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CORPORATE PLAN 2017-26

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AIRPORTS AUTHORITY OF INDIAHkkjrh; foekuiŸku izkf/kdj.k

AAI's Vision till 2026 is:

“To be the principal aviation services provider in the country, AAI shall

adopt and facilitate the use of contemporary air navigation services;

upgrade and develop airport infrastructure;

support improving air connectivity at unserved and under-served airports;

have a restructured organization;

focusonprofitableoperationsatmajorairportsthroughcontinuing efforts on cost reduction and enhancing non-aeronautical revenue.”

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“To be the foundation of an enduring Indian aviation network, providing high quality, safe and customer-oriented airport and air navigation services, thereby acting as a catalyst for economic growth in the areas we serve”.

MISSION

VISION

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AAI Corporate Plan 2017-264

ContentsForeword by Chairman, AAI 12Preface by Member Planning, AAI 14

1. Introduction 171.1. Background 171.2. Corporate Plan 2017-26: The Context 171.3. Objective and Approach 181.4. This Document 192. Internal Assessment 212.1. AAI’s Mandate and Services Provided 212.2. Resource Assessment 262.3. AAI’s Performance 312.4. Summary of Internal Assessment 393. External Assessment 413.1 PEST Framework 413.2. Summary of External Assessment 534. Market Assessment 554.1. Existing Market Constituents 564.2. Allied Services 684.3. Understanding and Managing Customer Expectations 775. SWOT Analysis 815.1. Key Strengths 815.2. Key Weaknesses 835.3. Major Opportunities 845.4. Major Threats 855.5. Summarizing the SWOT 866. Setting the Vision and Mission 896.1. Setting the Mission Statement 896.2. Setting the Vision Statement 907. Corporate Agenda: Priorities, Action Areas and Strategies 957.1. Introduction 957.2. Framework 957.3. Priorities for AAI 967.4. Action Areas for the Plan Period 997.5. Strategies 1008. Corporate Plan Monitoring and Review 1198.1. Corporate Plan Monitoring and Review 1198.2. Summary 123

AAI Corporate Plan 2017-26 5

List of ExhibitsExhibit 1: Overarching framework for preparation of Corporate Plan for AAI 19Exhibit 2: Framework for conducting internal assessment 21Exhibit 3: AAI's Mandate and Services being offered 22Exhibit 4: AAI initiatives to modernize air traffic services in India 25Exhibit 5: City-side developments to be undertaken by AAI (under DPR stage) 27Exhibit 6: Airports under AAI: operational vs. non-operational 27Exhibit 7: Average terminal capacity utilization for AAI and other airports 28Exhibit 8: Organizational pyramid, AAI 29Exhibit 9: Organizational structure for AAI 30Exhibit 10: Revenue sources for AAI 32Exhibit 11: Revenue mix for AAI (2008-16) 33Exhibit 12: Composition of expenses (2008-16) 33Exhibit 13: Expected funding sources for proposed capital expenditure over 2016-20 34Exhibit 14: Contribution to PBT by profitable airports under AAI in 2015-16 35Exhibit 15: Growth trend of passenger traffic in India 36Exhibit 16: Airports operating beyond capacity 37Exhibit 17: PEST framework for external assessment 41Exhibit 18: Implications of the NCAP, 2016, for AAI 43Exhibit 19: Unutilized / Under-utilized AAI airports 44Exhibit 20: Growth in domestic air passenger traffic and India’s economy 47Exhibit 21: Projected growth in key drivers of air passenger growth 49Exhibit 22: Framework for internal assessment 55Exhibit 23: Approach to market analysis 56Exhibit 24: Growth of passenger traffic in India 57Exhibit 25: Growth of domestic and international traffic 58Exhibit 26: Correlation between growth of domestic traffic and GDP 59Exhibit 27: Passenger growth forecast 60Exhibit 28: Additional capacity and investment requirement 61Exhibit 29: Evolution of airport ownership in India 62Exhibit 30: Traffic distribution between AAI and PPP airports 63Exhibit 31: International and Domestic cargo growth 64Exhibit 32: International and Domestic cargo growth 65Exhibit 33: Sector wise growth in air cargo 66Exhibit 34: NTDPC forecast for cargo infrastructure growth 67Exhibit 35: Potential disciplines for international consulting for AAI 69


Exhibit 36: Assessment for international consulting business 71Exhibit 37: Airports with MRO facilities 72Exhibit 38: Evolution of Ground Handling policy in India 74Exhibit 39: Porter's assessment for ground handling business 75Exhibit 40: Assessment for in-flight catering business 77Exhibit 41: Land available at select airports 82Exhibit 42: Comparison of non-aeronautical revenues of AAI with a comparable private

airport 83Exhibit 43: Summary of SWOT analysis for AAI 87Exhibit 44: Framework of review mechanism 89Exhibit 45: Framework for preparation identifying vision statements 91Exhibit 46: Key inputs for vision 92Exhibit 47: Framework for setting priorities 95Exhibit 48: Action Plans for the plan period 99Exhibit 49: Phases for implementation of ATFM 100Exhibit 50: Approach for infrastructure planning 101Exhibit 51: Focus on airport marketing 102Exhibit 52: Usage of social media by airports 103Exhibit 53: Potential Social Media Platforms for AAI 104Exhibit 54: Strategy on new greenfield airports 105Exhibit 55: Development Models for Fuel Farms 107Exhibit 56: Approach to provide value added services 108Exhibit 57: Options to improve energy efficiency 109Exhibit 58: Strategies to develop green airports 110Exhibit 59: Strategies/Plan for SMS implementation level 3-4 111Exhibit 60: Strategies to increase non-aeronautical revenue from terminals 112Exhibit 61: Strategy for city-side development 113Exhibit 62: Potential development options to be assessed 114Exhibit 63: Possible development models 114Exhibit 64: Three step approach to MRO business 115Exhibit 65: Examples of MRO business (Representative list) 116Exhibit 66: Modes of entering international consulting business 116Exhibit 67: Strategy for brand building 117Exhibit 68: Corporate Planning Monitoring and Review framework 120Exhibit 69: Key steps to be undertaken in the annual monitoring and review exercise 121Exhibit 70: Steps for revising strategies by AAI 123


List of AnnexuresAnnexure 1: List of expansion works planned by AAI 125Annexure 2: Cargo handling capacity and volume handled by AAI airports 130Annexure 3: Airports selected for City side development 131Annexure 4: Stakeholder consultation 132Annexure 5: Questionnaires used for feedback on Mission and Vision statements 133Annexure 6: Vision statements of international airports 134Annexure 7: Action plans provided by select Directorates of AAI 135Annexure 8: Potential coverage of MIS for AAI 145Annexure 9: City side development by international airports 146


List of AbbreviationsAbbreviations Expansions

AAI Airports Authority of IndiaAAICLAS AAI Cargo Logistics and Allied Services Company LtdACI Airports Council InternationalACLPB Air Cargo Logistics Promotion BoardACS Air Cargo Community SystemADS Automatic Dependent SurveillanceADS-B Automatic Dependence Surveillance – BroadcastAEO Authorized Economic OperatorAERA Airports Economic Regulatory Authority of IndiaAIATSL Air India Air Transport Services LimitedAIESL Air India Engineering Services LimitedAIMS Airport Information Management SystemAISATS Air India SATS Airport Services Private LimitedANSP Air Navigation Service ProviderANS Air Navigation ServicesAOCC Airport Operation Control CentreAODB Airport Operational Data Base (AODB)ASBU Aviation System Block UpgradesASEAN Association of Southeast Asian NationsASMGCS Advanced Surface Movement Ground Control SystemsASQ Airport Service QualityATC Air Traffic ControlATF Aviation Turbine FuelATFM Air Traffic Flow Management SystemATFMSG Air Traffic Flow Management Steering GroupATM Air Traffic ManagementATS Air Traffic ServicesAVSEC Aviation SecurityBCAS Bureau of Civil Aviation SecurityBIAL Bangalore International Airport LimitedBSF Border Security ForcesCAG Changi Airport GroupCAGR Compound Annual Growth RateCAPA Centre for Asia Pacific Aviation


