2004. LCCs along with the LCC brand of Full Service Carriers (FSCs) constituted 63.3% of the market share in 2009. The domestic traffic is rapidly shifting towards the LCC model. Market sources suggest that this has crossed 67% during 2011- 12. Also, the LCCs are reported to have displayed

Anticipating significant growth in traffic, most Indian carriers have placed orders to augment their aircraft fleet. According to an estimate, airlines in India are expected to add around 370 aircrafts worth 150,000 crores to their fleet by 2017. Fleet expansion at this scale would require airlines to explore multiple funding options including capital markets, long-term borrowings and leasing, and so on.

3. Revenue Model The revenue sources of an airport can be divided under the following two sources:

1. Aeronautical Revenues Aeronautical revenue basically comprises charges levied on airlines for conducting operations at an airport. These comprise of the following components:

Types of Tariff

Air Navigation Services Airport Services Other Charges Taxes

All these charges are Route Navigation subject to levy of Landing Charges Passenger Service Fee Facility Charges (RNFC) Service Tax as per applicable rates

Terminal Navigational Parking & Housing User Development Fee Landing Charges (TNLC) Charges

Fuel Throughput Charges

Passenger Service Fee (Security)

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Most of these charges vary with the nature of airport (Domestic, International or civil), type of city (Metro or Non-metro), type of aircraft and time of the day. Some of them have been defined below: i. User Development Fee - Airports levy User Development Fee (UDF) from embarking passengers to fund viability gap. Airports have been authorized by the Government to levy UDF from embarking passengers at Delhi and Mumbai airports to fund modernization of Delhi and Mumbai airports. ii. Passenger Service Fee - Passenger Service Fees (PSF) is levied to meet the expenditure on airport security and passenger facilities at the airports and it is not utilized to fund new development / up-gradation of airports. iii. Fuel Throughput Charges - Any service provided for supplying fuel to the aircraft at an airport is an aeronautical service and the tariff for such aeronautical service at a major airport is termed as Fuel Throughput Charges. It is to be determined by the Authority after taking in to consideration various factors as provided under Section 13 1 (a).

The airport (aeronautical) charges levied by the Indian airports are reportedly stated to be the second highest amongst the Asian and Gulf countries, after Hong Kong. For the year 2012-13, AAI reported the below revenue from these fee:

Particular 2012-13 (In Crores) 2011-12 (In Crores) RNFC 1796.95 1803.79 Landing Fees 421.84 409.38 Parking & Housing Fees 10.44 9.90 TNLC 290.69 315.54 Passenger Service Fees 703.26 709.53 User Development Fees 176.91 174.12

The tariff collecting agency differs from airport to airport depending on the type of airport. The following table details who collects the various type of tariffs:

ANS Services Airport Services UDF (If Airport RNFC TNLC L PH PSF applicable) PAYABLE TO (A) INTERNATIONAL AIRPORTS Delhi (DIAL) AAI AAI DIAL DIAL DIAL DIAL Mumbai (MIAL) AAI AAI MIAL MIAL MIAL MIAL Chennai, Trivandrum & Kolkata AAI AAI AAI AAI AAI AAI Bangalore (BIAL) AAI AAI BIAL BIAL BIAL BIAL Hyderabad (HIAL) AAI AAI HIAL HIAL HIAL HIAL Goa (Civil Enclave) AAI AAI Defense AAI AAI AAI Cochin (CIAL) AAI AAI CIAL CIAL CIAL CIAL Nagpur AAI - MIPL MIPL MIPL MIPL

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(B) DOMESTIC AIRPORT AAI - AAI AAI AAI AAI

2. Non- Aeronautical Revenues The non-aeronautical revenues come from activities that are undertaken on top of this core business, such as retail, parking, other concessions and rentals.

In FY2006, the last year in which all metro airports were operated by the AAI, non-aeronautical activities generated just 15.1% of total revenue, compared with around 50% or more being achieved by commercially driven airports in other parts of the world. However, in the next five years, total non- aeronautical revenue generated across all airports in the country (excluding Cochin) has grown by more than 340% from INR4.9 billion to INR21.6 billion. The vast majority of this growth (91%) has been driven by the four metro PPP airports at Delhi, Mumbai, Bangalore and Hyderabad. Indian Airports Non- Aeronautical Revenue: FY2003 to FY2011

Source: CAPA Study

All of the PPP airports have grown their non-aeronautical revenues to at least 35% of total revenue, and more than 45% in the case of Delhi and Hyderabad airports. However, in the case of the AAI it has risen by less than a couple of percentage points over the last five years to reach just 17%. There exists huge but unrealized potential for non-aeronautical revenue growth at the AAI airports, particularly at Chennai and Kolkata. As per the 2012-13 balance sheet of AAI following were the non-aeronautical revenues:

Particular 2012-13 (In Crores) 2011-12 (In Crores) Public admission fees 19.64 17.58 Trading Concessions 522.71 454.94 Rent & Services 300.87 269.88 Car Parking 57.26 50.78 Total 900.48 793.18 % of Total Revenue 13.01 13.49 Source: AAI Balance Sheet Any airport’s revenue model can be categorized under the following two categories. An airport might use these two models in their pure form or a combination of the two.

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1. Single Till Under the single till principle airport activities (aeronautical and commercial) are taken into consideration to determine the level of airport charges. Application of the single till is a clear recognition that airlines, and the passengers they deliver to airports, are a key factor in the ability to develop commercial revenues at an airport. IATA strongly supports the single till principle under which airports commercial revenues are used to offset the charges cost base. Some of the arguments given for adopting single till approach are:  Single till is an acknowledgment of the symbiotic and essential relationship between airports and airline users.  Lower fares as result of lower charges increases the attractiveness and competitiveness of airports  Airports are built specifically for aviation purposes and priority must be given to airline activity and passenger facilitation.  Eliminates the need for difficult detailed cost and asset allocation between aeronautical and commercial tills.  Dual till can incentivize airports to invest in potentially higher-return commercial activity rather than essential aeronautical infrastructure.

