Reaching new heights in India's airports sector | KPMG | GLOBAL

Reaching new heights in India's airports sector

Reaching new heights in India's airports sector

India’s airports are nearing capacity. Can technology help keep the country’s air passengers moving?

1000

Head of the Global Infrastructure Airports Practice

KPMG in India

Contact

Related content

Front view of aeroplane on runway

India’s air industry is booming.

Passenger traffic is up — way up — and the country’s 22 operating commercial airlines are adding new routes and new aircraft at an amazing rate. In fact, based on its current trajectory, most observers expect the country to become the world’s third largest aviation market by 2020. In some cities, the growth in air traffic has been astounding. In Bangalore — widely seen as the Silicon Valley of Asia — passenger air traffic has grown by almost 25 percent in each of the last 2 years. As Mr. Hari Marar, President and Executive Director at Bangalore International Airport Ltd notes, the tremendous growth in air traffic reflects both growing optimism in India’s economy and the changing nature of India’s economy.

“Particularly in Bangalore, our economy is fueled by the services sector, which is people-intensive and requires a lot of travel. At the same time, almost half of the workers in Bangalore’s services sector come from outside of the city, so there is a lot of demand for air travel, not only for work, but also to see family and for leisure,” he notes.

Breaking the choke hold

However, India continues to struggle with significant capacity challenges. By some accounts, just 75 of India’s airports are fully operational. And in the largest urban areas, airports are bursting at the seams. Indeed, up until 2008, Bangalore was served by a single-runway airport with capacity for just 3.6 million passengers per year.

Bangalore’s new airport, Kempegowda International Airport, opened in 2008. It now handles more than 22 million passengers per year, with plans to expand capacity to 50 million passengers by 2021. In part, the additional capacity will be achieved through the development of new assets. A second runway is nearing completion and a second terminal is now being constructed.

Yet, as Mr. Marar notes, new facilities will only be part of the solution. “In the past, expanding capacity meant pouring more concrete. But, today, we are focused on finding ways to better utilize our existing capacity. Our belief is that, going forward, India’s main challenge will be to build smaller and smaller airports that can handle larger and larger volume of passengers.”

The technology to soar

Technology will be key to achieving those goals. “The game changer will be technology,” asserts Mr. Marar. “In today’s airports, passengers spend an inordinate amount of time in queues waiting to be processed. But if we apply better technology, we can start to process passengers as they walk through the airport, and that would allow us to utilize our existing capacity much more effectively.”

Mr. Marar also expects technology to help improve operational efficiency by improving coordination between the various entities at the airport. “By creating a seamless exchange of information between all parties, we can deliver better customer experiences, achieve better operational efficiencies and improve key metrics such as on-time performance and baggage handling.”

Technology will also allow the airport to better serve customers and improve the overall customer experience. Mr. Marar notes that, in part, this will be achieved by improving passenger access to airport information which will enhance transparency and overall satisfaction. But it will also allow the airport to better understand its customers and to create experiences that are better tailored to specific customer needs.

Mr. Marar expects technology to help deliver on a range of other key objectives as well. “New technologies will allow us to improve our overall sustainability by helping us track and reduce our use of resources,” he says. “It will also allow us to improve employee engagement and satisfaction which, in turn, influences operational efficiency and customer satisfaction.”

Creating the right environment

While Mr. Marar has high expectations for technology, he also recognizes that technology is only part of the solution. Other structural and market reforms will also be needed if India is to meet the massive growth in demand for air travel.

“From a structural capacity perspective, I worry that our airports will get choked in the big metro cities within the next decade and we’ll need new urban centers and airports in these new urban centers to take on that load,” he notes. “The airlines, too, will need to rethink their business model to move towards a far more distributed system than they have in the past.”

At a national level, Mr. Marar suggests better integration between various modes of transport will be critical to delivering a better transportation solution to India’s citizens. “For travelers, the problem is how to get from point A to point B as quickly, safely and conveniently as possible. The problem is that, in India, we look at the various modes of transport in silos. We need to improve the integration between aviation, rail, road and shipping to deliver the transportation solutions that customer actually want.”

Looking ahead, Mr. Marar is hugely optimistic about India’s air and transport industry. “Every market has risks but, in our case, I believe these risks are very manageable. Our regulatory regime has matured significantly over the past few years and investors are now almost guaranteed a healthy rate of return,” he argues. “At the same time, our government has proven itself to be extremely proactive and reform-oriented, which enables growth and encourages risk-taking.”

All signs suggest that India’s air travel market will continue to grow and prosper. “It’s a very exciting market right now and there are massive opportunities for foreign investors, developers and technology companies,” he suggests. “India’s airports sector is a great place to invest for the long term.”

Connect with us

 

Request for proposal

 

Submit