C-ATFM Centralized Air Traffic Flow ManagementCATC Civil Aviation Training CollegeCBP Customs and Border ProtectionCE Civil EnclaveCHQ Central HeadquartersCNS Communications, Navigation and SurveillanceCP & MS Corporate Planning & Management ServicesCPC Centre for Perishable CargoCSI Customer Satisfaction IndexCUDCT Common User Domestic Air Cargo TerminalsDAEP Dubai Aviation Engineering ProjectsDGCA Directorate General of Civil Aviation of IndiaDIAL Delhi International Airport LimitedDPR Detailed Project Report DRDO Defence Research and Development OrganisationDVOR Doppler VHF Omni Directional RangeECIL Electronics Corporation of India LimitedE & M Electrical & MechanicalEPoS Electronic Point of SaleF & B Food and BeverageFIDS Flight Information Display SystemFIU Flight Inspection UnitFTC Fire Training CollegeFSC Full Service CarrierGoI Government of IndiaGAGAN GPS Aided GEO Augmented NavigationGBAS Ground-Based Augmentation SystemGDP Gross Domestic ProductGH Ground HandlingGHA Ground Handling AgenciesGHIAL GMR Hyderabad International Airport LimitedGRIHA Green Rating for Integrated Habitat AssessmentG2G Government – to – GovernmentHOD Heads of DepartmentHR Human ResourcesIAA Indian Aviation AcademyIAAI International Airports Authority of IndiaIAF Indian Airforce


IATA International Air Transport AssociationIBEF India Brand Equity FoundationICAO International Civil Aviation OrganizationIFS Instant Feedback SystemILS Instrument Landing SystemIMF International Monetary FundINR Indian RupeeINSPIRE Indian Ocean Strategic Partnership to Reduce EmissionsIP Internet ProtocolISMS Information Security Management SystemISRO Indian Space Research OrganisationI.T Information TechnologyJV Joint VentureJVC Joint Venture CompanyKPI Key performance IndicatorsLCC Low Cost CarrierLED Light Emitting DiodeMAG Minimum Annual Guarantee MGAE MAS GMR Aerospace Engineering Company LimitedMGAT MAS - GMR Aero Technic LtdMIAL Mumbai International Airport LimitedMIS Management Information SystemMMT Million Metric TonneMoCA Ministry of Civil AviationMoEF Ministry of Environment and ForestsMoU Memorandum of UnderstandingMPPA Million Passengers Per AnnumMRO Maintenance and Repair OrganizationsMT Metric TonnesNAA National Airports AuthorityNCAP National Civil Aviation PolicyNOCAS No Objection Certificate Application SystemNTDPC National Transport Development Policy CommitteeOECD Organisation for Economic Co-operation and DevelopmentO & M Operations and ManagementPBN Performance Based NavigationPBT Profit Before TaxPEST Political, Economic, Social and Technological


PPP Public Private PartnershipsPMC Project management consultancyRBI Reserve Bank of IndiaRCS Regional Connectivity SchemeR&D Research and DevelopmentRFID Radio Frequency IdentificationRNFC Route Navigation Facilities ChargesSAARC South Asian Association for Regional CooperationSATCOM Satellite CommunicationsSARP Standards, Recommended Practices and ProceduresSBAS Satellite based Augmentation SystemSCA Scheduled Commuter AirlinesSEZ Special Economic ZoneSID Standard Instrument DeparturesSMS Safety Management SystemSOW Statement of WorkSPV Special Purpose VehicleSRM Safety Risk ManagementSSP State Safety ProgrammeSTAR Standard Terminal Arrival RoutesSWOT Strength, Weakness, Opportunity, ThreatTMI Traffic Management InitiativesTNLC Terminal Navigational Landing ChargesUAE United Arab EmiratesUN United NationsUSD US DollarVFR Visual Flight RulesVHF Very High Frequency


Foreword by Chairman, AAI

I’m pleased to provide some introductory thoughts to this document, which arrives at an important turning point in history of Indian Aviation, especially at a time when Government of India has released the new National Civil Aviation Policy 2016 (NCAP), as also, when India is going through a phase of high economic growth and is poised to be the 3rd largest aviation market in the world in near future.

In today’s world, airports are operating in a competitive environment and it has become critical to adjust its business strategies inthe ever-evolving aviation scenario to ensure sustainable growth in the future. Airports Authority of India (AAI) is very conscious of its responsibilities and is making sincere endeavour to sustain and propel the growth story in the aviation sector, which is experiencing drastic changes since the recent past. While AAI’s traditional businesses are growing at a healthy rate, there is potential for AAI to foray into new businesses and new markets which complement the existing businesses. International aviation business fosters rapid growth to meet huge demands of relatively higher standards. As such, organisations are pushed to expand and invest in the best tools and technologies to keep up, and Corporate Planning is one such tool. Corporate Plan is of

paramount importance to an organization as it dictates the shared philosophy, practices and culture of an organization and its employees. An organization without a system of a Corporate Plan is often regarded as a body without a soul or conscience. Deciding which type of Corporate Plan is the best for any organisation can be a challenging task.

Since its inception in 1995, AAI has been already participating in globally accepted benchmarking programmes to assess our own standing and understand the areas for improvement in future. It is in this context that AAI has undertaken the preparation of this Corporate Plan document to communicate with its stakeholders. This Corporate Plan, developed for the period 2017 to 2026 is in


harmony with the NCAP and presents the Vision and Mission statements that AAI envisages for itself along with the targets and strategies to meet them during the next 10 years. The Corporate Plan of AAI is a strategic plan, which places greater emphasis on using internal resources and streamlining operations to achieve expected goals. It has been structured by first introducing a grand overall vision ofgrowth and development, then laying out a plan of action on a microscopic level to meet its end goal. It consists of a vision statement, mission statement, strength, weakness, opportunity, threat (SWOT) analysis, market assessment, identifying available resources and then listing objectives and strategies to be used tomeetthoseobjectives

OurCorporatePlan isambitious. Itdefineshow we will be successful within a challenging and changing aviation environment. The plan has been devised to enrich the experience of our stakeholders, and has been developed with their involvement and support through an extensive consultation programme that has also engaged with our internal and external stakeholders, as also, influencers. AAI has exciting aspirations as it moves into a new era of development. This plan, which will guide our workoverthenextfewyears,capturesfivekeypriorities – NCAP, RCS, AAICLAS, UAH & MRO that will enhance our reputation and position on a global platform. Our culture of support andcollaborationwillbenefitthecommunitiesin which we operate and address global challenges. This document is only the start of

the strategic planning process. Throughout the next few months, we will engage to specify the detail of the projectwork thatwill deliver ourvision and feed into an operating plan. We will ensure that we have appropriate supporting strategies for each of our priorities. We will review our plan on an annual basis to ensure that we respond appropriately to external and internal drivers. Our performance is on an upwardtrajectoryandwehaveinvestedinbothcurrent and future research leaders to continue improvement. We want to position ourselves as one of the leading global air service provider in afiercelycompetitiveenvironment.

While concentrating on development, AAI is committed to ensure safety, security and sustainability. Several measures have been adopted and strategies deployed which have a greater probability of success as the same is based on a better understanding of the direction the economy will take. This Corporate Plan brings together in one document the key work which Airports Authority will be doing in the next 10 years in meeting stakeholders’ expectations and making air travel a delight for passengers.

I would like to thank all my fellow Board Members and colleagues, as also, Deloitte Touche Tohmatsu India LLP for their persistent effortsinfinalizingtheCorporatePlandocument.

Dr. Guruprasad Mohapatra, IASChairman, AAI


Preface by Member Planning, AAI

The corporate plan of Airports Authority of India (AAI) for the period from 2017 to 2026 has taken its shape at the right time, when our prestigious organisation is blossoming, with the scope to excel in its current scheme of functioning. The coherent latitude is seconded earnestly by tremendous growth in Civil Aviation Sector in India, with the combination of ever increasing traffic demand, mainstay support from theGovernment of India and concentrated efforts of the stakeholders. At the national level, aviation business has been amajor driver ofgrowth and development in the last 10 years. Civil aviation industry has ushered into an era of expansion and connectivity driven by factors such as Low Cost Careers, modern airports, Foreign Direct Investment (FDI), advanced Information Technology interventions with growing emphasis on regional connectivity, as part of New Civil Aviation Policy (NCAP)-2016.

As a responsible industry stakeholder, AAI is engaging & collaborating with policy makers to implement the various policies of the Government efficiently, with an objectiveto boost India's civil aviation sector. In this currenttransformationalphase,clearlydefinedstrategic action plans, optimal utilisation of internal resources, streamlined operations and performance evaluation parameters are the definite ways to achieve the envisaged goalsover short, medium & long term.

