MUMBAI Feb 8 India's aviation industry risks a
capacity crunch as an expansion in landing slots and terminals
fails to keep pace with the number of jets entering the market
and rapid growth in demand from travellers, executives warned on
Airlines including Interglobe Aviation's IndiGo,
SpiceJet and GoAir have 880 aircraft on order as they
tap into a market growing 20 percent-plus per annum thanks to
rising incomes and low-cost fares.
Domestic passenger numbers topped 100 million last year,
with most of the growth involving flights into and out of the
"The airport infrastructure at many airports is breaking at
the seams because there is no more capacity," said Sanjiv
Kapoor, chief strategy and commercial officer at Vistara, an
Indian airline jointly owned by Singapore Airlines and
"Everyone is scrambling to grab whatever little is left but
what happens after that?" Kapoor told Reuters at an aviation
conference in Mumbai.
Most of India's 40 largest airports will exceed their design
capacity within a decade based on projected growth rates,
consultancy CAPA estimates, with Mumbai and Chennai fast
Kapil Kaul, CEO for South Asia at CAPA, said India could run
out of capacity within three to five years. "We are not ready
beyond 2020-2021," he said.
India's government plans to open 50 disused airports by
2020, and has given approval for 18 greenfield airports.
Junior aviation minister Jayant Sinha said this week India
would need to triple capacity within 15 years at a cost of up to
3 trillion rupees ($45 billion), mostly from private sources.
Delays in acquiring land, as well as the inability of
debt-laden domestic airport operators such as GMR Group and GVK
to invest, have stymied expansion proposals.
"No one will invest in airports till you open investment in
airlines," Manish Sinha at GMR Hyderabad International Airport
Ltd said, referring to a 49 percent cap on foreign ownership of
Capacity constraints are most acute in Mumbai, where
aircraft can wait for landing spots for 45 minutes, according to
The government wants to build a new airport - under
discussion for 20 years - outside the city but has repeatedly
delayed plans, with initial bids due this year.
Newer Indian carriers are set to swell aircraft order books
Vistara could order 50 narrow-body and 50 wide-body aircraft
this year, Kaul at CAPA said. AirAsia India plans to grow its
fleet to 20 aircraft by mid-2018.
In an attempt to lure firms, India last year allowed foreign
investors to invest 100 percent in brownfield airport projects.
Operators such as Singapore's Changi Airport have expressed
interest, although questions remain about the government's
revenue sharing model.
The looming capacity crunch adds to the worries of Indian
carriers, which last year reported their first combined profit
in a decade.
CAPA estimates airlines will lose $250 million to $300
million this year amid intensifying competition.
"There is a need to look at profitable growth and not just
capacity deployment," said Amitabh Malhotra, managing director
at Rothschild Global Advisory in India.
Malhotra said it would be tough to maintain a 20 to 25
percent growth rate as rising fuel costs bite.
($1 = 67.3125 Indian rupees)
(Writing by Tommy Wilkes; Editing by Mark Potter)