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AVIATION

For updated information, please visit www.ibef.org

AVIATION For updated information, please visit www.ibef.org J u l y 2 0 1 7
AVIATION For updated information, please visit www.ibef.org J u l y 2 0 1 7

July 2017

Table of Content

Executive Summary………………….….…….3 ………………….….…….3

Advantage India…………………… ……………………

….…… 4

Market Overview ………………………….… 7 ………………………….… 7

Recent trends and Strategies….… ……… 194 Market Overview ………………………….… 7 Growth Drivers …………………… 22 Opportunities

Growth Drivers…………………… ……………………

22

Opportunities…….……… …….………

Case Studies………………………………… 22 Opportunities …….……… ………………33 …….…… ……35 Industry

………………33

…….…… ……35

Industry Associations……………………………33 …….…… ……35 … … 38 Useful Information……… ……………….40

38

Useful Information……… Information………

……………….40

…….…… ……35 Industry Associations…………… … … 38 Useful Information……… ……………….40
EXECUTIVE SUMMARY  India is set to become 3 r d largest aviation market by
EXECUTIVE SUMMARY  India is set to become 3 r d largest aviation market by

EXECUTIVE SUMMARY

India is set to become 3 rd largest aviation market by 2020.

By 2020, passenger traffic at Indian airports is expected to increase to 421 million from 223.61 million in 2016.

Travel and tourism to contribute US$ 423.7 billion to GDP by 2026.

The travel and tourism industry is forecast to grow at a CAGR of 6.66 per cent to US$ 423.7 billion in 2026 from US$ 100 billion in 2017.

Business and leisure travel to boost growth.

Spending on business travel is estimated to increase to US$ 39.88 billion in 2026 from US$ 10.26 billion in 2017, while on leisure travel is forecast to rise to US$ 203.5 billion in 2026 from US$ 181.65 billion in 2017.

Source: World Travel and Tourism Council, Airport Authority of India

3

Aviation

Council, Airport Authority of India 3 A v i a t i o n Air passenger
Air passenger traffic in India (million) 500 CAGR 17.1% 400 421 300 200 223 100
Air passenger traffic in India (million)
500
CAGR 17.1%
400
421
300
200
223
100
0
2016
2020F
Travel and Tourism industry (US$ billion) 250 CAGR 6.66% 200 228 150 100 100 50
Travel and Tourism industry (US$ billion)
250
CAGR 6.66%
200
228
150
100
100
50
0
2017
2020F
Business and Leisure Travel Spending (US$ billion) 300 200 203.50 181.65 100 39.88 10.26 0
Business and Leisure Travel Spending (US$ billion) 300 200 203.50 181.65 100 39.88 10.26 0

Business and Leisure Travel Spending (US$ billion)

300 200 203.50 181.65 100 39.88 10.26 0 2017E 2026F Leisure Travel Business Travel
300
200
203.50
181.65
100
39.88
10.26
0
2017E
2026F
Leisure Travel
Business Travel

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ADVANTAGE INDIA Aviation

ADVANTAGE INDIA

Aviation

ADVANTAGE INDIA  Rising working group and widening middle class demography is expected to boost
ADVANTAGE INDIA  Rising working group and widening middle class demography is expected to boost

ADVANTAGE INDIA

ADVANTAGE INDIA  Rising working group and widening middle class demography is expected to boost demand
 Rising working group and widening middle class demography is expected to boost demand 
 Rising working group and widening middle class
demography is expected to boost demand
 Growth in aviation accentuating demand for MRO facilities
 India plans to increase the number of airports to 250
by 2030 to cater to growing leisure and business
travel
 Expenditure in MRO accounts for 13-15 per cent of total
revenues; it is the second-highest expense after fuel cost
 By 2020, the MRO industry is likely to grow over
US$ 1.5 billion from US$ 0.5 billion currently
 Freight traffic also likely to go up as trade with the
rest of the world increases
ADVANTAGE
INDIA
 Investments totalling US$ 12.1 billion in
 The government has been encouraging
the airport sector are to be made
private sector participation
during the 12th Five Year Plan (2012-
17); of these, private investments are
expected to total US$ 9.3 billion
 Growing private sector participation
through the Public - Private Partnership
(PPP) route
 Foreign investment up to 49 per cent is
allowed under automatic route in scheduled
air transport service, regional air transport
service and domestic scheduled
passenger airline.

Notes: FDI Foreign Direct Investment, MRO Maintenance, Repair and Overhaul; FY Indian Financial Year (April March) Source: Ministry of Civil Aviation, MRO India

5

Aviation

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MARKET OVERVIEW Aviation

MARKET OVERVIEW

Aviation

EVOLUTION OF THE INDIAN AVIATION SECTOR  India is the 9th largest civil aviation market
EVOLUTION OF THE INDIAN AVIATION SECTOR  India is the 9th largest civil aviation market

EVOLUTION OF THE INDIAN AVIATION SECTOR

EVOLUTION OF THE INDIAN AVIATION SECTOR  India is the 9th largest civil aviation market in

India is the 9th largest civil aviation market in the world, In FY17, domestic passenger traffic witnessed a growth rate of 21.5 per cent

In FY17, airports in India witnessed a domestic passenger traffic of about 100 million people.

Investments worth US$ 6 billion are expected in the country's airport sector in 5 years

India’s civil aviation market is set to become the world’s 3 rd * largest by 2020 and expected to be the largest by 2030

Scheduled airlines: distance flown (mn km)

Non-scheduled airlines in operation

Number of aircrafts

Cargo Handled
Cargo Handled

Number of airports

199
199
39
39
225
225
703,000
703,000
50
50
Cargo Handled Number of airports 199 39 225 703,000 50 1,700 112 1,657 2,930,000 125 (FY17)
1,700
1,700
112
112
1,657
1,657
2,930,000
2,930,000
125
125

(FY17)

(FY17)

(FY16)

(FY17)

(FY17)

Note: * India ranks after the US and China FY Indian Financial Year (April March), mn km Million Kilometers Source: Airports Authority of India, Ministry of Statistics and Programme Implementation, Ministry of Civil Aviation

7

Aviation

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INDIA HAS 464 AIRPORTS AND AIRSTRIPS, OF WHICH 125 AIRPORTS ARE OWNED BY AAI 8
INDIA HAS 464 AIRPORTS AND AIRSTRIPS, OF WHICH 125 AIRPORTS ARE OWNED BY AAI 8

INDIA HAS 464 AIRPORTS AND AIRSTRIPS, OF WHICH

125 AIRPORTS ARE OWNED BY AAI

AND AIRSTRIPS, OF WHICH 125 AIRPORTS ARE OWNED BY AAI 8 Airports and airstrips in India

8

AND AIRSTRIPS, OF WHICH 125 AIRPORTS ARE OWNED BY AAI 8 Airports and airstrips in India

Airports and airstrips in India

(464)

AAI managed (125)

Non-AAI airports and airstrips (339)

(464) AAI managed (125) Non-AAI airports and airstrips (339) Non-operational (9) Operational (90) Civil enclaves (26)

Non-operational (9)

Operational (90)

Civil enclaves (26)

Non-operational (9) Operational (90) Civil enclaves (26) Domestic airports (66) Customs airports (7)

Domestic airports

(66)

Customs airports

(7)

International (17)

Activity in AAI airports - shares (%) – FY17 120% 100% 80% 78% 38% 80%
Activity in AAI airports - shares (%) – FY17 120% 100% 80% 78% 38% 80%

Activity in AAI airports - shares (%) FY17

120% 100% 80% 78% 38% 80% 60% 62% 40% 20% 22% 20% 0%
120%
100%
80%
78%
38%
80%
60%
62%
40%
20%
22%
20%
0%