I am happy to present the "Corporate Plan" of AAI on behalf of our Corporate planning & Management Services Department. The plan which would be supporting the NCAP provides for special focus on resource assessments (both internal and external) and market

For an organisation to be competitive, it needs to achieve goals;To achieve its goals, we need strategic plans


assessment.Abriefintroductoryofthesubjectarea of Corporate Plan is provided with SWOT analysis on the strengths and opportunities which may go in favour of implementation of Corporate Plan vis-à-vis the probable key weaknesses and major threats, which mightprove to be challenging. The plan also analyses dimensions involving current & future issues and primary determinants of evaluating performance in a comprehensive way, relating to various steps for realizing the Corporate Plan.Theplanalsoclearlydefinesthespecificaction stages that must be taken-up to achieve thedesiredobjectivesandwhichcan,aswellbeused as markers to check on a periodic basis todeterminewhetherornotsufficientprogressis being made. The objectives set forth areflexible allowing for mid-course amendments and adjustments as the time progresses, sothatwelearnfromourfirstsuchproactiveandqualitative step.

I must appreciate the enormous efforts put in, both by my colleagues in AAI and by M/s. Deloitte TT India, in framing the modalities, in surveying applicable action areas for the Plan period and in bringing out a workable formulation and implementation of policies. I also take this opportunity to thank the Chairman, AAI and the Board Members for their guidance and help, from time to time, in completing the Corporate Plan.

Now in executing the Corporate Plan, we have to identify issues that surround the key question as to who manages and monitors the Plan and how the plan is communicated

and supported and how committed are we in implementing the plan to take our organisation forward. I am happy that we are moving in a positive direction to make this Plan a success, teaming-upinanefficientmannerinachievingthe common goal of 'excellence'

S.RahejaMember (Planning)

Chennai Airport

Amritsar Airport


1. Introduction1.1. Background

The Airports Authority of India (AAI) was constituted by an Act of Parliament and came into being on 1st April 1995 by merging the erstwhile National Airports Authority (NAA) and International Airports Authority of India (IAAI). The merger brought into existence a single organization entrusted with the responsibility for creating, upgrading, maintaining, and managing civil aviation infrastructure both on the ground and in air space in the country.

AAI manages 125 airports, which include 21 international airports (3 civil enclaves), 8 customs airports (4 civil enclaves), 77 domestic airports, and 19 domestic civil enclaves at defence airfields and provides air navigation services for over 2.8 million square nautical miles of air space. In terms of administrative control, AAI has divided its airports under five regions, namely Northern, Eastern, Western, Southern and the North-East.

AAI’s functions are as follows1: ¾ Design, development, operation and maintenance of international and domestic airports and civil enclaves.

¾ Construction, modification and management of passenger terminals.

¾ Development and management of cargo terminals at international and domestic airports.

¾ Provision of passenger facilities and information systems at the passenger terminals at airports.

¾ Expansion and strengthening of operational areas, viz., runways, aprons, taxiway, etc.

¾ Control and management of the

Indian airspace extending beyond the territorial limits of the country, as accepted by International Civil Aviation Organization (ICAO).

¾ Provision of visual aids. ¾ Provision of communication and navigation aids, viz., instrument landing system (ILS), doppler VHF omni directional range (DVOR), radar etc.

1.2. Corporate Plan 2017-26: The Context

As mentioned above, since its inception in 1995, the Airports Authority of India (AAI) has been at the helm of affairs in the development of airport infrastructure and management and control of airport operations and air navigation services in India. Over the past two decades, AAI has been at the forefront of modernizing and developing airside & terminal side infrastructure, air navigation services, and improving its services at airports to deliver a better travel experience to passengers. These measures have resulted in improved air safety and passenger satisfaction as is reflected in passenger experience survey results.

There have been remarkable changes in the Indian aviation sector since the inception of the AAI. Various policy measures in the late 1990s, such as the repeal of the Air Corporation Act, Open Skies Policy & and the promotion of foreign direct investment in aviation and airport infrastructure allowed the flow of private investments in aviation in the form of the emergence and active participation of new airlines. Other factors such as economic growth and the influx of foreign tourists also supported

1http://www.aai.aero


the aviation industry by keeping demand buoyant. The emergence of the low cost carrier (LCC) model, which followed an established trend in western countries, also boosted demand. Passenger traffic grew by ~2.6 times at a compound annual growth rate (CAGR) of 11.6% over the last decade, creating an acute need for further capacity development. Although the spurt in air traffic brought new opportunities for AAI, it also posed a major challenge in terms of expanding ground infrastructure and air navigation services.

The period from 2007-16 also witnessed private sector participation in airport infrastructure development and management in India, with the re-structuring of two major AAI airports at Delhi and Mumbai. Few green field airports, like at Bangalore and Hyderabad, were also developed with funding from private sector. Besides, several state governments, like those in Maharashtra, Goa, Telangana, etc., are planning to develop primary / second airports in certain cities to cater to growing air traffic. In 2008, the Airport Economic Regulatory Authority (AERA) was constituted through the Airport Economic Regulatory Authority of India Act, 2008. The Authority was given the mandate to regulate tariff and other charges for the aeronautical services rendered at major airports and also to monitor performance standards at major airports.

The Indian aviation industry is likely to face challenges arising from the rapid growth and global integration of the Indian economy and from policy and regulatory changes. In a bid to inform stakeholders within and outside the organization of its priorities and proposed future strategies over the next decade, AAI has undertaken the preparation of this Corporate Plan document.

The preparation of the Corporate Plan for the period 2017-26 involved the following:

¾ Information gathering and analyses:• Internal assessment• External &market assessment

¾ Identification of key strengths and weaknesses

¾ Review of Mission Statement and development of the Vision Statement

¾ Development of priorities, action areas and strategies

1.3. Objective and Approach

While the Corporate Plan document presents the organization’s priorities and proposed strategies as a culmination of the present exercise, management activity around Corporate Planning would need to be institutionalized in the context of a changing business environment to ensure its relevance in coming years.

Operational strategies and plans formulated for 10 years would tend to be ineffective as planning tools because they are likely to be based on present expectations of possible changes in the business environment. Institutionalizing corporate planning by setting up a separate corporate planning unit with a well-defined framework within AAI will provide insights into the organization’s strengths, weaknesses, opportunities and threats in a dynamic and rapidly changing business environment and enable AAI to plan and respond effectively.

Aligned to this requirement, a multi-tiered approach is required beginning with an assessment of environmental trends and analyses of the organization’s strengths and weaknesses, development of a statement of the organization’s mission and vision for the future, and identification of priorities and strategies to achieve the identified vision.


This framework is shown in Exhibit 1.

Exhibit 1: Overarching framework for preparation of Corporate Plan for AAI

A SWOT analysis and the drawing up of a vision statement takes time when done once in ten years. A periodic review should be taken at shorter intervals if there are major changes in the organization or the business environment.

AAI accordingly envisages moving away from a static corporate planning

towards adopting a dynamic planning model which can respond to the evolving Indian aviation sector.

1.4. This Document

The various sections of this Corporate Plan document address the following key areas:

Section Number Content Page Number2 Internal Assessment 213 External Assessment 414 Market Assessment 555 SWOT Analyses 816 Setting the Vision and Mission 897 Corporate Agenda: Priorities and Strategies 958 Corporate Plan Monitoring and Review 119

InternetAssessment

SWOT

Mission

Vision

Priorities & Targets

Strategies

Management Aspirations

Aspirations of other Airport Authorities

ExternalAssessment

MarketAssessment

MultipleManagementWorkshops

SeconderyResearch

Dehradun Airpot

Indore Airport


2. Internal AssessmentThe internal assessment undertaken as part of preparation of this Corporate Plan document has focused on three key aspects – understanding of the mandate and services delivered by AAI, analysing resources available with AAI to discharge its mandate, and analysing AAI’s performance on certain parameters. To do so, AAI has used primary data collected by

itself, data from other/secondary sources, and from interaction and consultation within the organisation and with stakeholders outside the organisation.

The focus of this assessment was to identify AAI’s potential strengths / areas of comparative advantage as well as potential weaknesses / areas of vulnerability.

Exhibit 2: Framework for conducting internal assessment

2.1. AAI’s Mandate and Services Provided

As per the provisions of the AAI Act, the gamut of services to be provided by AAI

are summarized along with the extent to which AAI is currently providing these services.