2. Double Till Only aeronautical activities are taken into consideration under the dual till principle. Airport charges derived using the single till approach are therefore likely to be lower than they would under a dual till because of the sharing of profits generated by commercial activities. Airports and their investors, particularly with privatizations, are increasingly aware that their commercial revenue profits are significantly enhanced through application of the dual till.

In AAI, the tariff for airport charges (Landing, Parking, and Housing) is being fixed on ‘Single Till’ basis with the approval of the GoI so far. For the purpose of fixation of tariff, the total revenue and expenditure of AAI as a whole are taken into consideration (i.e. revenue and expenditure of all AAI airports are clubbed together and brought under one basket and tariff for the gaps is determined accordingly after taking into considering reasonable Rate of Return. The Tariff so determined, is charged uniformly to different AAI airports. Similarly, the tariff in respect of RNFC and TNLC is also levied uniformly at all airports.

4. Privatization The Civil Aviation services have expanded rapidly with the opening up of domestic skies to private carriers in the second half of the Tenth Plan through PPP investment in the airport infrastructure. The Private sector has played an unprecedented role in the area of airport development. Five international airport projects were successfully completed through the public–private partnership (PPP) mode, viz. Greenfield development of Hyderabad and Bengaluru international airports and modernization of Kochi, Delhi and Mumbai international airports. The Delhi, Mumbai, Bengaluru, Hyderabad and Cochin now have airports that compare very well internationally.

The airports run by leading private operators GMR and GVK, especially those in Delhi and Mumbai, are turning out to be cash cows for the government. The hefty revenues, the Airports Authority of India (AAI) earns from these companies is helping the government fund its ambitious plan of modernizing airports across the country. Also, the revenue shared by these operators has given government the headroom to concentrate on supporting the ailing state-owned airline, Air India. Now, the limited budgetary resources

Indian Airport Sector Assessment [Type here] Capital Fortune Private Limited are not required to financially support AAI. In 2012-13, as its revenue share from GMR-led Delhi International Airport Ltd, which runs the capital's airport, and the GVK group, the operator of the Mumbai airport, AAI received ₹ 2104.95 Crores - the most in a financial year since these airports were privatized. This accounts for around 30% of the total revenue of AAI. AAI invested ₹ 2,325 crore and ₹ 2,015 crore in modernizing the airports in Kolkata and Chennai, respectively. By the numbers, one of the two could have been fully financed by revenue shared together by the Delhi and Mumbai airports.

Source: Business Standard Total investment made by private airport operators in the 11th five year plan was to the tune of ₹ 30,000 crore. For the 12th year plan this contribution is likely to increase further.

Investor Investment Category Amount (in ₹ Crores) AAI Airport Projects 17,500 Private Investments By Airport Operator 40,000 By Others (Concessionaires, 10,000 Third Party and so on.) Total 67,500 Source: 12th Five Year Plan The government has undertaken various reforms to encourage private sector participation in the airport sector.

 100% FDI has been allowed in the existing airports; FIPB approval is required for any FDI beyond 74%  100% FDI under automatic route is permissible for Greenfield airports  Private companies have been allowed to develop Greenfield airports after securing proper approvals from DGCA  100% equity ownership by Non Resident Indians (NRIs) is permitted  100% tax exemption for airport projects for a period of 10 years

A comprehensive Civil Aviation Policy is in the process of finalization covering different areas of the aviation sector. India has entered into bilateral Air Services Agreement (ASA) with 104 countries. Karaikal Airport Karaikal Airport in Puducherry is being privately developed by Super Airport Infrastructure Pvt. Ltd. It will be India’s first fully private airport. The total project cost is estimated to be ₹ 35.34 Crores and will be spread across 562.05 acres. The developer has received the necessary approvals from Ministry of Civil Aviation and the Puducherry govt. Approximately 300 acres of land has been purchased and registered

Indian Airport Sector Assessment [Type here] Capital Fortune Private Limited and for 119 acres approximately 60% value has been paid in advance. The airport is under construction stage and is expected to be completed by April 2015.

5. PPP Mode of Development In India, due to policy changes and reforms, Public Private Partnerships (PPPs) have increasingly become the preferred mode for construction and operation of airport infrastructure. Private sector is presently actively involved in airlines and airports and their contribution are expected to rise substantially in the coming years. PPP offers a distinct possibility for increasing total investments by using a limited amount of public resources to leverage a much larger amount of private investment. Such PPPs accordingly could also increase economic efficiency and lower the capital requirement, provided that regulatory mechanisms are adequate. PPPs can be undertaken through a range of alternatives such as BOT, BOOT etc., with the Model Concession Agreement (MCA) being used to provide a stable regulatory and policy framework. The MCA regulates the PPP contracts by defining the rights and obligation of all parties concerned. In case a project is not viable due to either long gestation periods or inadequate returns, the government is committed to provide up to 40% funding by way of grants in some cases, called viability gap funding. The government has a non-interference approach on the commercial matters of the aviation sector. However in the future airports, where the competition is limited will come soon under the purview of AERA. With the number of PPP airports steadily increasing in India, the need of a regulator is felt necessary. The government on its part is continuing to provide a policy framework for the growth of the availability and accessibility of air travel.

