Mumbai, Feb 27 (Agency) Even as the ongoing geopolitical unrest between Russia and Ukraine is expected to have a short-term impact on the aviation industry, the greenfield airports infrastructure market in India is likely to attract Rs 2.3 trillion investment in the next eight years, says Praxis Global Alliance. According to a report by Praxis, a global management consulting and advisory services firm, India needs an average additional 34 airports by 2025, and about 125 airports by 2030 to meet the 350-400 million additional passengers demand forecasted by 2030. “The ongoing crisis is expected to have a short-term impact on the aviation sector and we do not see this impacting the rebound significantly in the long term,” Praxis Global Alliance Partner, Infrastructure Practice Suman Jagdev said.
He noted that the greenfield opportunity size for airports in India by 2030 translates to about Rs 2.3 trillion, resulting in a massive opportunity in the current decade. The government has already identified and given in-principle approval for 16 greenfield projects with an investment worth Rs 50000 crore. India’s air travel demand had grown at an 11 percent CAGR over FY16-20, primarily driven by growth in domestic air travel. However, Covid-19 impacted airport business resulting in an 85 percent decline in international travel and more than 60 percent decline in domestic travel in FY21. As far as the aviation industry is concerned, which was also severely hit by the Covid pandemic, Jagdev said the escalation in oil prices on account of the Ukraine crisis would have an impact on the profitability of aviation players in the short to medium term. “Any restriction on access to airspace may also have a bearing on flight movements, albeit in the short-term,” he added.
According to the report, the connectivity and transportation are the fulcrum for economic development, and developing the right infrastructure is of paramount importance. Understanding the need for building airport infrastructure, the government has laid out over Rs 60,000 crore investments in the next 2-3 years and significant push from schemes like RCS-UDAN. Given the demand for 125 airports by 2030 and the government expediting the development of 50 airports, this results in an unmet demand of 75 airports and net new investments to the tune of Rs 1.1 trillion Praxis hypothesis highlights a total of projected passenger traffic likely to reach 690 million by 2030, and freight traffic is expected to reach 5.8 MMT by 2030. “As air travel rebounds and economic growth provides further expansion opportunities, there is a need to strengthen the airports’ infrastructure. An enabling investment environment will lead to higher private sector participation,” Jagdev added.