Aircraft movement

Passenger traffic

78% 38% 80% 60% 62% 40% 20% 22% 20% 0% Aircraft movement Passenger traffic International Domestic

International

78% 38% 80% 60% 62% 40% 20% 22% 20% 0% Aircraft movement Passenger traffic International Domestic

Domestic

Freight Traffic

Activity in AAI airports - shares (%) – FY17
Activity in AAI airports -
shares (%) – FY17
Basic facts
Basic facts

Note: AAI Airports Authority of India, JV Joint Venture, FY Indian Financial Year (April March) Source: Airports Authority of India

Airports Authority of India (AAI) was

Established in 1994 under the Airports Authority Act

Responsible for developing,

financing, operating and

maintaining all government airports

The Aircraft Act (1934) governs remaining airports

Aviation

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SIX MAJOR AIRLINES OPERATE IN THE COUNTRY SpiceJet Market share: 13.2% Passenger load traffic: 91.4%
SIX MAJOR AIRLINES OPERATE IN THE COUNTRY SpiceJet Market share: 13.2% Passenger load traffic: 91.4%

SIX MAJOR AIRLINES OPERATE IN THE COUNTRY

SIX MAJOR AIRLINES OPERATE IN THE COUNTRY SpiceJet Market share: 13.2% Passenger load traffic: 91.4% GoAir
SIX MAJOR AIRLINES OPERATE IN THE COUNTRY SpiceJet Market share: 13.2% Passenger load traffic: 91.4% GoAir
SIX MAJOR AIRLINES OPERATE IN THE COUNTRY SpiceJet Market share: 13.2% Passenger load traffic: 91.4% GoAir
SIX MAJOR AIRLINES OPERATE IN THE COUNTRY SpiceJet Market share: 13.2% Passenger load traffic: 91.4% GoAir
SIX MAJOR AIRLINES OPERATE IN THE COUNTRY SpiceJet Market share: 13.2% Passenger load traffic: 91.4% GoAir

SpiceJet Market share: 13.2% Passenger load traffic: 91.4%

GoAir

Market share: 8.9%

Passenger load traffic: 84.8%

Jet Airways Market share: 15.4% Passenger load traffic: 79.8%

Jetlite Market share: 2.5% Passenger load traffic: 79.2%

Air India Market share: 13% Passenger load traffic: 74.6%

Indigo

Market share: 39.9% Passenger load traffic: 81.6%

Indigo Market share: 39.9% Passenger load traffic: 81.6% Source: Note: Market Share as on March’17 and

Source: Note: Market Share as on March’17 and Load Data for the month of March’17 as published by Directorate General of Civil Aviation

9

Aviation

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THE SIX MAJOR AIRPORTS IN THE COUNTRY Delhi Passenger traffic handled in FY16: 48 million;
THE SIX MAJOR AIRPORTS IN THE COUNTRY Delhi Passenger traffic handled in FY16: 48 million;

THE SIX MAJOR AIRPORTS IN THE COUNTRY

THE SIX MAJOR AIRPORTS IN THE COUNTRY Delhi Passenger traffic handled in FY16: 48 million; FY17:

Delhi Passenger traffic handled in FY16: 48 million; FY17: 57,7 million

Mumbai Passenger traffic handled in; FY16: 41.7 million; FY17: 45.2 million

Bengaluru Passenger traffic handled in FY16: 19 million; FY17: 22 million

traffic handled in FY16: 19 million; FY17: 22 million Note: FY – Indian Financial Year (April

Note: FY Indian Financial Year (April March) Source: AAI

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Aviation

Kolkata Passenger traffic handled in FY16: 12.4 million; FY17: 14.35 million

Hyderabad Passenger traffic handled in FY16: 12.4 million FY17: 15.24 million

Chennai Passenger traffic handled in FY16:

15.2 million; FY17: 16.7 million

Passenger traffic handled in FY16: 15.2 million; FY17: 16.7 million For updated information, please visit www.ibef.org

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PASSENGER TRAFFIC HAS EXPERIENCED HEALTHY GROWTH … (1/2)  Witnessing a growth of 18.5 per
PASSENGER TRAFFIC HAS EXPERIENCED HEALTHY GROWTH … (1/2)  Witnessing a growth of 18.5 per

PASSENGER TRAFFIC HAS EXPERIENCED HEALTHY

GROWTH … (1/2)

PASSENGER TRAFFIC HAS EXPERIENCED HEALTHY GROWTH … (1/2)  Witnessing a growth of 18.5 per cent

Witnessing a growth of 18.5 per cent over the previous year, total passenger traffic stood at a 264.97 million in FY17, which was recorded at 223.6 million in FY16 in India.

Growth in passenger traffic has been strong since the new millennium, especially with rising incomes and low-cost aviation;

during FY06-17, passenger traffic grew at a CAGR of 12.39 per cent

in the country.

VisakhapatnamPassengerporttraffictrafficin (million(million)tonnes) 300 250 200 150 100 50 0 73.4 96.5
VisakhapatnamPassengerporttraffictrafficin (million(million)tonnes) 300 250 200 150 100 50 0 73.4 96.5

VisakhapatnamPassengerporttraffictrafficin (million(million)tonnes)

300

250

200

150

100

50

0

73.4 96.5 116.9 108.9 123.8 143.4 162.3 159.4 169.0 190.1 223.6 265.0
73.4
96.5
116.9
108.9
123.8
143.4
162.3
159.4
169.0
190.1
223.6
265.0

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Notes: CAGR Compound Annual Growth Rate, FY Indian Financial Year (April March) Source: Association of Private Airport Operator, Airports Authority of India

11

Aviation

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PASSENGER TRAFFIC HAS EXPERIENCED HEALTHY GROWTH … (2/2)  Domestic passenger traffic expanded at a
PASSENGER TRAFFIC HAS EXPERIENCED HEALTHY GROWTH … (2/2)  Domestic passenger traffic expanded at a

PASSENGER TRAFFIC HAS EXPERIENCED HEALTHY

GROWTH … (2/2)

PASSENGER TRAFFIC HAS EXPERIENCED HEALTHY GROWTH … (2/2)  Domestic passenger traffic expanded at a CAGR

Domestic passenger traffic expanded at a CAGR of 13.52 per cent over FY0617

According to Directorate General of Civil Aviation, domestic passenger traffic witnessed growth at a rate of 21.5 per cent in FY17, as against 21.24 per cent in FY16.

International passenger traffic registered growth at a CAGR of 9.27 per cent over FY06-17.

During FY17, international passenger traffic increased by 8.5 per cent.

GrowthVisakhapatnamin domestic passengerport traffictraffic(millionhastonnes)been robust 300 50% 40% 250 30% 200
GrowthVisakhapatnamin domestic passengerport traffictraffic(millionhastonnes)been robust
300
50%
40%
250
30%
200
20%
150
10%
100
0%
50
-10%
22
59
26
30
32
34
38
41
43
47
51
55
0
-20%
FY06FY07FY08FY09FY10FY11FY12FY13FY14FY15FY16FY17
International
Domestic
Growth-International
Growth-Domestic
51
71
87
77
89
106
122
117
122
139
169
206

Notes: YoY Year on Year, FY Indian Financial Year (April March) Source: Airports Authority of India, Ministry of Civil Aviation

12

Aviation

Growth in passenger traffic set to remain strong in future 12 th Plan Period 300
Growth in passenger traffic set to remain strong in future 12 th Plan Period 300

Growth in passenger traffic set to remain strong in future

12 th Plan Period 300 250 209 200 11 th Plan Period 150 10 th
12 th Plan Period
300
250
209
200
11 th Plan Period
150
10 th Plan Period
122
100
26
71
50
26
41
60
14
0
FY02
FY07
FY12
FY17E
Domestic passenger throughput Domestic (million)
International passenger throughput international (million)

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FREIGHT TRAFFIC GREW AT A CAGR OF 6.8 PER CENT DURING FY06 TO FY16 …
FREIGHT TRAFFIC GREW AT A CAGR OF 6.8 PER CENT DURING FY06 TO FY16 …

FREIGHT TRAFFIC GREW AT A CAGR OF 6.8 PER

CENT DURING FY06 TO FY16 … (1/2)

GREW AT A CAGR OF 6.8 PER CENT DURING FY06 TO FY16 … (1/2)  Total

Total freight traffic registered a CAGR of 7.08 per cent over FY06-17

During FY06-17, domestic freight traffic increased at a CAGR of 7.95 per cent, while international freight traffic grew at a CAGR of 6.58 per cent during the same period.

