Indian airports ride the wave of infrastructure growth – CSIA all set to power this growth

Posted: 28 September 2007 | G.V. Sanjay Reddy, Managing Director, Mumbai International Airport Private Limited and Vice Chairman, GVK | No comments yet

Noted Indian economist Dr. V.K.R.V. Rao, said more than two decades ago, “The link between infrastructure and economic development is not a once and for all affair. It is a continuous process; and progress in development has to be preceded, accompanied and followed by progress in infrastructure, if we are to fulfil our declared objectives of generating a self-accelerating process of economic development.”

Noted Indian economist Dr. V.K.R.V. Rao, said more than two decades ago, “The link between infrastructure and economic development is not a once and for all affair. It is a continuous process; and progress in development has to be preceded, accompanied and followed by progress in infrastructure, if we are to fulfil our declared objectives of generating a self-accelerating process of economic development.”

Globally too, the critical role of infrastructure in facilitating growth is widely recognised and well borne out by cross-country experience. The transformation of countries such as Japan, Hong Kong, Singapore, China and Malaysia were preceded and reinforced by substantial investments in physical infrastructure.

As India moves towards becoming a mature and vibrant economy, the need for infrastructure to support broad based inclusive growth is ever more pressing. Infrastructure development will undoubtedly play a crucial role in helping India sustain high growth rates. India’s performance in recent years has been among the best in the world. The reforms initiated since the early 1990s have unshackled the economy. The long-term trend rate of growth has steadily increased from an average of 3.5% a year between the 1950s and 1970s, to around 7% to 8% in recent years. It goes without saying that a reliable infrastructure network will lay the foundation for a future of sustainable economic growth in the country.

It is now increasingly recognised that aviation, far from being a mere mode of transportation, is a crucial cog in the infrastructure wheel for sustainable development of the Indian economy. Moreover, the quality of airport infrastructure, which is a vital component of the overall transportation network, contributes directly to a country’s international competitiveness and the flow of foreign investment. The growth rates witnessed in Indian aviation today are amongst the highest in the world. India’s passenger traffic is all set to grow at 15-20% for the next five years. At this rate the growth expected in the next 20 years may be witnessed in the next ten instead. Airports are a symbol of a country’s aviation set up and need to support this growth rate if the economy is to grow. Airport infrastructure development is a capital-intensive sector that requires proper planning, with a vision for the next 20 years and the combined resources of the public and private sectors.

Infrastructure investment in India has been predominantly financed publicly. However since the mid-1980s, rising costs, the complexities of creating and maintaining infrastructure projects, increasing fiscal pressures and competing demands on public resources, have led to the formation of Public Private Partnerships or PPP’s. Considerable progress has already been made in attracting private capital in sectors such as telecommunications, ports, power and roads.

The modernisation of Chhatrapati Shivaji International Airport (CSIA) at Mumbai and the Delhi airport through the PPP route is the first such example in Indian aviation. The involvement of the private sector in this exercise was no more an option than a definitive requirement for the Government, to ensure the upgrade of airport infrastructure with negligible burden on its finances. PPP’s, more than anything else, are known to bring in higher levels of service efficiencies and sustain the growth momentum.

GVK was accorded the task of modernising and upgrading CSIA, India’s busiest airport. The airport operations were handed over on 3 May 2006. We were mindful of the fact that passengers form their first impressions about a nation from the state of its airports. The quality of passenger traffic at these, reflects the overall level of economic development, tourism and business activity in any country. Mumbai was a particular case in point since it is the economic nerve centre of India and one of the key gateways to India. Sufficient attention therefore had to be paid to the facilities, quality of design and maintenance at CSIA, if it were to become a symbol of national pride. The blueprint for the modernisation of CSIA, in the form of the master plan, is a documented step-by-step development with a vision of making CSIA a world-class airport that Mumbai can be proud of.

Besides planning, a change in mindset was required. While building a new airport or upgrading an existing one, it is imperative that an adequate amount of time and resources be devoted to effectively maintain satisfactory levels of convenience and service. There are two things I have always believed in: 1) a satisfied customer is the best business strategy of all and 2) a customer perceives service in his or her own terms. In the case of airports, service becomes the key differentiator between just a good passenger experience and a memorable one. We want passengers to have a memorable experience at CSIA. In the last year there have been changes at CSIA, such as additional check-in counters, faster immigration, wi-fi, new retail options for duty-free shopping, two new rapid exit taxiways and one parallel taxiway. We also have better housekeeping, improved signages, fast food kiosks and a website with live flight updates. Our clear focus is on passenger convenience and comfort in the long term. Above all, CSIA has a new identity rooted in the spirit of Mumbai.

With the current IT deployment and the new investments planned in technology, CSIA hopes to optimise existing airport facilities and resources. In fact we try and study passenger requirements from time to time so as to make their passage through the airport a pleasant and comfortable one. What we have noticed is that while frequent flyers look for swift and hassle-free airport experiences with the minimum of contact with staff, leisure or infrequent flyers place considerable emphasis on friendly and courteous staff. With a 5-6 hour transit layover and no access to an airline lounge, leisure passengers expect more from the airport experience and this is when the standard of airport services comes under the most scrupulous analysis. Leisure options, seating availability, general terminal comfort, comfortable waiting areas, finding a clean washroom, plus ancillary amenities to enjoy or pass away time, all contribute towards achieving high standards of customer service.

Primary airports such as CSIA will have to lead by example in managing the huge capacity infusion by domestic and international airlines. For the passengers, with privatisation, the travel experience will eventually change to an enjoyable and consumer friendly environment, similar to the leading international airports globally.

Any significant infrastructure development though, comes with its own set of challenges. In the case of CSIA, paucity of land is the single most important challenge we face. It is the one resource which cannot be expanded. Unlike most other airports that do not face space constraints, CSIA is landlocked on all sides by slums. Having said this, MIAL is in the process of resolving this issue and has already begun the process of identifying land needed to relocate slum dwellers. Being in the heart of the city, further development is possible with land availability. In such a scenario the developments that have taken place so far and what has been planned assumes greater significance, since we continue to face this challenge head on to give India an airport that can be compared to the other airports of the world.

The next few years are extremely critical for the civil aviation sector and the development of airports is the key building block. India is currently on the right track and we are confident that both the public and private sector, working in partnership with development agencies, will be able to bring about significant and sustainable improvements in India’s infrastructure. This will also help the overall process of growth. More than anything else, we at GVK are pleased to be a partner to India in this worthy endeavour.

About the author

Sanjay Reddy holds multiple positions and commands a key management role in the Hyderabad based GVK Industries. As the MD of MIAL, he is currently responsible for the planning and implementation of the Mumbai Airport development strategy. Prior to this assignment, he was involved in the affairs of a number of strategic initiatives taken by GVK. As the Vice Chairman of GVK Industries Limited, he was responsible for the successful implementation of various power projects in the country. He is also the CEO of GVK Bioscience and spearheads the Contract Research Services Division.