5.1 Benefits of PPP mode of development in Airport Sector PPP mode of development offers some specific advantages for the airport sector:

 As airports is a very capital intensive sector, it is very difficult for the government to provide the amount of funds required to develop the airport infrastructure which can cater to country’s future needs  These projects have a large element of sunk cost, a very long gestation period and highly uncertain returns on investment based. Due to these reasons very few private players are ready to take up these projects on their own  Airport projects involve acquisition of large amounts of land. Acquiring such large amounts of land on their own can be tough for private companies. Government can contribute to these projects by providing land to the private players  Private developers might not find developing airports in Tier 2/Tier 3 profitably viable. However, these airports are important for the inclusive development of the country. Thus, government has to provide enough incentives to the private players to develop Greenfield airports in these cities  Government can exploit the expertise of global companies and adopt international best practices to build state of the art infrastructure. Most of the projects taken up so far in PPP mode have included a foreign partner. 5.2 PPPs Success Stories  Cochin International Airport Cochin International Airport was the first airport in India to be built in the joint sector with public- private participation. An innovative financial structure involving public deposits for non-resident Keralites was conceived to kick-start the project. The total cost of construction was about ₹ 283 crore.  Hyderabad International Airport

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The consortium of GMR Infrastructure Limited and Malaysia Airports Holdings Berhad was selected to develop Greenfield international airport at Shamshabad near Hyderabad. The airport site measures about 5400 acres and is expected to have an ultimate handling capacity of 40 million passengers per annum equipped to handle large aircraft, including the Airbus 380. The total cost of the project is ₹ 2,370 crore.  Mumbai International Airport Mumbai International Airport Limited, a consortium of GVK Industries Ltd and Airports Company South Africa was entrusted the project of modernizing the Mumbai Airport in February 2006. The Mumbai International Airport caters to 40 million passengers per year and one million metric tonne of cargo per year.  Delhi International Airport Fraport, Airports Authority of India, Eraman Malaysia and GMR Infrastructure have entered into a joint venture to upgrade the Delhi International Airport. The contract was given on a BoT basis with a 35 year concession period. Two modernized terminals along with a brand new terminal, a new runway of more than 4400 m is part of the concession contract. Delhi Airport would have 500 check-in counters, 200 aerobridges, 150 immigration counters and the capacity to handle over 100 million passengers a year after the completion of the project.

A complete list of airport projects which are being executed under the PPP mode has been included in Appendix – B.

5.3 Constraints in PPP model 5.3.1. Supply side constraints Long Term Funds: The Infrastructure projects which are executed on PPP in Airport Sector are with a concession period of 30 years are more. The Project development takes around 24 to 36 months. Considerable revenue generation takes place only in the years 10 to 20. But the Financial institutions lending horizon is between 8 to 12 years due to average maturity of the deposits or the borrowed amount. This gap needs to be addressed on an urgent basis.

5.3.2. Demand side constraints Shelf of Bankable Projects: Shelf of Bankable Projects should be prepared on a continuous basis. These should be bidded out as per the demand, risk appetite of the developers, present market scenario. These shelves of Bankable Projects should be kept in the website and intimated to the prospective developers. Depending on the number of hits or enquiries or interests projects may be bidded out. Recently some of the bids called in the airport sector has not elicited any response.

5.3.3. Policy Constraints  Standard Documentation - Bidding documents like Request for Qualification (RFQ), Request for Proposal (RFP), Model Concession Agreement (MCA), and various Legal Documents should be standardized.  Empanelment of Transaction Advisors - Certain sectors like Road sector, Tourism Sector, Urban Infrastructure sector have empanelled Transaction Advisors with core competency in that particular sector. This may be done in the airport sector also. This may reduce the time in selecting the Transaction Advisors; it may catalyze consultants to become sector specific experts. These TAs may be taken on nomination basis for initial handholding purposes up to a limit of certain amount. The

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present TAs empanelled with DEA can be used only to the projects whose cost is up to Rs 250 cr. The TAs are also general in nature and not sector specific.  Land Acquisition and R&R Policy - There is lot of criticism that more land is acquired than the required for the project. There is also lot of criticism that the amount paid as compensation is not adequate. There should be proper and comprehensive guidelines in respect of how much land is required for a particular airport and the way to pay the compensation. The project affected people should be made as partners in the project. The guidelines also should include how to handle the issues in case land acquisition involves religious structures.  Single window approval - All the required approvals for the developing an airport should be through one government agency. Since one approval is linked to other approvals, the entire chain gets delayed due to delay in one approval. Dedicated officer for the airport should be identified from the government to make the entire process smooth.

5.3.4. Structural Constraints  Integration of the Airport with Main City - The major airports in India are mostly at considerable distance from the city centre. Sometimes to connect to the other end of the city, the distance is as high as 50 to 60 kms. One of the major challenges at present for certain airports like Hyderabad International Airport is integration with the main city. The airport should be seamlessly integrated with the important areas of the main city with dedicated rail, roads, Buses, Taxis, autos. The connecting infrastructure should be made available before the airport comes into operation. Delhi Airport is setting an example for rest of the airports by connecting Delhi Metro with Delhi Airport seamlessly. Passengers can check in with and without baggage at various designated stations of the dedicated Delhi Metro Line. Similarly a high speed rail link is being planned to connect the Bangalore Main City to the Bangalore International Airport. There will be airport check in counter in the city itself.  Capacity Building - PPP being a new concept, there should be a mechanism for continuous up gradation of skills. Various cadres of officers should be trained in all aspects of the PPP Projects. There should be lot of sharing of information about both the successful models as well as failed models. Repository of information should be built continuously. Guiding materials, tool kits should be made available to the participants. Lead Financing Institutions and Bankers should be involved in the capacity building exercise. 6. Challenges Faced by the Airport Sector Civil aviation in India is expected to open up a lot of new avenues in aerospace services in the next ten years. However the constraints are far too many and need to be addressed urgently to enable the smooth growth of the sector. Some of the issues / constrains are elaborated below:

 Financial Attractiveness of airports in Tier II/III towns o Airport projects are capital intensive with long gestation periods. o There is much higher certainty of returns from airports in metros/large cities, than from smaller cities/towns – even though the capital cost is extremely different o It is therefore easier to attract private sector players and also secure financial closure for the larger projects – but the country’s need is now shifting towards smaller airports  Land acquisition o Airports require significant land; which is complex and time consuming to acquire

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o Need for rehabilitation and proper compensation for the stakeholders displaced have been a major factor behind the land acquisition issues o The coordination between administrative departments of the state and central government agencies plays a major role in the land acquisition process  Environmental issues o There is an overall increase in concern about environmental issues. However, compliance can be a time consuming process o A lot of the projects are stuck due to pending environmental clearance  Financial feasibility o Several of the airports in the country are making operational loss, putting a drain on resources o We need to find ways of addressing this issue  High Airport Charges o The airport (aeronautical) charges levied by the Indian airports are reportedly stated to be the second highest amongst the Asian and Gulf countries, after Hong Kong.

Airport charges levied in various countries

Source: Deloitte Report on Indian Aviation sector

o Non-aeronautical revenue stream has not yet been fully tapped by the Indian aviation industry. Globally non aeronautical revenues contribute 50 to 70 percent of the total airport revenues, whereas in India these contribute to a mere 20 percent of total revenues. With the proportion of non-aeronautical revenue being very low, the airport operators are forced to levy higher aeronautical related charges on airlines.

 Closure of old airports o With the commissioning of the new private airports at (BIAL) Bengaluru and (HIAL) Hyderabad, the old airports at HAL and Begumpet respectively had to be decommissioned o There would be a huge wastage of the existing infrastructure and if the infrastructure is not utilised for aviation related or ancillary activities, it would imply a colossal waste of public money.

 Safety and security o The Central Industrial Security Force, a paramilitary organization is in charge of airport security under the regulatory frame work and instructions of the Bureau of Civil Aviation Security. CISF formed an Airport Security Group, which is dedicated to protect Indian airports.

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o Given the high intensity serial bombings witnessed across several parts of the country in the past few months, there is a need to review and upgrade the nature of security and safety measures provided at the country’s airports to mitigate against any drastic measures planned against Indian aviation sector by any form of terrorism o Potential risks associated with air cargo security include introduction of explosive devices in cargo placed aboard aircraft; shipment of undeclared or undetected hazardous materials aboard aircraft; cargo crime including theft and smuggling; and aircraft hijackings and sabotage by individuals with access to aircraft.

7. Future Opportunities The Indian aviation sector has witnessed outstanding growth amid fears of a global slowdown. The Indian aviation growth trend has resulted in many lucrative business opportunities for players in the aviation industry. Considering the traffic projections for passenger and cargo traffic in India, these opportunities are likely to attract more Indian and foreign players in the airport market. As per the 12th five year plan, India would require a total of 180 functional airports in the next 10 years to fulfill the demand.

Forecasted Passenger Traffic of Greenfield and other Airports

Source: MoCA Analysis 1. Corporatization of AAI  Given the increasing complexity of the AAI’s role and the need to enhance organizational capabilities, create flexible decision making, enhance financial viability and thereby respond more efficaciously to emerging market challenges, it is desirable that AAI move towards a corporate structure in the near future  There are several opportunities for improvement in the financial performance of smaller airports (existing and planned). For instance: o Improved development and use of retail opportunities at the airports – as witnessed in several of India’s newer airports. This could act as an attraction for the airport and add another revenue stream to them o Joint initiatives with tourism players (government and private) to create packages and promote a destination o Increasing the attractiveness of an airport for an operator by factoring that into the development plan, creating incentives for usage o Working with the state governments and other local stakeholders to create schemes and enhance usage of the airport  Addressing these issues will require strengthening the marketing capabilities at AAI. The capabilities may be built afresh, or developed through private partnerships. Outsourcing options may also be assessed as needed.

2. Greenfield Airports

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 Government has planned to set up Greenfield airports at various parts of the country. The Greenfield projects at Bangalore and Hyderabad have been completed and Goa, Navi Mumbai, Greater Noida and Kannur are being considered at present for development  Introduction of Greenfield Airport Policy by Govt. of India, helped in attracting a large amount of investment from private sector under PPP route. This contributed to almost 70% of total investment of ₹ 45, 000 crores made in airport development in the country during the last 5 years. It has been estimated that cost of creating one MPPA capacity in terms of Greenfield airports ranges from ₹ 275 - 300 crores at 2011 prices.  Low cost Airports - Various State Governments have identified nearly 25 Greenfield or unutilized airport projects in a bid to encourage regional airlines and to provide air links to small cities and towns. These are planned in tier-II or tier-III cities, and would be in addition to the Ministry of Civil Aviation’s ambitious modernization program for 35 non-metro airports. The investment in such an airport could range from ₹ 40 crore to ₹ 100 crore  To improve the connectivity of the North eastern part of the country, a large number Greenfield projects are planned: o Tezu, Arunachal Pradesh o Pakyong Airport, Sikkim o Itanagar, Arunachal Pradesh o Agartala, Tripura o Imphal, Manipur