In FY17, domestic freight traffic stood at 1,123.18 million tonnes, while international freight traffic was at 1,855.06 million tonnes.

During FY17, domestic freight traffic increased at 7.39 per cent while international freight traffic increased at 11.86 per cent in comparison with FY16.

By 2023, total freight traffic is expected to touch 4.14 million tonnes exhibiting growth at a CAGR of 7.27 per cent between FY2016 and FY23. In addition, international freight traffic is expected to grow at a CAGR of 7.13 per cent while domestic freight traffic is expected to grow at a CAGR 7.50 per cent between FY2016 and FY23.

InternationalVisakhapatnamfreight trafficportwastraffic61.3 per(millioncent oftonnes)the total in 2016 3,500 3,000 2,500
InternationalVisakhapatnamfreight trafficportwastraffic61.3 per(millioncent oftonnes)the total in 2016 3,500 3,000 2,500

InternationalVisakhapatnamfreight trafficportwastraffic61.3 per(millioncent oftonnes)the total in 2016

3,500 3,000 2,500 2,000 1,500 1,000 500 0 International( '000 Tonnes) Domestic ('000 Tonnes) FY06
3,500
3,000
2,500
2,000
1,500
1,000
500
0
International( '000 Tonnes)
Domestic ('000 Tonnes)
FY06
920
484
FY07
1,023
530
FY08
1,147
568
FY09
1,149
552
FY10
1,271
689
FY11
1,496
852
FY12
1,468
812
FY13
1,407
784
FY14
1,440
840
FY15
1,542
986
FY16
1,658
1,046
FY17
1,855
1,123

Source: Airports Authority of India

13

Aviation

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AND IS POISED TO GROW FURTHER … (2/2)  Freight traffic on airports in India
AND IS POISED TO GROW FURTHER … (2/2)  Freight traffic on airports in India

AND IS POISED TO GROW FURTHER … (2/2)

AND IS POISED TO GROW FURTHER … (2/2)  Freight traffic on airports in India is

Freight traffic on airports in India is expected to cross 11.4 million tonnes by 2032.

Growth in import and export in India will be the key driver for growth in freight traffic as 30 per cent of total trade is undertaken via airways.

Airports across the globe are planning on increasing their spending

on new technology to keep up with surging passenger traffic, which is expected to double to 370 million by 2020. The anticipated double digit growth would make India as the world’s 3rd largest aviation

market by 2020.

Fliers would soon be able to use biometric details for security checks at airports after good feedback from a pilot project.

VisakhapatnamFreight trafficport (milliontraffic (milliontonnes)tonnes) 3.00 2.50 2.00 1.50 1.00 0.50 0.00 FY06
VisakhapatnamFreight trafficport (milliontraffic (milliontonnes)tonnes) 3.00 2.50 2.00 1.50 1.00 0.50 0.00 FY06

VisakhapatnamFreight trafficport (milliontraffic (milliontonnes)tonnes)

3.00 2.50 2.00 1.50 1.00 0.50 0.00 FY06 1.40 FY07 1.55 FY08 1.72 FY09 1.70
3.00
2.50
2.00
1.50
1.00
0.50
0.00
FY06
1.40
FY07
1.55
FY08
1.72
FY09
1.70
FY10
1.96
FY11
2.35
FY12
2.28
FY13
2.19
FY14
2.28
FY15
2.53
FY16
2.70
FY17
2.68

Notes: FY Indian Financial Year (April March) Source: Airports Authority of India

14

Aviation

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GROWTH IN AVIATION HAS ALSO LED TO HIGHER AIRCRAFT MOVEMENT … (1/2)  During FY07-17,
GROWTH IN AVIATION HAS ALSO LED TO HIGHER AIRCRAFT MOVEMENT … (1/2)  During FY07-17,

GROWTH IN AVIATION HAS ALSO LED TO HIGHER

AIRCRAFT MOVEMENT … (1/2)

AVIATION HAS ALSO LED TO HIGHER AIRCRAFT MOVEMENT … (1/2)  During FY07-17, growth in aircraft

During FY07-17, growth in aircraft movement was recorded at a CAGR of 5.59 per cent

In FY17, total aircraft movement increased at a YoY of 3.91 per cent, as compared to FY16.

In FY17, total aircraft movement stood at 1.86 million

In May 2017, Air India has decided to launch flights to three new destinations in the U.S., Stockholm, Nairobi and Tel Aviv in 2017.

VisakhapatnamTotal aircraftportmovementtraffic (million(million)tonnes) 2.00 25% 1.80 20% 1.60 15% 1.40 1.20 10%
VisakhapatnamTotal aircraftportmovementtraffic (million(million)tonnes)
2.00
25%
1.80
20%
1.60
15%
1.40
1.20
10%
1.00
5%
0.80
0.60
0%
0.40
-5%
0.20
0.00
-10%
Aircraft movement
Growth in Aircraft movement
FY07
1.08
FY08
1.31
FY09
1.31
FY10
1.33
FY11
1.39
FY12
1.54
FY13
1.48
FY14
1.54
FY15
1.60
FY16
1.79
FY17
1.86

Notes: CAGR Compound Annual Growth Rate FY Indian Financial Year (April March) YoY Year on Year Source: Association of Private Airport Operators, Airports Authority of India

15

Aviation

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GROWTH IN AVIATION HAS ALSO LED TO HIGHER AIRCRAFT MOVEMENT … (2/2)  During FY07-17,
GROWTH IN AVIATION HAS ALSO LED TO HIGHER AIRCRAFT MOVEMENT … (2/2)  During FY07-17,

GROWTH IN AVIATION HAS ALSO LED TO HIGHER

AIRCRAFT MOVEMENT … (2/2)

AVIATION HAS ALSO LED TO HIGHER AIRCRAFT MOVEMENT … (2/2)  During FY07-17, domestic aircraft movement

During FY07-17, domestic aircraft movement increased at a CAGR of 5.59 per cent, while international aircraft movement expanded at 5.39 per cent CAGR over the same period.

During FY17, the total number of domestic aircraft movement increased to 1.86 million, as compared to FY16.

