Demand for airports in smaller cities has been growing every year. While the demands may be fair, as many as 93% of the airports owned by Airports Authority of India (AAI) are making losses. In the last four years from 2010-11 to 2013-14, these airports have accumulated a cumulative loss of 4788 crore rupees.
There have been demands from various states to establish Airports in smaller cities, to encourage investments, tourism & improve connectivity. While the demands are fair, viability is always an issue. It seems that the government does not do enough planning before setting up these Airports. Nothing can explain these shocking numbers. 93% of the government owned (owned by Airports Authority of India (AAI)) Airports are making losses and they collectively lost 4788 crore rupees in the last four years from 2010-11 to 2013-14. Some of the bigger Airports in Delhi, Mumbai & Hyderabad are PPP projects and are not owned by AAI.
Airports Authority of India (AAI)
Airports Authority of India (AAI) was constituted by an Act of Parliament and came into being in 1995 by merging erstwhile National Airports Authority and International Airports Authority of India. The merger brought into existence a single Organization entrusted with the responsibility of creating, upgrading, maintaining and managing civil aviation infrastructure both on the ground and air space in the country.
AAI manages 125 airports, which include 18 International Airport, 07 Customs Airports, 78 Domestic Airports and 26 Civil Enclaves at Defense airfields. Out of these, 107 Airports are open to civilian aircrafts. Out of these 107, only 8 have made profits in 2013-14, while the rest of the 99 have made losses in the last four years from 2010-11 to 2013-14.
Gujarat (10) has the highest number of AAI owned airports followed by Maharashtra (9), Assam (7), Rajasthan (7), Tamil Nadu (7) in the top five. Andhra Pradesh, Karnataka, Uttar Pradesh & West Bengal have 6 airports each, while Madhya Pradesh has five. The top 10 states make for 64% of all the states.
Profit Making Airports
Only eight (8) of these 108 airports have made a profit in 2013-14. However, there is a discrepancy in the data with Pune airport being mentioned as both making profits in 2013-14 and as making a loss. Chennai Airport made the highest profits with a profit of 452 crore. Next is Ahmedabad Airport with a profit of 58 crore followed by Goa Airport with 51 crore. Kolkata Airport also made a profit of 44 crore. Kerala & Maharashtra have two airports each in the profit making list (Trivandrum & Calicut, Pune & Juhu). Trivandrum made losses from 2010-11 to 2012-13. It made profits for the first time in the last 4 years in 2013-14.
Loss Making Airports
17 Airports have made a loss of more than Rs 100 crore from 2010-11 to 2013-14. Amristar Airport has made the most losses with 217 crore followed by the Jaipur Airport (191 crore), Bhopal (182 Crore), Lucknow (167 Crore) and Varansi (165 Crore). Bangalore (HAL), Aurangabad, Delhi (Safdarjung), Guwahati & Udaipur are the remaining Airports in the top loss making airports.
In terms of states, Airports in Uttar Pradesh have made a cumulative loss of 458 crore followed by Madhya Pradesh (415 crore), Rajasthan (382 crore), Karnataka (352.13 crore)) & Assam (320 crore in the top five. Airports in 10 states have made a cumulative loss of more than 200 crore rupees.
What does the Government say?
The government cites the following reasons for these heavy losses.
- Low air traffic movements resulting in lesser aeronautical revenue
- Low non aeronautical revenue potential
- Basic operating expenditure on account of regulatory/IATA and security requirements.
When asked what steps the government is taking to revive these airports, the government says it is trying to development of cargo activities; enhance non-aeronautical revenue through revision of rates and award of contracts through master concessions, allowing operation of flying schools at non-operational airports, encouraging Maintenance, Repair & Overhauling (MRO) activities, revision of base rates etc.
But none of these seem to be working the way the government wishes to. In close to 50% of these airports, the losses have increased from 2012-13 to 2013-14.