3. Better Utilization of existing infrastructure  Some airports like Kota and Rajkot are located right next or in the middle of urban townships. There is no possibility to acquire additional land in their vicinity for their up-gradation for any worthwhile aviation activities. It will be prudent for AAI to offer those airports which have useful land parcels to State Government for their further use and obtain land away from the city for another Greenfield airport, in form of barter exchange deal  The Government plans to improve the conditions of the existing airports across the country via PPP route. The existing infrastructure at these airports is poor, characterized by inadequate parking space, insufficient terminal capacity, poor air traffic control systems and lack of facilities for passengers  Ministry of Civil Aviation has proposed development of 35 non-metro airports, keeping in view the potential for traffic, tourism, business etc. The Ministry has proposed the development of these airports in three phases as follows: i. Phase-I (10 airports): Ahmedabad, Amritsar, Guwahati, Jaipur, Udaipur, Trivandrum, Lucknow, Goa, Madurai and Mangalore. ii. Phase-II (15 airports): Agati, Aurangabad, Khajuraho, Rajkot, Vadodara, Bhopal, Indore, Nagpur, Vishakhapatnam, Trichy, Bhubaneswar, Coimbatore, Patna, Port Blair, Varanasi iii. Phase-III (10 airports): Agra, Chandigarh, Dimapur, Jammu, Pune, Agartala, Dehradun, Imphal, Ranchi and Raipur. Additional airports will be taken up for development on need basis.  AAI has 24 non-operational airports. AAI is planning to identify non-operational airports that could be put into use to provide better air connectivity in the country. A list of airports with suggested mode of development is illustrated below: i. Entirely by AAI . Airports: Jalagaon, Akola, Cuddapah, Gondia ii. Funding by Central Government/ State Government/ NEC . Airports: Pakyong (new), Tezu, Daparizo, Itanagar (new), Chaitu (new), Kishangarh (new)

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iii. By Public Private Partnership (PPP) model . Airports: Pantnagar, Jharsuguda, Keshod, Vellore, Warrangal, Bhatinda

4. Cargo  There is a significant untapped potential for air-cargo in India. An indication of the same can be gauged from the fact that the total air-cargo volume of 2.3 million MT handled in FY-11 by all Indian airports put together is less than that handled by individual airports like Hong Kong, Memphis, Shanghai, Incheon, Anchorage and Paris.  Congestion and delays in air cargo terminals in some of the major metro airports have become chronic. India’s image as a reliable supplier in international markets is crucially dependent upon the performance levels of air cargo terminals in the country. Investments need to be made for up gradation/expansion of capacity and modernization of processes/systems to cater to the growing requirements. This needs immediate and effective intervention  MoCA forecasts that the Total Cargo throughput at Indian airports is expected to grow 7.6 times in the next 20 years (CAGR of 11.2). Domestic Cargo throughput is expected to grow 7.8 times in the next 20 years (CAGR of 10.4%). International Cargo throughput is expected to grow 7.5 times in the next 20 years (CAGR of 11.7%). Forecast of Air Freight Traffic throughput at Indian Airports

Source: MoCA

 AAI will consider the development of Cargo Terminals at Pune, Sri Nagar, Guwahati, Chandigarh, Surat and Trichy in next 5 to 10 years. Recently, Cargo Terminal was operationalized at Mangalore for International Cargo operations and at Port Blair for Domestic cargo operation with the assistance of Andaman and Nicobar Administration

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 Infrastructure relating to cargo handling like satellite freight cities with multimodal transport, cargo terminals, cold storage, automatic storage and retrieval systems, mechanized transportation of cargo, computerization and automation, etc., will be set up on top priority basis. Such facilities have to come up at smaller places too. The Electronic Data Interchange systems will be developed and linked amongst all stake-holders in the trade  The government plans to raise the FDI cap in air cargo business to 74 per cent as part of efforts to further open up the sector for foreign investment. There is huge opportunity in the cargo business. According to the civil aviation ministry, Nagpur should be made the cargo hub of the country because of its geographical advantage. The central government may provide all required support to make it a truly world class cargo hub.

5. MRO Facilities  Indian MRO industry is expected to triple in size from ₹ 2,250 crore in 2010 to ₹ 7,000 crore by 2020. However, this may still be small compared to the present MRO industry size of other countries such as UAE (₹ 8,000 crore per annum) and China (₹ 10,000 crore per annum)  Ground Handling - By 2017, ground handling market is expected to double from present ₹ 2,000 crore to ₹ 3,900 crore. A number of global ground-handling players have aggressive expansion plans in India. This would, however, depend significantly on supportive policies and requisite airport infrastructure development  India has the potential to be an MRO hub due to the growing aircraft fleet, locational advantage and availability of talent. India’s lower labor cost advantage – roughly half of that in Europe and USA will make the MRO operations more profitable for service providers. At the same time it will result in cost saving (cuts in expenditure) for airlines in India on account of not being required to take the aircraft out of India for MRO services. Indian airline companies spend over 13–15 per cent of their revenues on maintenance, which is the second-highest cost component after fuel. Given the growth of Indian aviation, it is logical to encourage MRO infrastructure to support the growth in the sector.  Looking at the need and potential there have already been initiatives from both public as well as private sector. National Aviation Corporation of India Limited (NACIL) has plans to set up separate MRO facilities in association with Boeing and Airbus. A satellite MRO center is planned at Chennai Aero Park. Gujarat government is examining the prospects for developing MRO business and making Gujarat, a MRO hub in the region. Ahmedabad Aviation and Aeronautics (AAA), has drawn up plans to set up MRO business in Ahmedabad by end of 2009 as part of its Aviation City Project.