VisakhapatnamAircraft portmovementtraffic (milliongrowth tonnes) 2,000 25% 1,800 20% 1,600 15% 1,400 1,200 10%
VisakhapatnamAircraft portmovementtraffic (milliongrowth tonnes)
2,000
25%
1,800
20%
1,600
15%
1,400
1,200
10%
1,000
5%
800
600
0%
400
-5%
200
0
-10%
International ('000)
Growth-International(%)
Domestic ('000)
Growth-Domestic(%)
FY07
216
862
FY08
249
1,059
FY09
270
1,036
FY10
282
1,049
FY11
300
1,094
FY12
309
1,235
FY13
314
1,165
FY14
336
1,201
FY15
346
1,260
FY16
375
1,481
FY17
365
1,502

Notes: YoY Year on Year; FY Indian Financial Year (April March) CAGR Compound Annual Growth Rate Source: Association of Private Airport Operators

16

Aviation

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AAI DOMINATES, BUT PRIVATE SECTOR PARTICIPATION IS RISING  Until 2013, AAI was the only
AAI DOMINATES, BUT PRIVATE SECTOR PARTICIPATION IS RISING  Until 2013, AAI was the only

AAI DOMINATES, BUT PRIVATE SECTOR

PARTICIPATION IS RISING

AAI DOMINATES, BUT PRIVATE SECTOR PARTICIPATION IS RISING  Until 2013, AAI was the only major

Until 2013, AAI was the only major player involved in developing and upgrading airports in India

Post liberalisation, private sector participation in the sector has been increasing

Private sector investment increased to US$9.3 billion during the 12th Five Year Plan from US$ 5.5 billion in the previous plan

Five Year Plan from US$ 5.5 billion in the previous plan Major private sector players Notes:
Five Year Plan from US$ 5.5 billion in the previous plan Major private sector players Notes:

Major private

sector players

billion in the previous plan Major private sector players Notes: AAI – Airports Authority of India
billion in the previous plan Major private sector players Notes: AAI – Airports Authority of India
billion in the previous plan Major private sector players Notes: AAI – Airports Authority of India
billion in the previous plan Major private sector players Notes: AAI – Airports Authority of India

Notes: AAI Airports Authority of India

17

Aviation

Development of Hyderabad International Airport; modernisation of Delhi International Airport– Airports Authority of India 17 A v i a t i o n Modernisation of

Airport; modernisation of Delhi International Airport Modernisation of Mumbai International Airport Development of

Modernisation of Mumbai International AirportAirport; modernisation of Delhi International Airport Development of Bengaluru International Airport Development

Airport Modernisation of Mumbai International Airport Development of Bengaluru International Airport Development

Development of Bengaluru International AirportAirport Modernisation of Mumbai International Airport Development of Bengaluru International Airport Development

Airport Development of Bengaluru International Airport Development of Bengaluru International Airport Development

Development of Bengaluru International AirportAirport Development of Bengaluru International Airport Development of Bengaluru International Airport Development

Airport Development of Bengaluru International Airport Development of Bengaluru International Airport Development

Development of Bengaluru International AirportAirport Development of Bengaluru International Airport Development of Simoga and Gulbarga airports in Karnataka For

Airport Development of Bengaluru International Airport Development of Simoga and Gulbarga airports in Karnataka For

Development of Simoga and Gulbarga airports in KarnatakaInternational Airport Development of Bengaluru International Airport For updated information, please visit www.ibef.org

Airport Development of Simoga and Gulbarga airports in Karnataka For updated information, please visit www.ibef.org

For updated information, please visit www.ibef.org

Porter’s Five Forces Framework Analysis Bargaining Power of Suppliers  High - Bargaining power of
Porter’s Five Forces Framework Analysis Bargaining Power of Suppliers  High - Bargaining power of

Porter’s Five Forces Framework Analysis

Porter’s Five Forces Framework Analysis Bargaining Power of Suppliers  High - Bargaining power of suppliers

Bargaining Power of Suppliers

Bargaining Power of Suppliers

High - Bargaining power of suppliers remain high as there are only few fuel and aircraft suppliers

Talent pool of pilots, engineers and other staff is also limited

Positive Impactpool of pilots, engineers and other staff is also limited Neutral Impact Negative Impact Source: Central

Neutral Impactengineers and other staff is also limited Positive Impact Negative Impact Source: Central Asia-Pacific Aviation 18

Negative Impactother staff is also limited Positive Impact Neutral Impact Source: Central Asia-Pacific Aviation 18 A v

Source: Central Asia-Pacific Aviation

18

Aviation

Threat of Substitutes

Threat of Substitutes

Low - Threat remains low in this sector also as no other means of transport is as swift and convenient as

airlines

It saves time

Competitive Rivalry

Competitive Rivalry  High - Competition among major players is very high, especially in LCC’s (Low

High - Competition among major players is very high, especially in LCC’s (Low cost carrier) section because the airlines compete for the middle income group customers and passengers of air-conditioning segment of railways. This group has low brand loyalty and is highly price sensitive

Bargaining Power of Buyers

Bargaining Power of Buyers

Low - Bargaining power of customers remains low as the demand for low cost air travel is quite high

The costs of switching airplanes and services offered hardly differ with each other

Threat of New Entrants

Threat of New Entrants

Low - Threat remains low because of the nature of the industry (Regulatory hurdles, Capital-intensive)

Air Asia India has been granted DGCA approval (Price War)

Air Asia started services to Bagdogra and Srinagar from Delhi.

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RECENT TRENDS AND STRATEGIES Aviation

RECENT TRENDS AND STRATEGIES

Aviation

NOTABLE TRENDS IN THE AIRPORTS SECTOR  Currently, five international airports have been completed successfully
NOTABLE TRENDS IN THE AIRPORTS SECTOR
 Currently, five international airports have been completed successfully under PPP mode
 Investment made by private sector during the 12th Five Year Plan (2012–17) is expected to increase by 69.1
per cent to US$ 9.3 billion over that during the 11th Five Year Plan
Rising private
Rising private
participation and
participation and
Investments
Investments
 Four existing airports and two greenfield projects will be offered on PPP basis which is expected to attract
investments from private players
 Delhi International Airport, a GMR led consortium, signed a land license agreement with Airbus to set up
India’s 1st full flight simulator at the Aerocity, Indira Gandhi International (IGI) Airport.
Greater Rising private use of non- participation and scheduled Investments airlines  Rising business activity
Greater Rising private use of non-
participation and
scheduled Investments airlines
 Rising business activity leading to higher demand for non-scheduled airlines
 As on July 2017, there are 112 operators (NSOP)
 Increasing use of development fees by airport developers and operators Rising private User participation
 Increasing use of development fees by airport developers and operators
Rising private
User participation development and fees
Investments
 Airport Development Fee: Delhi, Mumbai airports to fund expansion
 User Development Fee: Hyderabad, Bengaluru airports for maintenance
 Indian airports are emulating the SEZ-aerotropolis model to enhance revenues; focus on revenues from
 Indian airports are emulating the SEZ-aerotropolis model to enhance revenues; focus on revenues from
retail, advertising, vehicle parking, etc.
Focus Rising on private non-
participation and
aeronautical Investments revenue
 With the initiative of displaying “Art for a cause,” Nagpur airport became India’s 1st airport to take up the
cause of empowering the girl child in a unique way.
 Absence of complementary meals in low-cost airlines have boosted the F&B retail segment at airports

Notes: FY Indian Financial Year (April March) NSOP Non Schedule Operators Permit Source: DGCA

