New strategic power play uses aviation as driving force

Written by Rhik Kundu | Updated: Nov 27 2013, 08:22am hrs
Recently Maharashtra chief minister Prithviraj Chavan said the state was looking at an alternate site for the proposed Navi Mumbai airport. This was because some villagers were still resisting land acquisition at the current site. This meant that the airport will be delayed further. In an interview with FEs Rhik Kundu, aviation research firm CAPAs CEO South Asia Kapil Kaul discusses the need for the airport, a policy on bilaterals and other issues. Excerpts:

Does investing in a second international airport in Mumbai, and international airports in tier-2 cities and smaller towns like Mangalore, Bagdogra, Kannur (proposed), Aranmula (proposed), Nagpur, Coimbatore, Tiruchirapalli, Lucknow, and Varanasi, make sense

Mumbai needs a second airport and it is a critical national issue, but not addressed seriously. However, I dont see the second airport in Mumbai before 2020 as there is no certainty in resolving all outstanding issues. India needs continuous investments in airport development and a long-term approach to airport planning, including airside planning. Land scarcity will be a major issue and a barrier to expansion and perhaps, viability.

CAPA Research has estimated that bilateral requests from just four airlines from the Gulf Etihad, Emirates, Qatar and Air Arabia could be in excess of 150,000 seats a week in the coming years. How do you see this pan out

CAPA expects continuing pressure to further open up bilaterals from key Middle East carriers as the scale of their expansion needs deeper and very liberal access to markets like India. The three top Gulf airlines have 519 aircraft in service with about 738 aircraft on order. Emirates alone has 385 aircraft under order, which includes 101 A380s. These are once in a generation expansion plans, and a new strategic economic power play is being constructed using aviation as the driving force, which includes using aircraft orders to leverage against protectionism. This has much larger implications across markets and India needs to have a strategy in place to deal with this massive challenge. We have to open up keeping Indias strategic and national interests in mind. Unfortunately, we have had a very ad-hoc approach to granting bilaterals.

Critics say that the development of a hub in proximity (Dubai and Abu Dhabi) would adversely impact the growth of Indian gateways as hubs. Recovery of investment and the benefits associated with a gateway airport will also be adversely impacted. Is this likely to happen

Yes, all three carriers (Etihad, Emirates, Qatar) want to consolidate and make their respective hubs stronger. They do not want to build hubs in India, and more opening up of the markets, especially without considering Indias national interests, will hurt Indian airports. Opening up and reforms are necessary but India needs to have a transparent and well-structured bilateral policy which addresses its medium- and long-term connectivity needs, trade, security and geopolitical interests and also the competiveness of its aviation industry. India must use its national assets to drive its interests and not open up only because Gulf carriers are expanding. India is in the middle of this battle of Middle East hubs, but has no strategy to deal with this strategic challenge.

Which other bilateral deals are likely to be signed soon, by your projections

Emirates , Qatar, Turkish and Singapore airlines are seeking more traffic rights but I expect that India will open up especially for Emirates and Qatar, but with very restricted increases in entitlements. Qatar,Emirates additional requirements may be close to 1,00,000 weekly seats. Turkish Airlines has been very keen to expand and has been asking more rights for the last two years. Singapore airlines wanted more but got only 10% additional entitlements.

Kerala today has three international airports and two more have been planned. Are so many international airports required in the state

Yes, Kerala is an excellent example of building a viable and very cost effective airport development programmes. We see Kannur and Aranmula as logical steps towards building a robust airport infrastructure, which will drive tourism growth. However, keeping projects costs low and delivering on schedule will have to be maintained.