6. Aerotropolis  The term ‘aerotropolis’ means ‘Airport City’. In its simplest form, the aerotropolis is an economic hub that extends from a large airport into an adjoining area that consists mostly of distribution centers, office buildings, light manufacturing firms, convention centers, and hotels, all linked to the airport via roads and rail lines. These aerotropolis would be the prime movers for promoting local economic development and a potential hub for sourcing foreign investments. Unlike conventional airports, an aerotropolis is likely to generate simultaneous growth of other prominent sectors like real estate, hospitality, manufacturing industries etc.  The most developed examples of aerotropolis are to be found in the rising economies of Asia - and typically in city states such as Hong Kong, Singapore, and Dubai.  The concept of aerotropolis or airport city, though at a nascent stage in India, is fast catching, primarily due to the concept being seen as a viable investment option as compared to stand alone airports. In an aerotropolis, a major share of revenue comes from non-aeronautical components such as real

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estate, hospitality, tourism which yield faster returns than the aeronautical components. In such a scenario, even though the aeronautical part has a long gestation period, the financial standing of the company is not affected due to returns from the allied/non-aeronautical developments.  India’s first aerotropolis is being built in Durgapur, West Bengal. The project is being developed by Bengal Aerotropolis Pvt Ltd (BAPL) which is a joint venture of Changi Airports India Pte Ltd., IL&FS Airports Ltd., Pragati Social Infrastructure & Development Ltd., Lend Lease Compnay (India) Ltd., Citystar Infrastructures Ltd. and Pragati 47 Development Ltd. The project is spread across 1818 acres and will cost around ₹ 600 crores.

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8. Appendix A: Airport wise traffic of Indian Airports (2012-13)

11 International Airports (A) S.No. Aiport 2012-13 2011-12 % Change 1 CHENNAI 2,776,760 12,925,218 -1.1 2 KOLKATA* 10,068,655 10,303,991 -2.3 3 AHMEDABAD 4,162,747 4,695,115 -11.3 4 GOA 3,542,747 3,521,551 0.6 5 TRIVANDRUM 2,839,083 2,814,799 0.9 6 GUWAHATI 2,076,938 2,244,684 -7.5 7 CALICUT 2,273,703 2,209,716 2.9 8 JAIPUR 1,802,469 1,828,304 -1.4 9 SRINAGAR 1,861,691 1,632,098 14.1 10 AMRITSAR 895,425 892,104 0.4 11 PORTBLAIR 703,483 611,184 15.1 Total 43,003,701 43,678,764 -1.5 6 JV International Airports (B) 12 DELHI (DIAL) 34,368,411 35,881,965 -4.2 13 MUMBAI (MIAL) 30,207,514 30,747,841 -1.8 14 BANGALORE (BIAL) 11,993,887 12,698,343 -5.5 15 HYDERABAD (GHIAL) 8,300,469 8,444,431 -1.7 16 COCHIN (CIAL) 4,880,773 4,717,650 3.5 17 NAGPUR (MIPL) 1,262,921 1,415,739 -10.8 Total 91,013,975 93,905,969 -3.1 12 Custom Airports (C) 18 PUNE 3294909 3293146 0.1 19 LUCKNOW 2022414 2018554 0.2 20 COIMBATORE 1297804 1345381 -3.5 21 PATNA 1003169 1021544 -1.8 22 VISAKHAPATNAM 1037608 958160 8.3 23 TRICHY 870030 908771 -4.3 24 MANGALORE 1043386 893423 16.8 25 CHANDIGARH 881555 802059 9.9 26 VARANASI 808497 747811 8.1 27 BAGDOGRA 666052 735078 -9.4 28 MADURAI 558502 511737 9.1 29 GAYA 121091 98273 23.2 Total 13605017 13333937 2 17 Domestic Airports (D) 30 BHUBANESWAR 1389552 1253263 10.9 31 INDORE 1083663 1112834 -2.6

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32 JAMMU 862083 888595 -3 33 AGARTALA 791105 836700 -5.4 34 RAIPUR 810435 802583 1 35 IMPHAL 672872 727579 -7.5 36 VADODARA 676090 669931 0.9 37 RANCHI 463738 491418 -5.6 38 BHOPAL 492347 422595 16.5 39 AURANGABAD 439275 404192 8.7 40 LEH 347616 373420 -6.9 41 UDAIPUR 360320 370934 -2.9 42 RAJKOT 283291 261363 8.4 43 TIRUPATI 286548 240681 19.1 44 DIBRUGARH 230761 231870 -0.5 45 JODHPUR 260649 214827 21.3 46 SILCHAR 218735 209317 4.5 Total 9669080 9512102 1.7 OTHER AIRPORTS (E) 2006484 1874650 7 GRAND TOTAL (A+B+C+D+E) 159298257 162305422 -1.9 Source: AAI

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9. Appendix B: Airport Projects under PPP Program

S Project Name PPP Scheme Location TPC Implementing Status No Type (Rs. Agency Cr.) 1 Rajiv Gandhi Hyderabad BOOT State Shamshabad, Principle Secretary, Operational International Airport.- Level Ranga Reddy 2,487 Infrastructure & Projects District, Andhra Investment Dept. Pradesh

2 Development of Green PPP State Nellore, Ongole, VC&MD Infrastructure Pipeline Airports at Nellore, Level Tadepallygudem, Corporation Ongole,Tadepallygudem, Projects Kurnool, Kurnool, Kothagudem, Kothagudem, Ramagundam and Ramagundam and Nizamabad.- Nizamabad. 3 International Airport - PPP State Dholera Pipeline ahmedabad-dholera Level 2,500 Projects 4 Gulbarga Minor Airport BOT State Gulbarga Infrastructure Construction Level 80 Development Projects Corporation of Karnataka 5 Shimoga Minor Airport BOT State Shimoga Infrastructure Construction Level 80 Development Projects Corporation of Karnataka 6 Construction of Hassan BOT State Hassan Infrastructure Construction Airport Level 150 Development Projects Corporation of Karnataka 7 Construction of New BOT State Bellary Infrastructure Construction Greenfield Airport at Bellary Level 141 Development Projects Corporation of Karnataka 8 Development of Minor BOT State Bijapur Infrastructure Construction Airport at Bijapur Level 80 Development Projects Corporation of Karnataka 9 Bangalore International DBFOT State Bangalore Karnataka State Operational Airport (BIAL) Level 2,470 Industrial Investment & Projects Development Corporation 10 Amravati Airport PPP State Amravati Pipeline Level 279 Projects 11 Jalgaon Airport PPP State Jalagaon Pipeline Level 263 Projects 12 Shirdi Airport PPP State Shirdi Pipeline Level 264 Projects 13 Solapur Airport PPP State Solapur Pipeline Level 310 Projects 14 International Airport Chakan PPP State Pune Pipeline (Pune) Level 7,101 Projects 15 City side development of PPP PPPAC Udaipur Civil Aviation (Ministry of Proposal granted Udaipur Airport through PPP Project Civil Aviation) in-principle approval on 30.4.2008