PerformanceUnder this head,

the financial and operational performance of

AAI over the past few years has been

analysed

Mandate and Services

Under this head, an assessment of the

current service portfolio has been undertaken

- airport services; ATC/CNS services; cargo

operations

ResourcesUnder this head, an

assessment of resources has been undertaken - physical resources,

manpower and organizational

resources


Exhibit 3: AAI's Mandate and Services being offered

Mandate as per AAI Act Services being provided currently

Manage airports, civil enclaves and aeronautical communication sta-tions

Yes

Provide air traffic service and air transport service at any airport and civil enclaves

Yes

Plan, develop, construct and maintain runways, taxiways, aprons and terminals and ancillary buildings at airports and civil enclaves

Yes

Plan, procure, install and maintain navigational aids, communication equipment, beacons and ground aids at airports and at such locations as may be considered necessary for safe navigation and operation of aircraft

Yes

Provide air safety services and search and rescue facilities in co-ordina-tion with other agencies

Yes

Establish schools or institutions or centres for the training of its officers and employees in regard to any matter connected with the purposes of this Act

Yes

Construct residential buildings for its employees YesEstablish and maintain hotels, restaurants and restrooms at or near the airports

Partially – only at select airports

Establish warehouses and cargo complexes at airports for the storage or processing of goods

Partially – only at select airports

Arrange for postal, money exchange, insurance and telephone facili-ties for the use of passengers and other persons at airports and civil enclaves

Yes

Develop and provide consultancy, construction or management ser-vices, and undertake operations in India and abroad in relation to airports, air navigation services, ground aids and safety services or any facilities thereat

Yes. Consultancy has been limited in scope.

Allow for airport operations on public private partnerships (PPP) basis Yes

Source: Based on stakeholder consultations and AAI (Amendment) Act 2003

The extent and coverage of AAI’s provision of these services varies across its airports – primarily with respect to the nature of services and traffic quantum at a given airport. Therefore, while AAI provides air navigation services across all airports, its services around establishing and operating warehouses and cargo complexes are limited to certain airports.

2.1.1. Airport development, operations and management

AAI undertakes structural design of passenger and cargo terminals, aircraft hangars, runways and other pavements, technical buildings for installation of airport ground aids etc. through its Civil Engineering Department. A separate wing under the Civil Engineering Department looks after maintenance requirements


/ civil engineering aspects of airport operations and management. AAI also has a specialized department of electrical engineering looking after electrical and mechanical (E&M) services for airport terminal buildings and airfield lighting works.

2.1.1.1. Passenger facilities AAI is currently in the process of

expanding terminal buildings at

several existing airports, including Jaipur, Dehradun, Srinagar, Lucknow, Chennai, Vijayawada, Surat, Vadodara, etc. The list of ongoing expansion works at existing AAI airports is presented in Annexure 1 of this document. Recently, AAI appointed project management consultants to improve efficiency in development works across 14 airports.

2.1.1.2. Cargo facilities AAI has the mandate to develop

and manage air cargo terminals at international and domestic airports in India under the provisions of the AAI (Amendment) Act 2003 and Airports Authority of India (Storage and processing of Cargo, Courier and Express Goods and Postal Mail) Regulations 2003. AAI also acts as a custodian of import cargo under section 45 of Customs Act 1962. AAI has developed several common user cargo terminals both for international and domestic cargo.

AAI’s cargo business has been administered through a departmental structure within the overall AAI administration. Over the years, 115,000 sq. m of warehouse capacity was developed across the country with an estimated cargo handling capacity of 1,600,000 MT2. Depending on the size of operations, either an airport has a separate cargo department or the cargo function is managed as part of the commercial activities of the airport.

AAI currently manages3 international air cargo terminals at eight airports viz., Kolkata, Chennai, Amritsar, Guwahati, Coimbatore, Trichy, Lucknow and Mangalore and domestic cargo operations at four airports, namely Port Blair, Jaipur, Coimbatore and Lucknow. Cargo facilities at certain other airports are being managed through outsourced agencies/state government organizations on an O&M basis. AAI is also in the advanced stages of commissioning international air cargo handling facilities at Madurai and Visakhapatnam airports.

AAI had appointed a consultant to advise it on its air cargo business plan. The consultant had recommended that AAI separate its cargo department from the main organization by corporatizing the department. Based on these recommendations, AAI has decided to form a 100% AAI owned Cargo Subsidiary - AAI Cargo Logistics and Allied Services Company Limited (AAICLAS) in August 2016. AAICLAS will undertake all the activities that were previously carried

Over the years, AAI has gained significant expertise in planning, designing and developing airports. AAI has successfully completed the modernization of airports in both tier I and tier II cities. AAI’s expertise in development works have been used by other government enterprises like Air India, Bureau of Civil Aviation security (BCAS), Border Security Forces (BSF), Defence Research and Development Organisation (DRDO), etc., in the form of deposit works.

2Source: Air Cargo Business Plan for AAI, 2016 3Source: Air Cargo Business Plan for AAI, 2016


out by the Cargo Department of AAI and it is envisioned that it will becomes the foremost integrated logistics network in India. AAICLAS would provide cargo handling and related value added services at airports in India and or abroad including ground handling services, documentation, transport services for carriage of bonded & non-bonded cargo and screening services. It will promote, represent, organize, undertake, establish, conduct, handle, arrange, own, operate, participate, facilitate, sponsor, encourage, and provide the business as Cargo Terminal Operator, Free Trade Zone, Air Freight Station and Inland container depot for cargo and passengers.

2.1.2. Air Navigation Services AAI provides air navigation services

(ANS) across all civil airports in India. AAI manages Indian air space measuring over 2.8 million square nautical miles, which includes a land area measuring 1.05 million square nautical miles and oceanic airspace measuring 1.75 million square nautical miles, extending beyond the territorial air space into the Arabian Sea, Indian Ocean and Bay of Bengal.4 Air navigation services are also provided by AAI at joint venture airports (e.g. Delhi, Mumbai, Nagpur), green field airports (e.g., Bengaluru, Hyderabad and Cochin), state government airports (e.g., Lengpui) and private airports (e.g., Mundra, and Durgapur) as per the terms and conditions of communications, navigation and surveillance (CNS)/ air traffic management (ATM) agreements between AAI and the concerned airport operators.

AAI has laid major emphasis on developing communication, navigation and surveillance (CNS) infrastructure in the country. The emphasis has been on providing reliable and efficient ground

based equipment and the adoption of satellite based communication, navigation and surveillance systems. AAI has a dedicated team to deliver the ANS and air traffic services (ATS), respectively.

2.1.2.1. Communication, Navigation & Surveillance (Planning)

The CNS Planning Department within AAI is responsible for planning, procuring and commissioning all CNS facilities and support systems for air navigation based on short- term and long-term requirements. To meet the guidelines laid down by ICAO and to further the CNS ATM transition plans for SATCOM based air traffic management, the CNS Planning Department had undertaken the following initiatives:

¾ Installed automatic dependent surveillance (ADS) at Chennai, Kolkata, Delhi and Mumbai airports and successfully tested for operations

¾ Implemented a dedicated SatCom network in 80 airports all over India to support data and voice communication, including remote controlled air ground VHF communication to provide VHF coverage over the entire Indian air space, networking of radars and ATS data communications

¾ Taken up an area augmentation system using GPS Aided GEO Augmented Navigation (GAGAN), a space based augmentation systems for airspace, which has been developed in collaboration with Indian Space Research Organisation (ISRO)

2.1.2.2. Air Traffic Management (ATM)

This department is responsible for managing air traffic within the country. AAI envisages further upgrade of the ATM infrastructure in the country both in terms of conditional provision of automation systems and upgrade of

4Source: AAI Annual Report 2014-15


Exhibit 4: AAI initiatives to modernize air traffic services in India

Location Initiatives for improving ATS

Mumbai, New Delhi • The upgrade of automation systems to (Auto Track-Ill) with new air traffic controller assistance features such as arrival manager, depar-ture manager etc. at Mumbai and New Delhi airports

• Advanced surface movement ground control systems (ASMGCS) to improve efficient handling of aerodrome traffic (at Mumbai and New Delhi airports)

• Automatic dependent surveillance to enhance the surveillance of suitably equipped aircraft over the entire flight information region (at Mumbai and New Delhi airports)

Hyderabad, Bangalore

• Advanced integrated automation systems that integrate state-of-the-art radars, flight data processors, air situation display, advanced surface movement ground radars, have been installed by SELEX Integreti for providing effective air traffic management

Chennai, Kolkata • An ATS modernization project is underway for replacing old radars, surveillance systems by the latest state-of-the-art technology on par with Mumbai/Delhi to provide a common platform for integration of entire systems over Indian airspace, which will effectively increase air traffic capacity and bring synergy in ATS operations

