Monday, November 16, 2015

It is time for Delhi Airport to go Big!

by Soumen Mukherjee
Busy immigration area at Terminal 3 of Delhi Airport
Indira Gandhi International Airport or popularly Delhi Airport, India's and indeed South Asia's busiest airport by annual passenger volume, had handled 39.75 million passengers in 2014. Since 2009, it had occupied the position of country's busiest airport replacing Mumbai. And for the year 2014, Delhi Airport was awarded with the title of 'World's Best Airport' in the 25-40 million annual passengers category by the Airport Council International. But it will be challenging for Delhi to defend the title this time. As in 2015 it is going to enter the big club of airports with beyond 40 million annual passenger volume. Currently it is one of the fastest growing major airports in the world, growing at a double digit rate in 2015. In the first two quarters of the current fiscal year (FY2016: Apr'15-Mar'16), Delhi airport has already clocked 22.76 million passengers, an increase of ~15% over the traffic for the same period in the previous year (~15% YoY). And it is expected to cross 46 million passengers by the end of this fiscal. At the current rate of growth (~15% YoY) Delhi airport is likely to cross 60 million annual passengers milestone by FY2018 (see Figure:1). Being optimistic, if the present macro-economic environment persists Delhi Airport to reach its full capacity of 100 million before FY2024. But if you look at the present expansion plans of Delhi international airport limited (DIAL) it seems insufficient.
Delhi Airport currently has two functional terminals, T-1 and T-3. Terminal 1, which is further divided into T-1D for departures and T-1C for arrivals, only caters domestic operations of three low-cost carriers: IndiGo, SpiceJet and GoAir. On the other hand terminal 3 is used for all the international flights of Indian and foreign airlines and the domestic operations of Air India, Jet Airways, Vistara and AirAsia India at the same time. Built in 2010, the terminal 3 can handle upto 34 million passengers per annam. While the terminal 1-D was inaugurated in 2009 as a stop gap measure with 15 million annual passengers capacity. In FY2015, the terminal 1 had reached its saturation point as it had handled close to 15 million passengers while the rest 26 million passengers traveled through T-3. As a result, T-1 faces huge pressures on the capacity side, encountered frequent chaos during the summer peak season (Apr-Jun) and similar situations expected in the winter peak season (Oct-Dec) too. In order to decongest T-1, DIAL, the operator of Delhi Airport, comes with an expansion plan which will eventually increase the capacity of T-1 to 30 million by 2018. Meanwhile it is working on smaller changes to increase T-1 capacity to 18 million annual passenger level by February 2016. DIAL's master plan also includes another new domestic terminal (T-4) with 34 million annual capacity besides increasing the present T-3 capacity to 45 million level and a fourth runway but with no definite timeline given. But the plan simply looks insufficient and lagging well behind the demand.
Figure 1: Annual passenger growth of Delhi Airport with projections of next few years
Currently, Delhi Airport is connected with direct flights to 58 domestic and 65 international destinations. In the coming years, Delhi Airport going to face a carpet bombing of new flights to and from the city. On the domestic front, India's largest airline by passenger volume, IndiGo soon going to start receiving new Airbus A320neo aircraft from its order of 430 such planes. And Delhi being IndiGo's primary hub, a lion share of those new flights going to be either to or from Delhi. GoAir also has similar but scaled-down expansion plan from early 2016. Vistara, also maintains hub at Delhi, going to add 12 more A320 aircraft in its fleet by 2018 therefore increasing operations from Delhi Airport. Among the International players, Taiwan's EVA Air announced its intent to enter Delhi in 2016 similarly LOT Polish Airlines is also planning to launch non-stop service to Delhi from its base in Warsaw by early 2016 (EVA and LOT both Star Alliance members). Norwegian Long Haul, the long-haul subsidiary of the European low-cost carrier Norwegian Air Shuttle, is already negotiating for Copenhagen-Delhi service from 2016, they are also interested in operating budget flights to Delhi from their London (Gatwick) and Stockholm bases. If the plan materializes it would the first ever service by a low-cost carrier between India and Europe. Although Lufthansa had also announced plans for operating Eurowings, its long-haul low-cost subsidiary, on Germany-India routes. Air India Express, the low-cost subsidiary of Air India, had announced its plan to relaunch its base at Delhi in early 2016 which is likely to operate flights to central asia and middle-east. Air India too will start receiving its remaining 6 Boeing 787-8 Dreamliner from November 2016 and likely to deploy them on international routes. Only Jet Airways and SpiceJet have no immediate plan for major increase in capacity till 2018. Then if the ministry of civil aviation relaxes the so called '5/20' rule. Which restricts an Indian airline with less than five years of domestic flying experience and a fleet size below twenty aircraft, from flying on international routes. New entrants like Vistara and AirAsia India are the two most keen to start international flights from Delhi as and when Govt allowed them.

Although Delhi-IGI Airport has a capacity limitation of 100 million per annam traffic and Govt has already started the process of developing a second airport around Delhi by 2023. But it has much to offer and much to achieve before it saturates around 2023. In order to become a true hub airport with good volume of transit traffic, it needs to innovate and incorporate good practices of other hub airports. Instead of marking terminals as LCC/FSC or domestic/international it should ideally possess an alliance specific terminal like the other big hub airports does. Which also suites the 'under one-roof' policy of the alliances. Among the major airline alliances, Star Alliance (SA) has a much bigger presence at Delhi Airport as 13 out of its 27 members serve Delhi including the home-carrier Air India. While SkyTeam and Oneworld have only 7 members each serving Delhi Airport. And SIA being Vistara's parent, it may potentially join Star Alliance in the future, increasing SA's share at Delhi. So it would be welcome development if Delhi Airport comes with a SA specific terminal instead of developing T-4 as domestic only. Inter-terminal connectivity needs to be improved, terminals should ideally be co-located and interconnected though walkway or dedicated metro services. The next few years will be extremely favorable for Delhi Airport with double digit passenger growth as Indian economy is expected to grow at 7.5-8.5% and become the fastest growing major economy in the world. And Delhi-IGI Airport may well beat the big Asian hub airports like Kuala Lampur, Singapore, Bangkok-Suvarnabhumi in the coming years.


·         For simplicity I have referred to DGCA published data although the authentication of DGCA released data are sometimes questioned. 
·         Delhi airport interior picture is from Wikipedia Commons. 

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