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16 City side development of PPP PPPAC Amritsar Civil Aviation (Ministry of Proposal granted Amritsar Airport through PPP Project Civil Aviation) in-principle approval on 30.4.2008 17 Modernisation of Mumbai LDOT IIFC Mumbai Mumbai International Operational International Airport Project 5,825 Airport Pvt. Ltd 18 Modernisation of Delhi LDOT IIFC Delhi GMR Group, Fraport AG Operational International Airport Project 8,890 Frankfurt, Malaysia Airports Holdings Berhad 19 Cochin International Airport BOO Cochin Airport Authority of India Under Operations 303 20 Dwarka Airport Project - - Dwarka - Construction 500 21 Dr. Bhimrao Ambedkar Under State Meerut - - - Airport Bidding Level Projects 22 Development of International Under VGF Uttar Pradesh 354 Airport at Khushinagar Bidding

Source: PPP in India Database

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10. Appendix C: Operators of major airports across the world

S.No. Name Ranking* Airport Size Operator/O&M Partner 1 Incheon international 1 30 - 50 Incheon International Airport Corp Airport

2 Singapore Changi Airport 2 30 - 50 Changi Airport Group 3 Hong Kong International 3 Greater than 50 BCS Airport Pan Asia Pacific Aviation Services Limited 4 Amsterdam Schiphol Airport 4 30 - 50 Schiphol Group 5 Beijing Capital International 5 Greater than 50 Beijing Capital International Airport Airport Company Limited 6 Munich Airport 6 30 - 50 Flughafen München GmbH (FMG) 7 Zurich Airport 7 20 - 30 Flughafen Zürich 8 Vancouver International 9 10-20 Vantage Airport Group Airport

9 Kuala Lumpur International 9 30 - 50 Malaysia Airports Holdings Berhad Airport 10 London Heathrow Airport 11 Greater than 50 Ferrovial 11 Copenhagen Airport 12 20 - 30 Swissport 12 Auckland International 13 10-20 Auckland International Airport Limited Airport 13 Tokyo International Airport 14 Greater than 50 Japan Airport Terminal Co., Ltd. Haneda 14 Frankfurt Main Airport 15 Greater than 50 Fraport 15 Shanghai Hongqiao 16 30 - 50 Shanghai Airport Authority International Airport 16 Narita International Airport 17 30 - 50 NARITA INTERNATIONAL AIRPORT CORPORATION 17 Abu Dhabi International 18 10-20 Abu Dhabi Airports Airport 18 Kansai International Airport 19 10-20 Kansai International Airport Land Co.,

Ltd. 19 Sydney Airport 20 30 - 50 Sydney Airport Corporation Ltd. 20 Barcelona Airport 21 30 - 50 Aena Aeropuertos 21 Helsinki Vantaa Airport 22 10-20 Finavia 22 Seoul Gimpo Airport 23 10-20 Korea Airports Corporation 23 Cincinnati/Northern 24 20 - 30 Kenton County Airport Board Kentucky Int'l Airport 24 Bangkok Suvarnabhumi 25 30 - 50 Airports of Thailand PLC Airport 25 Dubai International Airport 26 Greater than 50 Dubai Airports Company 26 Hamburg Airport 28 10-20 AHS Aviation Handling services 27 Taiwan Taoyuan 29 10-20 Taoyuan Airport Corporation International Airport

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28 Taiwan Taoyuan 29 20 - 30 Taoyuan Airport Corporation International Airport 29 Jorge Chávez International 30 10-20 Lima Airport Partners S.R.L. (LAP) - a Airport consortium composed of Fraport AG , Bechtel Enterprises Services, Ltd. 30 O.R. Tambo International 31 10-20 Airports Company South Africa Airport 31 Moscow Domodedovo 40 20 - 30 DME Enterprises Airport 32 Vienna International Airport 41 20 - 30 Flughafen Wien AG 33 Melbourne Airport 43 20 - 30 Australia Pacific Airports Corporation Limited 34 Denver International Airport 44 Greater than 50 Denver's Department of Aviation 35 Oslo Airport 48 20 - 30 Avinor 36 Dallas/Ft Worth Airport 49 Greater than 50 Dallas/Fort Worth International Airport 37 Hartsfield-Jackson Atlanta 59 Greater than 50 CH2M HILL Int'l Airport 38 Delhi Indira Gandhi Int'l 62 20 - 30 Fraport Airport 39 Paris Charles de Gaulle 78 Greater than 50 Aéroports de Paris; Schiphol Group Airport 40 Palma de Mallorca Airport 93 20 - 30 Aena Aeropuertos * Skytrax Airport rankings 2012, Source: Primary Research

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11. Appendix D: Skytrax – Global Airport Rankings