Nagpur/ Vara-nasi/ Ahmedabad/ Trivandrum/ Mangalore

• Integration of radar with flight data processors has been completed by Electronics Corporation of India (ECIL) in collaboration with AAI for providing indigenous automation solutions for effective air traffic management within the designated airspace

• Initiatives to enhance the standards of ATS

Mumbai, Chennai • Established a number of ATS connector routes in airspace to facili-tate performance based navigation (PBN) operations

Delhi, Mumbai, Ahmedabad and Chennai

• Introduced PBN, standard instrument departures (SIDs) and standard terminal arrival routes (STARs) to reduce delays to aircraft

Source: AAI website5

5Source: http://www.aai.aero/public_notices/aaisite_test/airtraffic_management.jsp

technology, which also involves shifting from ground based navigation to satellite based navigation. AAI has taken

several initiatives to modernize air traffic services in the country, as summarized in Exhibit 4:

2.1.2.3. Flight Inspection Unit The Flight Inspection Unit (FIU)

of AAI is a critical resource of the CNS department. It is responsible for conducting flight checks and calibration of CNS facilities installed

by AAI throughout the country as well as at some Indian Air Force and Indian Navy bases. The calibrations are required to be done on a regular basis, so that the equipment may be certified for use. Considering the vast


geographical reach of the country and the range of installed CNS equipment to be tested, the FIU is an important service to ensure flight safety. The need for expanded FIU operations is critical given the increase in the number of airports, and the expansion of existing facilities, e.g., extended or new runways. Currently, the FIU has three fully equipped aircraft, one B-300 and two Do-228s, to undertake flight inspections with support crew. The unit suffers from a shortage of flight crew with only one captain and three co-pilots. This is an important resource that needs to be augmented in this plan period.

2.1.3. Consulting AAI provides consulting services

across various domains of airport development and operations. AAI has undertaken consultancy and construction projects in India and abroad. Over the years, AAI has developed a large number of specialists in almost every aspect of airport planning, construction, maintenance and operations. The consultancy division of AAI can co-ordinate and provide inputs leveraging the skills of airport planners, designers, aviation ground equipment specialists, and civil, electrical, and electronics engineers besides specialists in navigational aids, communications, air traffic control, air traffic management, airport terminal operations, air safety, security and audit functions. The expertise available within AAI can be used to provide consulting services across the following areas:

¾ Airport feasibility studies - site selection/technical feasibility

¾ Airport development services - concept to commissioning service for green field airports

¾ Airport commercial viability studies/airport audit services

¾ Airport master planning ¾ Designing, evaluating and constructing passenger terminals/air cargo terminals.

¾ Planning, installation, operation and maintenance of radars, navigational-aids, visual & non-visual landing aids and communication facilities.

¾ Air space and air traffic management, air route re-structuring

¾ Airport management on turnkey basis.

¾ Computerization ¾ Training ¾ Flight calibration of airport ground facilities

2.2. Resource Assessment

AAI’s resources can be categorized as ¾ Physical – tangible assets owned and deployed to provide various services: for example, passenger and cargo terminals, land holdings etc.; and

¾ Manpower and organization.

2.2.1. Physical Resources From the perspective of a corporate

planning exercise, the key physical resources AAI considered were ones that could have a substantial impact on its ability to deliver services over the long term.

Land assets AAI has substantial land assets across

its airports and has the potential to leverage its land holdings for city-side development. Exhibit 5 shows land identified across various airports for potential city-side development in different phases. Currently, AAI is in the process of undertaking feasibility studies and preparing detailed project reports (DPRs) for city-side development at these airports. Besides, AAI has engaged consultants


6Source: AAI presentation to MoCA titled ‘Planning of works – an overview’, 2016

Exhibit 5: City-side developments to be undertaken by AAI (under DPR stage)

Exhibit 6: Airports under AAI: operational vs. non-operational

Airport Land Identified (in Acres)

Airport Land Identified (in

Acres)

Airport Land Identified (in Acres)

Phase I Phase II Phase II

Lucknow 217 Hyderabad Planning Stage Guwahati 46

Raipur 80 Trivandrum 2 Gaya 62

Tirupati 117 Bengaluru Planning Stage Patna 10.5

Kolkata 105 Visakhapatnam Planning Stage Phase III

Varanasi 60 Coimbatore Planning Stage Trichy Planning Stage

Bhubanesh-war

80 Ahmedabad Planning Stage Bhopal 2.5

Jaipur 40 Indore Planning Stage Dehradun 2.4

Amritsar 60 Chandigarh 30 Madurai Planning Stage

Source: AAI presentation to MoCA titled ‘Planning of works – an overview’, 2016

Source: AAI

2.2.1.1. Airside and Terminal Assets

AAI operates a large network of airports, consisting of 21 international airports (3 civil enclaves), 8 customs

airports (4 civil enclaves), 77 domestic airports and 19 domestic civil enclaves. Of these, some of its domestic airports are non-operational.

20

10

19

466

2 2 3

7 7

45

8

1 1 1 00 0 0 0 0 0 0 0 00 0

9

15

12

0Domestic

Operational Non-Operational

DomesticInternational InternationalCustom Custom

North East North East West South

to assess the potential to develop multi-level car parking facilities at

Chennai, Kozhikode, Jaipur, Amritsar, Ahmedabad and Pune.6


AAI is in a position to leverage its assets to cater to air traffic growth in the country as well as to enhance regional air connectivity in the country in future, including through potential operationalization of its non-operational airports.

However, it will need to continue to focus on appropriate expansion of airside infrastructure to be able to sustain traffic growth at existing operational airports as well as rehabilitate / upgrade infrastructure at some of its non-operational airports to be able to cater to regional operations in the future.

Based on data as well as interactions with stakeholders, it is evident that enhanced airside infrastructure would be required at a number of airports to cater to future traffic / growth requirements.

For instance, Chennai Airport has a displaced threshold for the runway 12-30 and Kolkata Airport has parallel runways with separation of approximately 200m, which is not adequate for simultaneous operations. Besides, AAI operates 26 civil enclaves that are generally not amenable for flexible capacity expansion to cater to traffic growth. This has resulted in some state governments taking up green field airport development projects (for instance Mopa and Bhogapuram in Goa and Andhra Pradesh respectively).

In terms of passenger terminals, AAI’s average terminal capacity utilization, as presented in Exhibit 7, is ~68% of the available capacity. While high utilization levels are typically preferred from an efficiency / profitability perspective,7 AAI needs to ensure that capacity planning and enhancements are in sync with expected traffic growth rates across airports.

Exhibit 7: Average terminal capacity utilization for AAI and other airports

AAI

70%

0%10%20%30%40%50%60%70%80%90%

100%

81% 68% 92%69% 78% 66% 86%

Terminal Capacity Utilization in the IndianAirport Sector

JV/Pvt./SG Delhi (DIAL) Mumbai (MIAL)

2014-15 2015-16(Till Jan)

7A comparative analysis with other airports in the country shows that some of these airports are operating at higher utilization levels.


AAI’s cargo terminals, under its departmental control, have a current utilization level of ~17%. A list of AAI managed airports with their cargo holding capacities and volume of cargo handled in 2015-16 is presented in Annexure 2.

2.2.2. Manpower and Organisational Resources

2.2.2.1. Manpower – Numbers and Key Issues

AAI's employee strength exceeds 17,000 personnel across various grades and functions. Its employees are predominantly organized by major job functions within a largely function-based organizational structure. As shown in Exhibit 8, ~44% of the employees are in the lower management to top management (executive) cadre.

AAI employees have experience in the areas of airport planning, engineering development, ANS, airport operations,

Exhibit 8: Organizational pyramid, AAI

and other support functions such as finance and human resources.

While AAI has an advantage in terms of the wide variety of professional experience among its employees across key areas, most departments within AAI reported manpower shortage. However, as the HR Strategic Plan 2013-17 noted, manpower cost is the highest proportion of AAI’s revenue expenditure and effective management of human resources is required.

An employees’ satisfaction survey, cited in the HR Strategic Plan 2013-17 indicated satisfaction with aspects like compensation and facilities extended; however, the satisfaction scores indicated that aspects such as ‘working style of management’, working conditions/environment, etc., which affect efficiency and productivity, needed to be addressed.

2.2.2.2. Training

The share of training expenses as a percentage of AAI’s gross expenses have reduced from ~2% in 2007-08 to <0.1% in 2014-15 (in absolute terms, training expenses have fallen from Rs 21 crore in FY07 to Rs 2 crore in FY15), indicating a potential gap in this area. Stakeholder interactions during the preparation of the Corporate Plan also identified this as a key focus area. In this context, the HR Strategic Plan 2013-17 noted that there was need to take up skill development as a planned effort in line with AAI’s requirements and that employees needed to be enabled – especially at the non-executive level – to take up higher responsibilities before elevation.

