The metro’s push for a world-class international airport has hit turbulent weather caused by policy logjam, lack of political will and rank bad planning
By all accounts Mumbai is a high-flying city. Except on one. It just doesn’t have enough land to, well, safely land the ever-growing tribe of globetrotters. The city is adding close to six million air passengers every year. That’s a Singapore taking off or landing in Mumbai every year. For the record, 41.67 million passengers used the Mumbai airport in 2015-16, and that figure is expected to breach the 46 million mark by the time this fiscal year winds down to an official close.
More and more people flying in and out of a city is usually good news. But this is Mumbai, a city where holding on to land is a harder fought battle than some of the high-flying boardroom skirmishes. The Mumbai airport has decisively lost one battle at least, if not the war. The city has two terminals: T1 & T2. T1 exclusively caters to domestic passengers, and T2 to both international and domestic traffic. Unlike Delhi, where the two terminals have two separate lives, the two terminals of the Mumbai airport share land. Over 300 acres out of the 2,000 meant for both the terminals has been overrun by encroachers and their makeshift structures. Some of these precarious contraptions have over the years also grown vertically and are as close as 10 metres from the airport.
Such close proximity to the airport is a massive security risk, and is a visible point that has often been stated. There is a larger point in the shadows and it needs to be stated simply. The 300 acres was to have been used to construct more parking bays, a point clearly articulated in the original airport plan. The constraint on airports is not as much on runaways as it’s on parking bays. If there aren’t enough parking bays, the overall capacity of an airport to accommodate flying and landing passengers is severely curtailed.
On and off, the government tries to do something about it and sets cut-off dates for eligible slum dwellers to be rehabilitated. For now, the government is sticking, even if precariously, to January 1, 2000 as cut-off date. In April of 2015 a fresh survey, the 10th such, was carried out for identifying slum dwellers eligible for rehabilitation. The results of the exercise are yet to be known. Sometimes, the courts also try to solve this seemingly intractable problem. In 2016, the Bombay high court ordered the Mumbai Metropolitan Regional Development Authority (MMRDA) to clear slums that came up after 2009. It particularly wanted the agency to focus its attention on the vertical structures. The usually lethargic MMRDA was jolted out of its inaction, and a rehabilitation and redevelopment contract was given to the real estate company HDIL. But the contract was found to be faulty and it was challenged in the court and annulled.
“If encroached land had been freed, many parking bays would have been created. With encroachments very close to runways, there can be no extension of runways. The land is a state asset. If the government has the will it can resolve this issue fast. Mumbai International Airports Limited (MIAL) seems to have lost interest in the project,” said former Airports Authority of India (AAI) chairman VP Aggarwal. It’s the point that’s been brought out more starkly in a report prepared by S Mangala, who is DGM (aviation safety) of western region, AAI.
“The encroachment of airspace by the buildings around the airports is a cancer spreading across Indian airports, but it has brought aviation safety to critical limits in Mumbai. There is the involvement of top officials of the MIAPL [Mumbai International Airport Private Limited], AAI, DGCA [Directorate General of Civil Aviation] and MoCA [Ministry of Civil Aviation] in compromising aviation safety and therefore I recommend that the mitigation measures recommended in this report be undertaken under the supervision of ICAO [International Civil Aviation Organisation],” said the Report on Aviation Safety. “The unwillingness of the authorities to act in accordance with air regulations could be catastrophic in case of any eventuality because the number of ground casualties could be far more than that of passengers and crew put together.”
Citing safety oversights, the US Federal Aviation Administration downgraded India’s civil aviation sector in 2014. A year earlier the ICAO audited India’s civil aviation sector and discovered severe safety lapses. Mumbai is India’s second busiest airport after Delhi and it has a main runway and a secondary one. One arm of the X-shaped Mumbai airport terminal, T2, has been left incomplete due to encroachment curtailing its capacity and additionally one-third of the airport land is occupied by slums. Usually, in an international airport of global standards, 60 percent of the available land is used for airfield infrastructure like the runways, taxiways and parking stands.
Protected by powerful political interests, encroachers refuse to move out. “The politicians have the knack of getting things done when they want them done. Large parts of the city economy are based on connectivity and this is going to hit Mumbai very hard,” said an industry expert. “The political class has been very lethargic and has no long-term vision. Due to short-term narrow political objectives, no one thinks about airports.”