2012 Rank Airport 2011 Rank 1 Incheon International Airport 3 2 Singapore Changi Airport 2 3 Hong Kong International Airport 1 4 Amsterdam Schiphol Airport 6 5 Beijing Capital International Airport 5 6 Munich Airport 4 7 Zurich Airport 7 8 Kuala Lumpur International Airport 9 9 Vancouver International Airport 12 10 Central Japan International Airport 11 11 London Heathrow Airport 16 12 Copenhagen Airport 10 13 Auckland International Airport 8 14 Tokyo International Airport Haneda 17 15 Frankfurt Main Airport 20 16 Shanghai Hongqiao International Airport 21 17 Narita International Airport 19 18 Abu Dhabi International Airport 26 19 Kansai International Airport 14 20 Sydney Airport 40 21 Barcelona Airport 15 22 Helsinki Airport 18 23 Seoul Gimpo Airport 27 24 Cincinnati/Northern Kentucky Intl Airport 24 25 Bangkok Suvarnabhumi Airport 13 26 Dubai International Airport 23 27 Cape Town International Airport 28 28 Hamburg Airport 29 29 Taiwan Taoyuan Airport 31 30 Jorge Chávez International Airport 32 31 O.R. Tambo International Airport 25 32 Shanghai PuDong International Airport 39 33 Athens International Airport 43 34 Brisbane Airport 38 35 King Shaka International Airport 33 36 Dusseldorf International Airport 31 37 London City Airport 45

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38 Madrid Barajas Airport 22 39 San Francisco International Airport 50 40 Moscow Domodedovo Airport 36 41 Vienna Airport 51 42 London Stansted Airport 47 43 Melbourne Airport 48 44 Denver International Airport 35 45 London Gatwick Airport 66 46 Gold Coast Airport 34 47 Toronto Pearson International Airport 49 48 Oslo Airport 42 49 Dallas/Fort Worth Airport 37 50 Billund Airport 62 51 Stockholm Arlanda Airport 46 52 Guangzhou Baiyun International Airport 41 53 Cologne/Bonn Airport 61 54 Prague Ruzyne Airport 44 55 Porto Francisco Sá Carneiro Airport 55 56 Guayaquil Airport 58 57 Istanbul Atatürk Airport 54 58 Bahrain International Airport 52 59 Hartsfield-Jackson Atlanta International Airport 57 60 Malta International Airport 73 61 Lisbon International Airport 60 62 Delhi International Airport 95 63 Doha International Airport 56 64 Haikou Meilan International Airport 53 65 Minneapolis St.Paul International Airport 64 66 Manchester Airport 67 67 Bangalore International Airport 59 68 Halifax Stanfield International Airport 88 69 Brussels Airport 63 70 Christchurch International Airport 65 71 Seattle-Tacoma International Airport 75 72 Panama Tocumen Airport 69 73 Nice Côte d'Azur Airport 68 74 JFK International Airport 70 75 Adelaide Airport 74 76 Detroit Metro Airport 72 77 Hyderabad Rajiv Gandhi International Airport 92 78 Paris Charles de Gaulle Airport 89

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79 Montreal-Trudeau International Airport 71 80 Perth International Airport 86 81 Berlin Tegel Airport 77 82 Raleigh Durham Airport 84 83 George Bush Intercontinental Airport 81 84 Keflavik Airport 85 85 Budapest Ferihegy Airport 78 86 Chicago O'Hare Airport 80 87 Luxembourg Findel Airport 79 88 Charlotte Douglas International Airport 87 89 Muscat International Airport 97 90 Pittsburgh International Airport 83 91 Sanya Phoenix Airport 76 92 Fukuoka Airport 90 93 Palma de Mallorca Airport 91 94 Boston Logan Airport 99 95 Birmingham International Airport 98 96 Newark Liberty International Airport 101 97 Philadelphia International Airport 100 98 Sheremetyevo International Airport 105 99 Salt Lake City Airport 102 100 Cairo International Airport 82 Source: Skytrax

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12. References

Websites

. http://www.aai.aero/traffic_news/AnnualReviewTraffic2012-13.pdf . http://www.newdelhiairport.in/fact-sheet.aspx . http://www.aai.aero/public_notices/aaisite_test/orign.jsp . http://aera.gov.in/documents/pdf/GREENFIELDAIRPORTPOLICY.pdf . http://www.infrastructure.gov.in/airports.php#potential . http://aera.gov.in/documents/pdf/AAI_1.pdf . http://www.pib.nic.in/newsite/erelease.aspx?relid=70765 . http://www.aai.aero/public_notices/aaisite_test/policy.jsp#4 . http://www.atcguild.com/tour/touratc2.asp . http://www.aai.aero/public_notices/aaisite_test/airtraffic_management.jsp . http://centreforaviation.com/analysis/capa-report-potential-for-usd35bn-of-duty-free-retail-fb- spend-at-indian-airports-74409 . http://www.newdelhiairport.in/marketing-possibilities.aspx . http://hindi.iocl.com/downloads/Investor_Presentation_2013.pdf . http://petroleum.nic.in/pngstat.pdf . http://businesstoday.intoday.in/story/behind-increasing-number-of-retail-shops-at-indian- airports/1/204082.html . https://www.iata.org/policy/Documents/single-till.pdf . http://centreforaviation.com/analysis/indian-ppp-airports-drive-340-growth-in-retail-and-other- non-aero-revenues-over-5-years-67675 . http://www.business-standard.com/article/companies/money-from-delhi-mumbai-fuelling- govt-s-airport-modernisation-plan-114011300031_1.html . http://www.share- pdf.com/9c5599004b684bad821b76794a8c8456/Appraisel%20Report%20As%20Submitted%20t o%20Bank%20of%20Maharashtra.pdf

Other Sources

. 12th Five year Plan . AERA White Paper . Annual Report 2012-13, Airport Authority of India . Annual Report 2012-13, Ministry of Civil Aviation . Greenfield Airport Policy - 2011, Ministry of Civil Aviation . MOCA WORKING GROUP ON AIR LOGISTICS REPORT . Policy on Airport Infrastructure – 2011, Ministry of Civil Aviation . OMDA, Delhi Airport . Strategic Plan 2010-15, Ministry of Civil Aviation . PPP Position Paper, Ministry of Civil Aviation