Board, ED,GM

Top

JGM, DGM, AGM, Senior Manager

Manager Assistant. Manager, Junior Executive

MiddleManagement

LowerManagement

Non-Executive

9,690 (56%)

5,030 (29%)

2,474 (14%)

184 (1%)


2.2.2.3. Organizational Structure

HR Strategic Plan 2013-17 noted:

“After the merger of two erstwhile organizations i.e. IAAI and NAA, the organization continued to function with two separate and parallel divisions for over 18 years. The pace to merge

various functions and bringing a unified structure was very slow. Even at this stage, the unified structure is yet to emerge. In order to bring out an optimum organization structure, the pending issues related to merger are required to be addressed and resolved at a faster pace.”

AAI has recently taken up an Organizational Restructuring and Capability Enhancement study to facilitate and expedite achievement of desired results on various initiatives that the Authority is in the process of

undertaking. The key objectives of the study have been articulated as follows:

a. Providing of world class infrastructure and services to the users of airports

b. Tapping the potential from the city side land areas of airports

It accordingly noted a key action plan item as follows:

“To realize an optimum organization structure, a three-step activity will be carried out i.e. restructuring, rationalization and redeployment. Restructuring will involve the study of existing organization structure and

bring out an alternative structure in line with emerging priorities. Rationalization will involve assessment of manpower requirement based on the existing level of activity. This will be followed by redeployment of personnel as per the plan evolved.”

Exhibit 9: Organizational structure for AAI

Source: AAI website

Given the diversity of various activities / businesses at airports requiring specialized skills, airport companies across the world respond by identifying separate teams and executives who can lead such teams. For Example: Changi Airports Group has dedi-cated teams focusing on:

• International endeavours led by an Executive Vice President

• Airside Concessions led by a Senior Vice President

• Landside Concessions led by a Senior Vice President

Chairman

Aviation safety Company Secretary

Member ANS Member Finance

Member Planning

Member OperationsVigilanceMember HR


c. Increasing commercial revenue by restructuring existing infrastructure and by creation of additional infrastructure

d. Creating air cargo infrastructure and facilities for taking air cargo volumes to new heights

e. Excelling in airport performance and building airport’s image, especially in the Asia and Asia Pacific region

The first phase of the study focuses on the following:a. Developing an in-depth

understanding of the organizational priorities and objectives as well as the current organizational structure to outline the key objectives for the new organizational design

b. Defining roles, responsibilities and key performance indicators (KPIs) for the new organizational structure

c. Diagnosing internal capability issues that need to be addressed on a priority basis.

The first phase of this study has been completed and the consultant has already submitted its report. The consultant has already commenced the second phase in which it will develop a time bound capability building programme with detailed roles and responsibilities, key performance indicators (KPI) outline etc., for capacity deficient areas/unit/functions.

2.2.2.4. Management Information System (MIS)

As can be seen, AAI’s is focusing on identifying KPIs for the new organizational structure. Hence, it will be necessary to develop an institutional framework for the development and co-ordination of a robust Management Information System (MIS) for AAI’s top management.

An updated MIS will enable the top management to focus and monitor progress on a number of aspects:

¾ Operations – Improve passenger experience by increasing efficiencies across touch points through regular monitoring and analytics

¾ Finance – Enhance profitability through better controls

¾ Commercial – Increase non-aeronautical revenues through better utilization of retail space within the airport terminal, car park, advertisement and other rentals

¾ Airline Marketing – Identify trends and opportunities to attract more airlines at airports

¾ Infrastructure – Monitor projects as well as proactively maintain assets for better efficiency and serviceability

¾ Environment and Sustainability – Improve safe and energy efficient business operations

¾ Business development – Identify and develop opportunity pipeline within India / overseas

¾ Engineering – Track and improve maintenance activities at the airports

2.3. AAI’s Performance

AAI’s financial and operational performance is discussed in detail below.

2.3.1. Financial Performance

2.3.1.1. Revenues

AAI’s revenues can be broadly categorized into aeronautical, non-aeronautical, cargo, airport lease revenues and others from allied services such as consultancy projects. Sub-heads under each of these revenue categories are highlighted in Exhibit 10:


Exhibit 10: Revenue sources for AAI

Source: AAI Financial Statements

As shown in Exhibit 11, AAI’s aeronautical revenues have doubled between 2008 and 2016, contributing more than 50% of AAI’s overall revenues. However, aeronautical revenues are dominated by ANS charges (route navigation facilities charges and terminal navigational landing charges), which have approximately 24.1% share in the overall revenues of AAI.

Non-aeronautical revenues for AAI come from commercial operations at airports like retail, F&B, car parking, other concessions and rentals in terminals and city side premises. As shown in Exhibit 11, non-aeronautical

revenues contributed (on an average) about 10% of total revenues for AAI between 2008 and 2016.

Lease revenues from major airports like Mumbai and Delhi accounted for ~31% of AAI’s revenues in 2016. As tariffs at these airports are regulated by the Airports Economic Regulatory Authority of India (AERA) with reference to traffic growth and investment plans of these airports, AAI has no control over this revenue stream.

The contribution of cargo revenues to AAI’s total revenues was hitherto marginal at about 2%. The overall revenue mix for AAI over 2008, 2012 and 2016 is shown in Exhibit 11.

AAI revenues

Aeronautical Revenues

Non-Aeronautical revenues

OthersCargo revenues

Airport lease revenues

Airport Services• LPH Charges• PSF• UDF• Other airport

services• Service hours

extension• Ground

handling• Oil

Throughput• Royalty on

CUTE

ANS• RNFC charges• TNLC charges Rent & services

• Non-residential buildings

• Hangars• Land rent• Other services• Light, power &

water

Trading concessions

Other airport services• Admission fee

Commercial Passes• Car Parking• Other

Self Operated and outsourced cargo terminals

Consultancy

MIAL Airport

DIAL Airport


Exhibit 11: Revenue mix for AAI (2008-16)

Exhibit 12: Composition of expenses (2008-16)

Source: AAI Annual Reports

Source: AAI Annual Reports

2.3.1.2. Expenses

AAI’s key expense categories include employee costs (comprising employee salaries, allowances and contributions to provident fund), operating expenses including aviation security, administrative expenses, financing

costs and depreciation.

As shown in Exhibit 12, employee costs for AAI have increased by about 12 percentage points between 2008 and 2016, contributing to about 49% of total expenses.

Revenue Mix for AAI (INR Crore)

Cost Mix for AAI (INR Crore)

Reve

nu

eC

ost

s

0

0

1000

2000

3000

4000

5000

6000

7000

8000

2000

2008 2012 2016

4000

6000

8000

10000

36%

37%46%

49%

18%

20%

13%

26%

23%

29%22%

36% 24%

27%

11%

31%

22%

13%

21%

24%

17%10%

10%

4%1%

2%

2%

2,469

2008 2012 2016

2,469

4,378

7,127

4%

4%4%

5%2%

9%4,273

5,879

10,824

Others Cargo Airport Lease Non-Aero Aero ANSOthers Cargo Airport Lease Non-Aero Aero ANS

Gross expensesAdministrative & Other expensesOperating expenses

Finance CostsDepreciationEmployee Benefits


AAI plans to fund the creation of airport infrastructure and ANS equipment worth Rs. 14,746 crore and Rs. 2,646 crore respectively also over the next

five years. The key sources of funding this proposed capital expenditure have been shown in Exhibit 13.

2.3.1.3. Profitability

Only 13 out of 80 operational AAI airports have profitable operations. Kolkata and Chennai Airports are the most profitable airports for AAI, contributing approximately Rs 559 crore to profit before tax (PBT).

Ahmedabad, Bagdogra, Chandigarh, Goa, Guwahati, Juhu, Leh, Lucknow, Port Blair, Pune and Tiruchirapalli Airports are the other profitable airports contributing approximately Rs. 302 crore to PBT.