20

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STRATEGIES ADOPTED Rising private  Expansion of CAPA; further, rise of LCC’s was also supported
STRATEGIES ADOPTED
Rising private
 Expansion of CAPA; further, rise of LCC’s was also supported by the exit of Kingfisher, which is on the verge of
insolvency
Expansion
participation and
 Capacity will also increase with new terminals coming up in Mumbai, Bengaluru, Chennai and Kolkata
Investments
 Indian carriers to double their fleet capacity by 2020 to around 800 aircrafts
 Indian LCC’S are looking forward to increase their ancillary services, without tampering their business
 Indian LCC’S are looking forward to increase their ancillary services, without tampering their business models. This
includes services like lounge access, priority boarding, customer loyalty memberships and customer meals
Rising private
Ancillary participation services and
Investments
 The AAI has allowed the BRTS buses to foray in the airport premises in Surat. The initiative is to allow the passengers
to reach airports on time and allow smoother transit.
 In April 2017, Indigo Airlines entered the record books by registering a record breaking 900 flights a day, most by any
Indian airline.
Rising private Increasing participation operations and Investments  Indian LCC’s are looking forward to increase
Rising private
Increasing participation operations and
Investments
 Indian LCC’s are looking forward to increase their low cost products on routes which will take up to four hours (shorter
international routes)
 This will allow deleveraging of domestic fleet, increasing aircraft utilisation and improving commercial performance
 Chennai, with its strategic location in South India has a strong potential to become a hub, with connecting flights to
Gulf and across South East Asia
 In June 2017, the Ministry of Civil Aviation launched DigiYatra Platform through which travellers
 In June 2017, the Ministry of Civil Aviation launched DigiYatra Platform through which travellers will be able to access
information on all the stakeholders and vice-versa. The ‘Digi-Yatra’ is an industry led initiative coordinated by the
Ministry in line with the government’s vision of Digital India.
Rising private
Government’s participation and push
Investments
 In April 2017, the central government launched UDAN – the regional connectivity scheme for civil aviation – from
Shimla airport. Under the scheme, the flights are available from Nanded, Shimla and Kadapa airports.
 In June 2017, the government announced that it is planning to allow relaxations under the UDAN scheme hoping to
increase air connectivity to undeserved routes. The airlines operators will be allowed to bid for a route connecting an
airport which is underserved, and to allow operators to bid for a route which are separated by less than 150 kms.

Source: Central Asia-Pacific Aviation

21

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GROWTH DRIVERS Aviation

GROWTH DRIVERS

Aviation

STRONG DEMAND AND POLICY SUPPORT DRIVING INVESTMENTS Expanding middle income group and working population Rising
STRONG DEMAND AND POLICY SUPPORT DRIVING INVESTMENTS Expanding middle income group and working population Rising

STRONG DEMAND AND POLICY SUPPORT DRIVING

INVESTMENTS

STRONG DEMAND AND POLICY SUPPORT DRIVING INVESTMENTS Expanding middle income group and working population Rising
STRONG DEMAND AND POLICY SUPPORT DRIVING INVESTMENTS Expanding middle income group and working population Rising
STRONG DEMAND AND POLICY SUPPORT DRIVING INVESTMENTS Expanding middle income group and working population Rising
Expanding middle income group and working population
Expanding middle income
group and working
population
Rising domestic and foreign tourists and travellers
Rising domestic and
foreign tourists and
travellers
Strong growth in external trade
Strong growth in external
trade
tourists and travellers Strong growth in external trade Policy Strong support government support Greater

Policy Strong support government support

Greater government focus on infrastructure
Greater government focus
on infrastructure
support Greater government focus on infrastructure Increasing liberalisation, Open Sky Policy Policy sops, FDI
Increasing liberalisation, Open Sky Policy
Increasing liberalisation,
Open Sky Policy
Policy sops, FDI encouragement
Policy sops, FDI
encouragement
Inviting
Inviting
Increasing investments
Increasing investments

AAI driving large modernisation, development projects; expansion and upgradation of existing airports; development of

low-cost airports

Increasing private sector participation, increasing greenfield projects
Increasing private sector
participation, increasing
greenfield projects
Strong projected demand making returns attractive
Strong projected demand
making returns attractive
Resulting in
Resulting in

23

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PASSENGER TRAFFIC SPIKES UP AS DEMAND FOR AIR TRAVEL SOARS  Improving tourism infrastructure 
PASSENGER TRAFFIC SPIKES UP AS DEMAND FOR AIR TRAVEL SOARS  Improving tourism infrastructure 

PASSENGER TRAFFIC SPIKES UP AS DEMAND FOR AIR TRAVEL SOARS

PASSENGER TRAFFIC SPIKES UP AS DEMAND FOR AIR TRAVEL SOARS  Improving tourism infrastructure  Successful

Improving tourism infrastructure

Successful ad campaigns abroad

The share of travel and tourism in India’s GDP was depicted to be 9.6 per cent in 2017E; and is expected to grow at a CAGR of 7.2 per cent per annum between 2017E-2027

India is one of the fastest growing economies

Overall, leisure travel and tourism spending inclined at a CAGR of 15.74 per cent between 2007-17E.

Emergence of business hubs like Mumbai (Finance), Bengaluru (IT), Chennai (IT), Delhi (Manufacturing, IT) is likely to boost business travel as well.

Leisure travel spending grew to US$ 181.65 billion in 2017E from US$ 96.20 billion in 2016.

VisakhapatnamTravel and tourismportspendingtraffic (million(US$ tonnes)billion) 200.0 180.0 160.0 140.0 120.0
VisakhapatnamTravel and tourismportspendingtraffic (million(US$ tonnes)billion) 200.0 180.0 160.0 140.0 120.0

VisakhapatnamTravel and tourismportspendingtraffic (million(US$ tonnes)billion)

200.0

180.0

160.0

140.0

120.0

100.0

80.0

60.0

40.0

20.0

0.0

22.1 42.1 24.4 46.2 18.8 48.7 22.3 60.9 25.5 69.3 26.4 68.7 20.8 77.9 17.8
22.1
42.1
24.4
46.2
18.8
48.7
22.3
60.9
25.5
69.3
26.4
68.7
20.8
77.9
17.8
90.2
19.1
96.0
19.1
96.2
10.3
181.7

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Business Travel and Tourism Spending (in USD Bn)96.2 10.3 181.7 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Leisure Travel

Leisure Travel & Tourism Spending (in USD Bn)96.2 10.3 181.7 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Business Travel

Notes: IT Information Technology, E Estimated Source: World Travel and Tourism Council, Make in India, Global Business Travel Association

24

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MORE PASSENGERS AND RISING TRADE AIDING HIGHER AIRCRAFT MOVEMENT  Growing trade benefits of freight
MORE PASSENGERS AND RISING TRADE AIDING HIGHER AIRCRAFT MOVEMENT  Growing trade benefits of freight

MORE PASSENGERS AND RISING TRADE AIDING

HIGHER AIRCRAFT MOVEMENT

PASSENGERS AND RISING TRADE AIDING HIGHER AIRCRAFT MOVEMENT  Growing trade benefits of freight movement 

Growing trade benefits of freight movement

Over FY09-17,

India’s exports expanded at a CAGR of 4.47 per cent to US$ 276.28 billion in FY17.

Imports registered a CAGR of 2.53 per cent which reached to US$ 75.9 billion in FY17.