Non-availability of parking bays at the Mumbai airport has a knock-on effect in the entire country, since connecting flights are not able to fly to Mumbai as frequently as they can. Aviation expert Hormuz P Mama said, “The parking bay capacity has saturated at Mumbai airport. This situation does not allow more passengers into the terminal buildings and approach roads, despite capacity available at passenger terminal buildings. It’s only on rare occasions the runway is able to handle about 50-51 flights an hour, which is the optimum number.”
Due to heavy congestion, there are many delays. As per safety norms, separation between flights cannot be less than 60 seconds. Delhi airport, the busiest in the country, follows a gap of two-three minutes. “Having cross runways at Mumbai airport posed efficiency issues. So only single runway operations can take place. Such operations have limitations as there can be a maximum peak hour operations of 45 flights. This results in peak hour flights having to be shifted to off peak hours, which of course causes delays,” added Aggarwal.
The Navi Mumbai saga
In February 2017, more than two decades after the state government had first proposed developing a second airport for Mumbai, GVK Group-led MIAL bagged the contract for Navi Mumbai International Airport (NMIA), offering 12.60% annual revenue to City Industrial Development Corporation (CIDCO). It outbid GMR, the operator of Delhi and Hyderabad airports, which offered 10.44% annual revenue. Tata Realty and Hiranandani had also shown interest in the project, but dropped out.
NMIA will be spread across 1,160 hectares, will have two independent parallel runways with full length taxi ways on either side of the runways and accommodate large aircraft. It will have the capacity to absorb 60 million passengers by 2030. According to CIDCO, the airport will boost industrial development along the Mumbai-Pune-Ahmednagar Corridor, Mumbai-Nashik Corridor and Konkan belt.
Industry observers said that the Rs 16,000 crore greenfield project is unlikely to be ready in two years as per government expectations. There are three logistical challenges to be surmounted. First, the flow of the Ulwe river has to be diverted for around 8.5 miles. Second, a 90-metre hill has to be levelled. Third, large parts of the low-lying and marshy land have to be filled with soil. The last challenge is the most complicated since the land is meant for baggage handling operations, always done in a secure environment underground.
There are also other relatively easier challenges that range from re-laying the high voltage transmission lines that are currently passing through the land, clearing 400 acres of mangroves forest and resettlement of nearly 3,500 families in 10 villages to intensive work to make the air corridor safe against bird ingress during flight landings and take offs. The Karnala bird sanctuary is located close by. Though part of pre-development work has started, some land is yet to be acquired.
Mama said for an airport to accommodate a peak capacity of 100 million passengers a year, it would require 4,000 acres. “By the time the NMIA is going to be completed, the situation at the second airport is going to be absolutely cataclysmic. Mumbai is turning away airlines. Being the financial capital of the country it needs global connectivity for its survival and commercial success,” he added.
Speaking on tiding over the traffic congestion till NMIA comes up, Amber Dubey, partner and India head, aerospace and defence, KPMG, said that there is a limit to the number of flights that can be accommodated. “The city is not handling more than 40-45 flights per hour whereas many global airports are handling 50 flights per hour. Airlines can bring in wide-bodied aircraft like A330, B777 or B787 on the domestic routes for Mumbai to gain. There will be longer queues for which we can bring in more X-ray machines and CISF screening officers. These staff can be redeployed for screening, eliminating redundant activities that they are currently made to do,” he said.
Former Air India executive director Jitender Bhargava said that many airports worldwide have faced problems of congestions. “It is the issue of tiding over and improving efficiency, which means more landings and take offs per hour. It could also mean having more capacity at lean hours,” he said. Bhargava, however, pointed out that earlier Mumbai was the sole international flights hub. “Today with airports in Hyderabad, Bangalore, Mangalore, Trichy, Trivandrum, Nagpur and Pune servicing outbound flights, the shortage in Mumbai may not be as acute as it was in the past. Larger capacity aircraft could be deployed and airlines could operate flights to Europe and US out of these other airports,” he added.