Exhibit 13: Expected funding sources for proposed capital expenditure over 2016-20

Source: AAI

in INR Crore

Year FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Total

Opening Cash Balance

2,827 4,493 3,503 746 67 11,636

Internal Re-sources

3,903 2,319 2,323 2,917 3,105 14,568

Accretion to Debtors

(350) (350) (350) (350) (350) (1,750)

NEC Grant 21 76 100 100 100 397

Govt. Bud. Support

81 100 100 90 70 442

CAPEX for Engg / IT works

(1,486) (2,056) (3,919) (4,218) (3,068) (14,746)

Capex for ANS Equip-ment

(271) (284) (734) (578) (779) (2,646)

Term Loans/Borrowings

68 15 158 1,360 1,000 2,600

Bond Repay-ment

(300) (810) (435) 0 0 (1,545)

Closing Cash Balance

4,493 3,503 746 67 146 8954


2.3.2 Operational Performance

AAI’s operational performance across certain key service areas – airport development, operations and management, ANS and consulting services – is discussed in the sub-sections below.

Exhibit 14: Contribution to PBT by profitable airports under AAI in 2015-16

Source: AAI

Profit before Tax for Profitable Airports, in INR Crore

Ahmedabad

Bagdogra

Chandigarh

Chennai

Goa

Guwahati

KolkattaLeh

Lucknow

Portblair

Pune

Tiruchirapalli

Juhu

0 50 100 150 200 250 300 350 400 450 500

2.3.2.1. Airport development, operations and management

¾ Passenger volumes

A key operational performance indicator for airports is the passenger volumes handled. The total air passenger traffic in India reached 223 million in 2015-16, of which AAI airports handled about 42%. The overall passenger growth trend has been presented in Exhibit 15


Exhibit 15: Growth trend of passenger traffic in India

Source: AAI data

¾ Passenger satisfaction

Passenger satisfaction is a key parameter of operational performance. AAI has enrolled eleven of its airports in the international passenger satisfaction measurement exercise carried out by Airports Council International (ACI). ACI conducts the “Airport Service Quality (ASQ)” survey annually covering more than thirty parameters that affect passenger experience during their journey – from the time they enter the terminal building to the time they board the flight. Currently, ASQ surveys indicate an average rating of 4.31 out of 5 for the 11 AAI airports that participate in the survey. In 2015, Jaipur and Lucknow airports ranked first and second respectively in the ASQ ratings for airports in the 2-5 million passengers category globally. On the lines as the ASQ survey, AAI also conducts the Customer Satisfaction Index (CSI) survey, at 53 airports that have scheduled operations, to ascertain passenger satisfaction levels.

Along with monitoring passenger satisfaction scores, AAI will need to leverage user feedback (including

online user-generated feedback) to effect continuous improvement in various services.

¾ Cargo volumes

Indian airports handled 2.70 million metric tonnes (MMT) of cargo in 2015-16. Of this, AAI airports handled only 0.79 MMT. Even though AAI has a large number of airports under its management, the bulk of the air cargo is handled at private/joint venture (JV) airports. This can partly be attributed to the fact that private/JV airports are located in large metro cities – catering to buoyant local catchments.

¾ Capacity enhancement

AAI’s last plan period saw economic growth, privatization of major airports and the entry of low cost carriers in the Indian aviation sector. This led to a spurt in passenger numbers, necessitating capacity expansion. AAI undertook a large capital expenditure programme to develop infrastructure across the country. Under this programme, 35 non-metro airports were identified for development to meet future demand. AAI was successful in meeting its

Growth of Passenger traffic in India, 2008-16

2008 2009 2010 2011

Pass

enge

rs in

mill

ions

2012 2013 2014 2015 2016

250

200

150

100

50

0

AAI Traffic PPP Traffic Total Traffic


Source: AAI estimates, presented to MoCA

capacity enhancement targets and has completed development/expansion of 32 airports by the end of its last plan period (2007-2016).

Going forward, designing and planning of terminals will require inputs from all departments, including operations and commercial, to ensure passenger comfort and optimum space utilization to generate non-aeronautical revenues at airports.

Further, as shown in Exhibit 16, of the 20 airports where AAI has planned capacity additions, ten airports are

already operating at traffic levels in excess of their existing design capacities. This has led to situations where new capacity addition by airlines has to be deferred due to terminal congestion. In order to pro-actively cater to growing traffic, it will be important to ensure that planning and development of additional infrastructure / capacities is undertaken in a manner that ensures that growth is not hindered by capacity constraints. This is critical since AAI aspires to build an enduring aviation network to connect businesses and people.

¾ Safety and security

Passenger safety and security are among AAI’s prime concerns. AAI complies with the regulations set by the Directorate General of Civil Aviation of India (DGCA) in matters of aviation safety and by the Bureau of Civil Aviation Security (BCAS) in matters of aviation security.

AAI has taken steps in the past to improve safety at its airports and in the air. The ANS strategic plan, 2014, highlights the steps taken to improve

safety. DGCA, the safety regulator, is a member of ICAO’s State Safety Programme (SSP). In order to manage the SSP and to implement a safety management system (SMS), a special division has been formed by the DGCA.

The SMS identifies safety hazards, ensures implementation of corrective measures to maintain agreed levels of safety, monitors and assesses the efficacy of safety measures and improves SMS on a continuous basis.

Exhibit 16: Airports operating beyond capacity

Airport CurrentCapacity(MPPA)

CurrentDemand(MPPA)

Airport CurrentCapacity(MPPA)

CurrentDemand(MPPA)

Calicut 1.71 2.58 Agartala 0.5 0.88

Guwahati 1.6 2.23 Dehradun 0.4 0.47

Jaipur 2.07 2.20 Mangalore 1.0 1.31

Lucknow 2.18 2.54 Trichy 0.5 1.19

Pune 2.24 4.19

Srinagar 2.00 2.04


Following the setting up of the SMS implementation department by the DGCA, AAI in 2005 developed its first Corporate Safety Management System Manual for ANS operations. The manual was subsequently revised and the latest version (2013) was accepted by the DGCA.

AAI has also developed safety performance indicators to monitor and improve safety performance. The main areas of focus are a reduction in bird strike incidents, reduction in separation minima infringement, reduction in runway incursion/excursion and reduction in flight level bursts.

Although AAI takes all necessary steps to ensure passenger safety and security, there have been some instances in the recent past where minor and major incidents were reported. Cases of animal intrusion were reported at Jabalpur, Nagpur and Surat airports, in some cases leading to damage to aircraft. In 2015, an airline bus crashed into an aircraft at Kolkata Airport. There was also an aerobridge related incident in Chennai in 2015.

Given the priority attached to safety and security, AAI intends to initiate measures to eliminate the recurrence of such events.

2.3.2.2. Air Navigation Services

¾ Technology at AAI Airports

New technologies have been introduced recently at various levels in Air Navigation Services. Essentially they have been towards increasing capacity, safety, and providing for savings in flight time and fuel costs to airlines, in addressing issues related to air space use, and towards introducing

environmental sustainability measures and cost control at airport facilities. However, the introduction of new technologies to directly address passenger satisfaction services is not in the forefront of the technological introductions.

In the CNS and ATC disciplines, the introduction of technologies that link the primary and secondary radars through ATC automation systems are a major benefit to tower and area controllers. Further the introduction of automatic dependence surveillance – broadcast (ADS-B) at 21 airports has resulted in improved surveillance using GPS technology to determine the location and airspeed and other aircraft related data.

The indigenous GAGAN system, once commissioned in the next few years during this Corporate Plan period, will further enhance the surveillance capability of aircraft in Indian controlled airspace and in neighbouring countries. This will be a further step ahead in improving air traffic management procedures.

AAI has taken steps to increase and improve communication data links with aircraft and between airports and will attempt to expand these links to neighbouring countries too.

To improve and enhance co-ordination between airport operators, airlines, ATC and other major service providers at the airports, Airport Operations Control Centres have been introduced at 10 airports and more are on the way. The airport operation control centre (AOCC) is key in providing a real-time co-ordinated, collaborative decision making platform to key service providing stakeholders, the airlines


and airport operators, enabling safe airport operations and enhancing its capacity utilization. This service needs to be expanded to all airports as traffic volumes grow. The level of the airport operational data base (AODB) to be introduced varies depending on the volume of traffic to be handled. Discussions with users indicate that AODB should atleast be introduced at airports as they approach an annual load of 5 million passengers or about 150 movements per day.

¾ Air Traffic Flow Management System

The air traffic flow management system (ATFM) system is a forward looking technology application by which a real-time link of all the surveillance and navigation systems will show aircraft operating throughout the Indian airspace on a large screen display at AAI’s air traffic management (ATM) centre. Along with the aircraft and routes, etc., the display will present weather systems and concentrations of flight operations throughout the airspace. The data available will enable guidance to be provided to controllers throughout the country. It will allow flexible routing of flights and improve on-time performance and safety, besides helping maximize utilisation of airspace capacity.