Growing trade augurs well for airports as they handle about 30 per cent of India’s total trade (by value)

Increasing airline

operators

total trade (by value) Increasing airline operators FDI in aviation and liberalised aviation policy Higher

FDI in aviation and liberalised aviation policy

operators FDI in aviation and liberalised aviation policy Higher aircraft movement Rise in freight traffic Growth

Higher aircraft

movement

and liberalised aviation policy Higher aircraft movement Rise in freight traffic Growth in passenger traffic
and liberalised aviation policy Higher aircraft movement Rise in freight traffic Growth in passenger traffic

Rise in freight traffic

Growth in passenger traffic

VisakhapatnamRising exports portandtrafficimports(million(US$ tonnes)billion) 600 500 400 300 200 100 0
VisakhapatnamRising exports portandtrafficimports(million(US$ tonnes)billion) 600 500 400 300 200 100 0

VisakhapatnamRising exports portandtrafficimports(million(US$ tonnes)billion)

600

500

400

300

200

100

0

185.29 303.69 178.75 288.37 249.82 369.77 305.96 489.32 300.40 490.74 314.41 450.20 309.56 447.52 262.03
185.29
303.69
178.75
288.37
249.82
369.77
305.96
489.32
300.40
490.74
314.41
450.20
309.56
447.52
262.03
380.60
274.65
380.38

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

 
  Exports Imports  

Exports

Imports

Imports

 

Notes: CAGR Compound Annual Growth Rate, FY Indian Financial Year (April March) 1- April 2016 - February 2017 Source: Ministry of Commerce

25

Aviation

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POLICY SUPPORT AIDING GROWTH IN THE AIRPORTS SECTOR … (1/2)  GOI envisions airport infrastructure
POLICY SUPPORT AIDING GROWTH IN THE AIRPORTS SECTOR … (1/2)  GOI envisions airport infrastructure

POLICY SUPPORT AIDING GROWTH IN THE

AIRPORTS SECTOR … (1/2)

POLICY SUPPORT AIDING GROWTH IN THE AIRPORTS SECTOR … (1/2)  GOI envisions airport infrastructure investment
 GOI envisions airport infrastructure investment of US$ 11.4 billion under the 12th Five Year
 GOI envisions airport infrastructure investment of US$ 11.4 billion under the 12th Five Year Plan (2012-17)
Rising private
infrastructure Greater participation focus on and
Investments
 The Indian government is planning to invest US$ 1.83 billion for development of airport infrastructure along
with aviation navigation services by 2026.
 With the opening of the airport sector to private participation, six airports across major
 With the opening of the airport sector to private participation, six airports across major cities are being
developed under the PPP model
 Currently 60 per cent of airport traffic is handled under the PPP model, while the remaining 40 per cent is
managed by the AAI
Liberalisation, Rising private Open Sky
participation and
Policy Investments
 Increased traffic rights under bilateral agreements with foreign countries
 India signed its 1st open skies agreement with Greece
 In May 2017, India and Spain signed an MoU for cooperation in civil aviation industry. The MoU would spur
greater trade, investment, tourism and cultural exchanges between both the countries.
 In April 2017, Brussels Airlines launched its service from Brussels to Mumbai, its 1st flight to Asia. The
launch is a part of Lufthansa’s group strategy to expand its business in India.
 The GOI has allowed 100 per cent FDI under automatic route for greenfield projects,
 The GOI has allowed 100 per cent FDI under automatic route for greenfield projects, whereas, 74 per cent
FDI is allowed under automatic route for brownfield projects.
Rising private
Encouragement participation and to FDI
Investments
 100 per cent FDI is allowed under automatic route in scheduled air transport service, regional air transport
service and domestic scheduled passenger airline. FDI over 49 per cent would require government
approval.
 Approval of 49 per cent FDI in aviation for foreign carriers.

Notes: India currently has bilateral air service agreements with 104 countries. These include Brazil, 27 members of the EU, and China. In 2008 traffic rights were been enhanced with Mexico, Saudi Arabia, Netherlands, Qatar, Iran, Japan and Turkey, FDI Foreign Direct Investment, GOI Government of India

26

Aviation

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POLICY SUPPORT AIDING GROWTH IN THE AIRPORTS SECTOR … (2/2)  100 per cent tax
POLICY SUPPORT AIDING GROWTH IN THE
AIRPORTS SECTOR … (2/2)
 100 per cent tax exemption for airport projects for a period of 10 years
Rising private
Taxes and duties
participation and
Investments
 Indian aircraft Manufacture, Repair and Overhaul (MRO) service providers are exempted completely from
customs and countervailing duties
 In the Union Budget for FY17, Government of India, for the purpose of equity
 In the Union Budget for FY17, Government of India, for the purpose of equity infusion has earmarked US$
255.86 million for Air India Limited.
• Also, a budget of about US$ 14.98 million has been allocated to Airports Authority of India, of which US$
4.29 million has been attributed towards Pakyong, Sikkim project.
Rising private
Budgetary participation support and
Investments
• The government has planned to allocate a sum of US$ 11.80 million to Directorate General of Civil
Aviation to implement various schemes.
• The government has also supported the Bureau of Civil Aviation Security with US$ 9.71 million to meet
their expenditure.
• The Civil Aviation Ministry to receive budgetary funds of US$ 768.64 million an increase of over 22 per
cent in the Union Budget for 2017 as compared to the funds allocated in Union Budget 2016

Notes: AAI Airports Authority of India, DGCA Directorate General of Civil Aviation, FY Indian Financial Year (April March) Source: : Ministry of Civil Aviation

27

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AAI LEADS THE WAY IN AIRPORTS INFRASTRUCTURE INVESTMENT Rising private  The AAI aims to
AAI LEADS THE WAY IN AIRPORTS INFRASTRUCTURE
INVESTMENT
Rising private
 The AAI aims to bring around 250 airports under operation across the country by 2020
Metro airports
participation and
 The AAI has developed and upgraded over 23 metro airports in the last 5 years
Investments
 The AAI plans to spend US$ 1.3 billion on non-metro projects over the 5
 The AAI plans to spend US$ 1.3 billion on non-metro projects over the 5 years (2013–17); mainly focusing
on the modernisation and upgradation of airports; New airports at Itanagar, Kohima and Gangtok are also
planned.
Rising private
Non-metro participation airports and
Investments
 The Government of Andhra Pradesh is to develop greenfield airports in six cities-Nizamabad, Nellore,
Kurnool, Ramagundam, Tadepalligudem and Kothagudem under the PPP model.
 Upfront subsidy has been proposed through which non-metro airports would be funded by imposing 2 per
cent levy on both domestic and international airfares.
 About 22 airports to get connected under regional connectivity scheme of AAI.
 Over 30 airport development projects are under progress across various regions in Northeast India
 Over 30 airport development projects are under progress across various regions in Northeast India
Rising private
 AAI plans to develop over 20 airports in tier II and III cities in next 5 years
Northeast India
participation and
Investments
 The AAI plans to develop Guwahati as an inter-regional hub and Agartala, Imphal and Dibrugarh as
intra-regional hubs
28
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PRIVATE SECTOR INVESTMENT IN AIRPORTS RISING … (1/2)  Recourse to the Public Private Partnership
PRIVATE SECTOR INVESTMENT IN AIRPORTS RISING … (1/2)  Recourse to the Public Private Partnership

PRIVATE SECTOR INVESTMENT IN AIRPORTS RISING

… (1/2)

PRIVATE SECTOR INVESTMENT IN AIRPORTS RISING … (1/2)  Recourse to the Public Private Partnership (PPP)

Recourse to the Public Private Partnership (PPP) model has boosted private sector investments in airports

PPP route for five international airports (Delhi, Mumbai, Cochin, Hyderabad, Bengaluru) most noteworthy

In Union Budget 2017, Government of India has decided to develop select airports in tier 2 cities under PPP model in order to attract investments from private players.

Increasing share of private sector in equity component of major airports

74 per cent private share holding in IGI Airport (Delhi) - owned majorly by GMR (54 per cent), Fraport AG (10 per cent), Eraman Malaysia (10 per cent); rest of the shares owned by AAI

74 per cent private shareholding in CSI Airport (Mumbai) - owned majorly by GVK (50.5 per cent), Bid Services Division (Mauritius) Ltd. (13.5 per cent), ACSA Global (10 per cent); rest of the shares owned by AAI

74 per cent private shareholding in RGI Airport (Hyderabad) - owned majorly by GMR (63 per cent), Malaysia Airports Holdings Berhad (11 per cent); rest of the shares owned by Government of India (13 per cent) and Government of Andhra Pradesh (13 per cent)

74 per cent shareholding in Kempagowda International Airport (Bengaluru) owned majorly by Siemens Project Ventures, Germany (40 per cent), Unique (Flughafen Zurich AG) Zurich Airport, Switzerland (17 per cent), L&T, India (17 per cent); rest of the shares owned by AAI (13 per cent) and KSIIDC, which is an agency owned by the state of Karnataka, India (13 per cent)

In March 2017, by selling off 2 offshore bonds, GMR plans to raise US$250-300 million for refinancing their debt. In June 2017, GMR announced plans to refinance loans and divest assets in road and power sectors to cut debt so as to invest up to Rs. 7,400 (US$ 1.15 billion) crore to expand Delhi and Hyderabad airports.

