Non-Aeronautical Revenues in Indian Airports

There are seventeen international airports in India out of which six are managed by private companies. Through this article, I wish to make a comparison on the non-aeronautical sources of revenue generation between airports that are operated by AAI (Airport Authority of India) and ones managed by private players.

The chart below indicates the share of non-aeronautical revenues as a percentage of the total revenue. It is very evident that in the case of Delhi, Hyderabad, Mumbai and Bangalore, the share exceeds 38 percent (2010 data).  On the other hand, the average of the non-aviation revenue share of the other eleven airports owned and operated by AAI, is only a mere 17 percent.

The reason for this is clearly because private companies see non-aviation sources as huge profit making potential while bidding for PPPs. To achieve this goal of maximizing their profits, they develop the land surrounding the airport for commercial activities. This includes revenues from real estate development by construction of hotels, business parks, malls, parking facilities, etc.  This, at a later stage can be further developed into an aerotropolis, which according to the Wikipedia definition is “urban plan in which the layout, infrastructure, and economy is centered around an airport”. This is already existent in other countries. For example, the aerotropolis of Singapore Changi Airport has helped it earn 58 per cent of its revenues from non-aviation sources.

On the other hand, AAI only aims at providing aviation services in the best possible manner. AAI isn’t really bothered about development of the surrounding airport land. The majority of the non-aeronautical revenues would come from activities within the airport terminal like renting of shops, advertisements, etc. I believe AAI should make use of the existing potential to develop land surrounding the airport area and the revenues generated can thus be used to develop airports in Tier II cites or modernize/upgrade existing airports to meet the growing demands.  

Here is a recent news article (Link: http://www.business-standard.com/article/economy-policy/nod-to-privatise-kolkata-and-chennai-airports-113070400953_1.html) on Government approval to hand over the international airports at the Chennai and Kolkata to private operators. The two metro cities have huge potential to gain from non-aeronautical sources because of the ever increasing air traffic growth. Currently, Chennai and Kolkata are ranked the third and fifth respectively, among the busiest airports in India.