Making flying affordable
Radical policy interventions in the telecom industry led to high competition and exponential growth in the early 2000s, lowering costs and bringing mobile phones within the reach of the common man. The same model could be replicated in the aviation sector. “A golden window of opportunity has been provided to us after the crash of oil prices since January 2015. Around 50 percent of the air ticket price comprises of the oil price. Yet with 300 million middle class people in the country, only 99 million air tickets were sold last year, Jan-Dec 2016,” said Dubey, underlining the potential.
“No other sector in India is growing at this unprecedented pace of 23-25% per annum, despite the fact that jet fuel price in Delhi is Rs 54 per litre, which is almost 70% costlier than the global average. If the government can match the global price for just three years on an experimental basis, we can leapfrog to 300-350 million domestic passengers in less than six years. The infrastructure and aircraft fleet will of course need to be rejigged to handle that kind of traffic growth,” he added.
Dubey also pointed to the fact that establishing an airport is a tough process as it requires availability of at least 2,000 acres of land. “For that farmers and other landowners have to sacrifice their land. You have to keep their interest in mind. Since the positive impact of an airport development is seen only eight to 10 years down the line, politicians and bureaucrats are wary of getting too aggressive on land acquisition,” he said, pointing to political difficulties.
The revenue sharing dilemma
There are also complicated revenue sharing calculations that can have an impact on the growth of aviation in Mumbai. GVK will share 12.6 percent of its annual revenue from NMIA with CIDCO; in comparison, Goa’s second airport at Mopa has a share of revenue at 36.99 percent. The difference in revenue share emanates from the fact that though both are greenfield projects NMIA has huge site challenges.
“Due to the high cost of land in Navi Mumbai, non-aeronautical revenue like hotels, retail and parking will not be available to the developer. As per terms and conditions of the contract, the existing contractor (GVK, developer of MIAL) had the first right of refusal for quotes within 10 percent, so even if they were not eligible the contract had to go to GVK,” said Aggarwal.
From the Mumbai airport, T1 & T2, the government gets 38.70 percent share of the revenue, while from Delhi it gets a 45.99 percent revenue share. “With the government taking away revenue it is a party to creating a monopoly,” said Captain Gopinath, founder of Air Deccan, India’s first low-cost airline. “This removes free competition with a uniform level playing field.” Bhargava, however, said that in a two-bid technical specification system, the contract is given to whoever gives higher returns.
“The most lucrative proposal is in the second stage. Though the government must set up the airports initially, eventually it must create competition and exit,” countered Gopinath.
Bhargava too added that once the airport is constructed the government should ‘forego’ that revenue and allow it to be translated in terms of benefit to passengers by way of lower airport user development fees. “The government’s job is not to make money but be a facilitator and it has already admitted that it has the requisite wisdom that lower fares stimulate demand. The moment you have more passengers spending less on fares, more people will travel. We must get an international standard airport at the lowest possible cost which can only come when third parties are removed,” Bhargava said.
From a public sector to a private sector monopoly?
Gopinath said public sector monopoly has been replaced by private sector monopoly. “Public sector monopoly is inefficient but private sector monopoly is a monster. Competition is key to price and quality of service, which are the two main casualties of monopoly,” he added. “Monopoly affects equitable growth. Though the private sector has created world-class airports, these have become exorbitant. Airport charges at Mumbai, Delhi or Bengaluru are very high. All over the world, big cities have multiple airports. Advanced countries have used anti-trust laws to break monopolies. Heathrow airport in London has five terminals and handles 100 million passengers. In comparison, our airports are not catering to growth. Places like Mumbai and Delhi need three-four airports. Ultimately you need to have competitive tariff and good service, which can be effected with good competition. At present, prices are very high and regional connectivity suffers.”
Countering Gopinath’s view, Bhargava said the private sector today is fully equipped to carry out large infrastructure projects and Airports Economic Regulatory Authority of India (AERA) keeps a check on arbitrary airport development fee or hikes by airports. “You get the best party to make it run.
Hyderabad, Delhi and Bangalore airports are all good. Was AAI not a monopoly organisation running all airports?” Bhargava questioned. Aggarwal too feels that privatising airports brings in efficiency in services. “In a dynamic scenario, policies too must be dynamic and not cast in stone as the case is at present,” he said. “You have to judge an airport by the quality of service it provides.”
geetanjali@governancenow.com
(The story appears in the April 1-15, 2017 issue of Governance Now)