Source: Notes: KSIIDC Karnataka State Industrial and Infrastructure Development Corporation Ltd.

29

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PRIVATE SECTOR INVESTMENT IN AIRPORTS RISING … (2/2) Participation in international airport projects Delhi
PRIVATE SECTOR INVESTMENT IN AIRPORTS RISING … (2/2) Participation in international airport projects Delhi

PRIVATE SECTOR INVESTMENT IN AIRPORTS RISING

… (2/2)

PRIVATE SECTOR INVESTMENT IN AIRPORTS RISING … (2/2) Participation in international airport projects Delhi

Participation in

international

airport projects

Delhi

(Modernisation,

Terminal 3)

Mumbai

(Modernisation)

Hyderabad

Bengaluru

Terminal 3 construction in Delhi completed in 2010

Terminal 3 - Total cost

US$ 2.7 billion

(including Terminal 3 and 1- D)

PPP format likely to continue Bijapur Airport Shimoga Airport 15 greenfield projects with private sector
PPP format likely to
continue
Bijapur Airport
Shimoga Airport
15 greenfield projects with
private sector participation
has been approved in May
Hassan Airport
2015
Gulbarga Airport
In May 2016, US$ 2.23
billion of investments
were approved
byAirports Authority of
India (AAI) for
upgrading Indian
airports, over a period
of four years
Mopa Airport, Navi
Mumbai Airport, Shirdi
and Sindhudurg
Airports, Kannur and
Aranmula Airports,
Durgapur Airport, Dabra
Airport, Pakyong
Airport, Karaikal Airport
and Kushinagar Airport

30

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SUCCESSFUL PPP AIRPORTS IN INDIA  Presently India has 5 PPP airports each at Mumbai,
SUCCESSFUL PPP AIRPORTS IN INDIA  Presently India has 5 PPP airports each at Mumbai,

SUCCESSFUL PPP AIRPORTS IN INDIA

SUCCESSFUL PPP AIRPORTS IN INDIA  Presently India has 5 PPP airports each at Mumbai, Delhi,

Presently India has 5 PPP airports each at Mumbai, Delhi, Cochin, Hyderabad and Bengaluru, which together handle over 55 per cent of country’s air traffic.

Government of India has approved 15 greenfield PPP projects which are expected to increase the air traffic in India. These projects would be setup in Goa, Navi Mumbai, Maharashtra, Bijapur, Gulbarga, Karnataka, Kerala, West Bengal, Madhya Pradesh, Sikkim, Puducherry and Uttar Pradesh.

Name of airport

Operator

Type of project/ PPP structure

Revenue sharing

Chhatrapati Shivaji International Airport

Mumbai International Airport Ltd (MIAL)

Brownfield/BOOT

38.7 per cent of gross revenue to be shared with AAI

Indira Gandhi International Airport

Delhi International Airport Ltd (DIAL)

Brownfield/BOOT

45.9 per cent of gross revenue to be shared with AAI

Rajiv Gandhi International Airport

GMR Hyderabad International Airport Ltd (GHIAL)

Greenfield/BOOT

Concession fees - 4 per cent of gross revenue to be shared with AAI

Bengaluru

Bengaluru International Airport

Greenfield/BOOT

Concession fees 4 per cent of gross revenue to be shared with AAI

International Airport

Ltd (BIAL)

Cochin International Airport

Cochin International Airport Ltd (CIAL)

Greenfield/BOO

Payment of dividend to the Government towards their 26 per cent of equity capital

Notes: BOOT - Build Own Operate Transfer; BOO - Build Own Operate Source: Association of Private Airport Operators

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FOREIGN PLAYERS ARE SHOWING INCREASING INTEREST IN THE SECTOR   Major foreign players Airport Stake
FOREIGN PLAYERS ARE SHOWING INCREASING INTEREST IN THE SECTOR   Major foreign players Airport Stake

FOREIGN PLAYERS ARE SHOWING INCREASING

INTEREST IN THE SECTOR

FOREIGN PLAYERS ARE SHOWING INCREASING INTEREST IN THE SECTOR   Major foreign players Airport Stake (%)
 

Major foreign players

Airport

Stake (%)

Description

Airports Company South Africa Global

Mumbai International Airport Pvt Ltd

10

Operates and owns 9 airports in South Africa

 

Delhi International Airport Pvt Ltd

10

Operates and manages 5 international gateways, 16 domestic airports, to 18 short take-off and landing ports (Short Take-off and Landing ports) that serves the rural and remote areas in Malaysia

Malaysia Airports Holdings Berhad

Hyderabad International Airport Pvt Ltd

11

     

Global airport operator that offers airport management services including terminal

Frankfurt Airport Services Worldwide

Delhi International Airport Pvt Ltd

10

and traffic management, baggage and cargo handling and aviation ground handling

     

AirAsia is a Malaysian low-cost carrier. It has formed a JV AirAsia (India) Pvt Ltd with Tata Sons (30 per cent stake) and Arun

AirAsia

Joint venture with Tata sons and Arun Bhatia

49

Bhatia via Telestra Tradeplace (21 per cent stake) in March 2013. Tata Sons planning to raise its stake to 41.06 per cent as on August 14, 2015

Jet Airways

Aeromexico

Signed a MoU

Partnered with Aeromexico for codeshare flights and frequent flyers programme

32

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OPPORTUNITIES Aviation

OPPORTUNITIES

Aviation

OPPORTUNITIES Policy support and demand growth unlocking large investment potential  The Indian Aviation sector
OPPORTUNITIES Policy support and demand growth unlocking large investment potential  The Indian Aviation sector

OPPORTUNITIES

Policy support and demand growth unlocking large investment potential

and demand growth unlocking large investment potential  The Indian Aviation sector likely to see investments

The Indian Aviation sector likely to see investments totalling US$ 12.1 billion during the 12th Five Year Plan

Of the total investment, US$ 9.3 billion is expected to come from the private sector

Success of PPP formats will raise

investment in existing and greenfield airports

Private sector participation in 6 existing airports operated by AAI is likely to increase investment opportunities for airport sector

Huge potential to develop India as an MRO hub

airport sector Huge potential to develop India as an MRO hub  The Indian Aviation Industry

The Indian Aviation Industry aims to boost MRO business in India, which is worth US 500 million as of FY2016 and is estimated to grow over US1.5 billion by 2020

Indian airline companies spend over 13

15 per cent of their revenues on

maintenance, which is the 2nd highest cost component after fuel

Inauguration of MRO facility at Hyderabad in May 29, 2015 by Air India Engineering Services Limited (AIESL) which is a 100 per cent owned subsidiary of Air India

which is a 100 per cent owned subsidiary of Air India Leverage on non-aeronautical revenues, improved

Leverage on non-aeronautical revenues, improved technology

Leverage on non-aeronautical revenues, improved technology  Airport developers can now draw on wider revenue

Airport developers can now draw on wider revenue opportunities such as retail, advertising and vehicle parking

