It is time India plans a hub airport flight path

News: There is an ongoing discussion on transforming India’s metro gateway airports into a hub airport. Today’s conditions are just right for building a hub airport.

The concept of a hub airport

A hub airport is one which is served by a multitude of airlines, connecting several airports through non-stop flights.

In addition to a common passenger terminal with arrival/departure flows segregated on different floor levels, at the hub airport, there is a separate corridor for transit flyers, who use the airport only to connect flights.

A hub airport operates on the concept of waves. A wave of incoming flights arrives and connects with another wave of outgoing flights that departs an hour or two later.

Advantages of a hub airport

It is a win-win for all. A hub creates economies of scale for the airport and airlines alike.

‘Hubbing’ allows for the maximum combination of flight pairs at the hub airport. Therefore, it provides a wider choice of destinations and frequencies for connecting passengers. In addition, it lowers ancillary costs, such as avoiding the time and cost of an overnight stay.

The direct connectivity is increased with other airports. It provides more revenue opportunities due to increased passenger footfalls.

It improves the wider airport ecosystem, such as aero and non-aero service providers at the airport, including cargo and ground handling, fuelling, retail and duty-free, vehicle parking, aircraft maintenance repair and overhaul (MRO), and fixed-base operation (FBO) services at the airport.

This enables airlines to serve city pairs that are otherwise economically unviable for non-stop flights.

An airport acts as a force multiplier with economic activity, jobs and employment, investments, business, trade, commerce, tourism, culture, and benefits to other sectors of the economy. For example, if one job is created in the aviation sector, it leads to the creation of up to six jobs in various allied sectors, such as the tourism and hospitality sector.

In fact, it propels the economic and social development of the city and its inhabitants, too.

What are the requirements for making a major airport hub, whether domestic or international, in India?

(1) sufficient local consumer demand;

(2) good geographic location, and

(3) necessary infrastructure to support high-volume traffic.

What are the favourable factors for making an airport hub in India?

As per the UN Department of Economic and Social Affairs, Population Division – Report on International Migration 2020, India has the largest diaspora, or transnational community, at 18 million people across all six continents and regions.

India is located on busy international air corridors that connect Europe, Africa, and the Middle East with Asia.

As per the IMF World Economic Outlook Database April 2019, India is the 5th largest economy in nominal GDP terms.

India is the 7th largest by land mass, India can support the development of more than one hub airport.

India’s Airport business is largely monopolistic. Normally, a competing airport is not found in the same urban area;

In India, Airport development is a regulated business. It has minimum downside risk for investors.

The Airports Economic Regulatory Authority of India has established a robust, fair, and transparent process for Airport tariff determination.

At present, India is the third-largest domestic aviation market in the world, next only to the United States and China. There is a continuous surge in passenger demand in India.

What are the impediments?

There are capacity constraints at major airports because of a lack of landing slots, especially during peak hours.

The Airports Authority of India Act (AAI), 1994 constrains the AAI/airport operators from commercially exploiting available land for non-aeronautical activities.

There is a ‘high cost-low fare’ operating environment in India.

There are 34 operational international airports in India. But smaller international airports are either completely left out or have very limited scope in starting international flight operations

There are problems with high duties and taxes like imposed on Aviation turbine fuel (ATF)

What are the opportunities?

There is a need to develop inter-modal connectivity (rail/road – air) and logistics support infrastructure (warehousing) as a part of the future airport master plans to fully exploit potential with cargo and freight;

The aspiring hub airports can partner with tier-2 and tier-3 airports in their catchments;

Airports should develop allied service capabilities, such as cargo handling, aircraft MRO and FBO.

The duties and taxes should be rationalized, such as bringing ATF under the ambit of GST.

In India’s case, the first two requirements of making a major airport are largely addressed. At present, the focus should rightly be on addressing the third requirement.

Source: The post is based on the article “It is time India plans a hub airport flight path” published in the “The Hindu” on 22nd June 2022.

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