Future operators will benefit from

greater operational efficiency due to

satellite based navigation systems

like ‘Project Gagan’ which is in development phase

Notes: ‘Project Gagan’ is directed towards transitioning from a ground-based navigation system to a satellite-based one. AAI and ISRO are jointly working on this. A Space Based Augmentation System (SABS) will be operational by 2013,MRO Maintenance, Repair and Overhaul

34

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CASE STUDIES Aviation

CASE STUDIES

Aviation

IGI AIRPORT, DELHI - A COMPELLING SUCCESS STORY  Awarded at the Skytrax World Airport
IGI AIRPORT, DELHI - A COMPELLING SUCCESS STORY  Awarded at the Skytrax World Airport

IGI AIRPORT, DELHI - A COMPELLING SUCCESS

STORY

IGI AIRPORT, DELHI - A COMPELLING SUCCESS STORY  Awarded at the Skytrax World Airport Awards

Awarded at the Skytrax World Airport Awards 2015 for the “Best Airport in Central Asia regionand for the “Best Airport Staff”. Also, they were felicitated with the prestigious Golden Peacock National Quality Award’ 2015 for their continuous efforts in building a culture across IGI Airport

IGI airport ranked 1st at the ACI Annual Service Quality Awards in 2016, across the globe (category: handling 25-40 million passengers), up from 2nd position in 2012.

Delhi International Airport Ltd became the 1st in the world to receive the ISO 22301:2012 certification for its robust business continuity management system.

Delhi International Airport Ltd is also India’s 1st airport to cross 5 crore passenger mark, in 2016.

In 2017, Delhi Airport was adjudged as the "Best Airport in India and Central Asia" by Skytrax at the World Airport Awards.

Phase 1 of modernisation of IGI International Airport (at a cost of INR86 billion) involved renovation of terminals 1A, 1B, 1C and Terminal 2. It also included construction of a new domestic terminal along with an integrated passenger terminal (Terminal 3)

Facts and features:

Passenger Traffic: 57.7 million (FY17)

Aircraft movement: 0.39 million (FY17)

Cargo: 0.85 million tonnes (FY17)

Terminal 3

Retail space: 0.3 million square feet

Apron area: 6.7 million square feet

Multi level car park: 4,300 cars/day

Passenger handling capacity per annum

Area (acres)

Operational status

Notes: ACI Airports Council International , mn - Million Source: Delhi International Airport Ltd, Association of Private Airport Operators, Airports Authority of India

36

Aviation

Phase I

34 million

1,907

Completed on Mar-2010

Final

100 million (by 2020)

(60 million as on October

2013)

5,106

Ongoing 20-year project

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CSI INTERNATIONAL AIRPORT, MUMBAI - HARNESSING THE POWER OF PPP  During the World Travel
CSI INTERNATIONAL AIRPORT, MUMBAI - HARNESSING THE POWER OF PPP  During the World Travel

CSI INTERNATIONAL AIRPORT, MUMBAI -

HARNESSING THE POWER OF PPP

INTERNATIONAL AIRPORT, MUMBAI - HARNESSING THE POWER OF PPP  During the World Travel Awards, 2015,

During the World Travel Awards, 2015, CSI International Airport, Mumbai’s GVK Lounge at Terminal 2 was felicitated with “Asia’s Leading Airport Lounge Award. Also, the Architizer A+ Award for the “Best Architectural Structures in the World” was bagged by CSI International Airport in the Transportation-Airports category, 2015.

In 2017, CSIA also secured top award for 'Best Airport Staff Service' in India and Central Asia at the World Airport Awards organised by Skytrax.

In FY17, CSIA became the world’s busiest airport amongst single runway facilities with 45.2 million passengers flying in and out in this fiscal and by handling 837 flights per day or 1 in 65 seconds on an average.

In FY17, CSI handled 45.2 million of passenger traffic and 0.78 million tonnes of cargo movement.

Passenger handling capacity per annum
Passenger handling
capacity per annum
Cargo handling capacity per annum
Cargo handling capacity
per annum

45 million

7.8 million tonnes

Notes: ACI Airports Council International Source: Airports Authority of India, Mumbai International Airport Ltd.

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Modernisation of the Mumbai International Airport will entail investments worth US$ 1.3 billion over a period of 20 years

Government of India to provide US$ 1.1 billion

Parts of the project completed till now:

Phase I (2008): New airport lounges, retail outlets, duty-free shops, temporary cargo facilities and multilevel car parks

Phase II (2010): Involved construction of a new terminal at Sahar, a parallel runway and new cargo facilities

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INDUSTRY ASSOCIATIONS Aviation

INDUSTRY

ASSOCIATIONS

Aviation

INDUSTRY ORGANISATIONS Airports Authority of India (AAI) Address: Rajiv Gandhi Bhawan, Safdarjung Airport, New Delhi
INDUSTRY ORGANISATIONS Airports Authority of India (AAI) Address: Rajiv Gandhi Bhawan, Safdarjung Airport, New Delhi

INDUSTRY ORGANISATIONS

Airports Authority of India (AAI)

Address: Rajiv Gandhi Bhawan, Safdarjung Airport, New Delhi 110 003 Phone: 91 11 24632950

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– 110 003 Phone: 91 11 24632950 39 A v i a t i o n

Directorate General of Civil Aviation (DGCA)

Address: Aurbindo Marg, Opp. Safdarjung Airport, New Delhi 110 003 Phone: 91 11 24622495

Fax: 91 11 24629221

E-mail: dri@dgca.nic.in, dfa@dgca.nic.in

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USEFUL INFORMATION Aviation

USEFUL

INFORMATION

Aviation

GLOSSARY  AAI: Airports Authority of India  ACI: Airport Council International  CAGR: Compound
GLOSSARY  AAI: Airports Authority of India  ACI: Airport Council International  CAGR: Compound

GLOSSARY

AAI: Airports Authority of India

ACI: Airport Council International

CAGR: Compound Annual Growth Rate

FDI: Foreign Direct Investment

FY: Indian Financial Year (April to March)

So FY10 implies April 2009 to March 2010

GOI: Government of India

INR: Indian Rupee

MRO: Maintenance, Repair and Overhaul

PPP: It could denote two things (mentioned in the presentation accordingly)

two things (mentioned in the presentation accordingly) – • Purchasing Power Parity (used in calculating per-capita

Purchasing Power Parity (used in calculating per-capita GDP slide 12, GROWTH DRIVERS)

Public Private Partnership (a type of joint venture between the public and private sectors)prop

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EXCHANGE RATES Exchange Rates (Fiscal Year) Year INR Equivalent of one US$ 2004 – 05
EXCHANGE RATES Exchange Rates (Fiscal Year) Year INR Equivalent of one US$ 2004 – 05

EXCHANGE RATES

Exchange Rates (Fiscal Year)

Year

INR Equivalent of one US$

200405

44.81

200506

44.14

200607

45.14

200708

40.27

200809

46.14

200910

47.42

201011

45.62

201112

46.88

201213

54.31

201314

60.28

2014-15

61.06

2015-16

65.46

2016-17E

67.23

Source: Reserve bank of India, Average for the year

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Exchange Rates (Calendar Year)

42 A v i a t i o n Exchange Rates (Calendar Year) Year INR Equivalent

Year

INR Equivalent of one US$

2005

43.98

2006

45.18

2007

41.34

2008

43.62

2009

48.42

2010

45.72

2011

46.85

2012

53.46

2013

58.44

2014

61.03

2015

64.15

2016E

67.22

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DISCLAIMER India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same
DISCLAIMER India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same

DISCLAIMER

DISCLAIMER India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has

India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared by Aranca in consultation with IBEF.

All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF.

This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of Aranca and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice.

Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation.

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taken from any portion of this presentation. 43 A v i a t i o n
taken from any portion of this presentation. 43 A v i a t i o n

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