2.3.2.3. Consulting services

AAI has in the past carried out consulting assignments for various state governments and private operators. A majority of these assignments were pre-feasibility studies or techno-economic feasibility studies for new airport projects. In some cases, AAI has offered services to develop new

infrastructure at existing airports or airstrips.

For the year 2014-15, the total revenue earned from consulting services was INR 52 lakh. For the year 2015-16, the revenue from consulting services jumped to INR 4 crore. The revenue earned from these services is modest but AAI can increase revenue from consulting if it actively looks out for opportunities in India and abroad.

2.4. Summary of Internal Assessment

Based on the internal assessment outlined in this section, certain strengths and weaknesses have been identified. These have been presented in section 5 along with opportunities and threats identified that are based on external and market assessments.


Srinagar Airport

Bhopal Airport

Ahmedabad Airport


3. External AssessmentThe objective of undertaking an external assessment as part of the Corporate Plan was to identify / assess possible changes and trends in the environment external to the AAI that could have an impact on it over the plan period. To ensure that the exercise is meaningful, the focus has been to identify only those changes that could have a significant impact on the AAI and which could present opportunities

or threats to AAI’s working / growth in the future.

3.1. Policy and Regulatory, Economic, Social, Technology (PEST) Framework

The various factors / trends that could affect AAI have been outlined under certain broad categories as shown in Exhibit 17.

Exhibit 17: PEST framework for external assessment

Economic &

Industrial growth

Tariff Regulation

Environment & Safety

Trends in Air Transportation

NCAP

Social

Technology

Policy & Regulatory

Economic

EXTERNAL ASSESSMENT


3.1.1. Policy and Regulatory

Policies and regulations are an integral part of an aviation industry’s ecosystem and can significantly influence its evolution.

The National Civil Aviation Policy (NCAP), recently issued by the Ministry of Civil Aviation, Government of India, is a comprehensive policy blueprint that will have a significant bearing on the functioning of airports in general and of AAI in particular.

As mentioned earlier, the Corporate Planning exercise should have a mechanism to review any future changes in policies and regulations that may affect the aviation sector in the country in general and AAI in particular.

An important aspect to be considered is the fact that AAI revenues from airport leases (Delhi International Airport Limited and Mumbai International Airport Limited) and its own major

airports are dependent on tariff determination by the Airports Economic Regulatory Authority of India (AERA). Further, tariffs for non-major airports, most of which are AAI airports, continue to be determined by the Ministry of Civil Aviation (MoCA). As can be expected in a regulated infrastructure sector, economic regulation has a major bearing on AAI’s financial outlook. Agencies like the Directorate General of Civil Aviation (DGCA) and Bureau of Civil Aviation Security (BCAS) also regulate aspects of AAI’s operations.

3.1.1.1. National Civil Aviation Policy, 2016

The National Civil Aviation Policy (NCAP), 2016, aims to provide a thrust to the sector and envisions the creation of an ecosystem that enables 50 crore domestic ticketing and 20 crore international ticketing by 2027. The NCAP has attempted to address a whole host of issues with implications for AAI.


Exhibit 18: Implications of the NCAP, 2016, for AAI

Source: National Civil Aviation Policy, 2016

Key Features of the NCAP that impact AAI

Cargo MRO OperationsRegional Connectivity Airline Operations

• RCS aims to tap potential markets within India; revive unviable airtstrips / developing 'no frills' airports; effective April 1, 2016

• Separate fund set up to enhance financial support

• State support in providing free land and multi-modal hinterland connectivity

• Provides tax rebates; airport charges exemptions; excise duty exemption on ATF (from RCS airports for RCS routes); utility concessions

• Air Cargo Logistics Promotion Board (ACLPB) formed earlier; to submit detailed action plan to reduce dwell time of "air cargo in truck" and shift to paperless processing

• Encourages development of cargo village near airports

• Provision of space on 10 year lease to operators of express cargo and freighters

• Implementation of advanced air cargo information system by Apr 2016 to improve efficiency/faster processing

• Modification of 5/20 rule to ease commencement of international operations for airlines

• Single-window system for all aviation related transaction queries and complaints

• Promotes growth of airlines through ease of regulations such as no airport charges on airlines having operations under the RCS scheme, Permission to Scheduled Commuter operators to have code share agreements with other airlines

• Tools and tool kits used by MRO have been exempted from customs duty.

• Provision of adequate land for MRO services providers in all future airports with potential for MRO services

• Allows import of unserviceable parts by MROs for providing exchange/advance exchange

• Allows foreign aircraft to stay for up to 6 months for maintenance

• Airport royalty and additional charges will not be levied on MRO service providers for 5 years

Boost to traffic

Increase in Efficiency

OPPORTUNITY

Propels MRO business

Boost to traffic

Cost of infra for airstrip

THREAT

New Airlines and Routes

Boost to traffic

OPPORTUNITY

Airport royalty loss

OPPORTUNITY


3.1.1.2. Regional Connectivity Scheme (RCS)

The Regional Connectivity Scheme aims to facilitate additional connectivity within the country – potentially requiring the revival and upgrade of airport infrastructure or creating new aviation infrastructure in cities having unviable airstrips/airports.

As a public sector entity with a specific mandate, AAI may end up bearing a significant part of the responsibility for infrastructure upgrading / creation. While this may increase the requirement for additional funds and

cause concerns about the financially viability of such infrastructure in the future, it could also initiate / increase traffic to some of the existing unutilized / under-utilized AAI airports as well as to the rest of the airport network in the country.

AAI anticipates the airports listed in Exhibit 19 to be candidates for connectivity under the RCS, although it recognises that the actual origin / destination points will be identified by the market in future:

Exhibit 19: Unutilized / Under-utilized AAI airports

Source: AAI

Under-utilized airports

Under-utilized civil enclaves

Unutilized airports

UnutilizedCivil enclaves

Airports under construction/ upgradation

Agatti Agra Akola Jaisalmer Belgaum

Dimapur Allahabad Behala Bikaner Hubli

Kangra Bhuj Gondia Bhatinda Kishangarh

Khajuraho Gorakhpur Jalgaon Pathankot Jharsuguda

Kullu Gwalior Kandla Kanpur Tezu

Lilabari Jodhpur Keshod

Ludhiana Tezpur Kolhapur

Mysore Kotaw

Pantnagar Salem

Pondicherry Shimla

Porbander Sholapur

Surat

Shillong


Since airlines are to be exempted from paying airport charges for the first 10 years from the start of flights on RCS routes under the scheme, it will affect the generation of aeronautical revenues at such airports. Also, as terminal navigational landing charges (TNLC) charges for such flights are to be waived off and lower route navigation facilities charges (RNFC) charges have been stipulated, there may be lower ANS revenues accruing to AAI from these routes. Further, given the typical catchment size and possible traffic at these locations, the scale (passenger traffic) is likely to be inadequate to generate substantial non-aeronautical revenues. AAI will have to actively manage investment requirements stemming from this scheme while closely monitoring what spill-over benefits it can maximize – especially in terms of traffic and associated non-aeronautical revenues at the major airports that such flights connect.

3.1.1.3. Fillip to airlines

NCAP, 2016 had outlined policy measures to facilitate airline operations in terms of code share agreements, bilateral traffic rights, scheduled commuter airlines, etc. These measures may facilitate coverage of new routes and enhancement of air traffic – positively impacting AAI airports.

3.1.1.4. Air Cargo

NCAP, 2016 emphasizes implementation of the advanced cargo information system to facilitate faster processing of cargo and encourages

the newly formed Air Cargo Logistics Promotion Board (ACLPB) to submit a detailed action plan to reduce the dwell time of air cargo to less than 24 hours. This could help promote growth in air cargo by creating the requisite infrastructure and improving efficiency in cargo operations.

3.1.1.5. Maintenance, Repair and Overhaul (MRO)

The policy aims to lower input costs of MRO by lowering taxes on aircraft spare parts, storage and import restrictions, as well as providing longer stay for flights undergoing maintenance. This, in turn, will encourage the development of the MRO business in India. At present Indian carriers spend close to Rs 5,000 crore in MRO activities of which 90% is spent outside the country in Sri Lanka, Singapore, Malaysia, United Arab Emirates (UAE) as airlines primarily go to these destinations for MRO services.8

3.1.1.6. Economic Regulation

AERA regulates aeronautical tariffs for major airports in the country (with more than 1.5 million passengers per annum), while tariffs for non-major civil airports are determined / approved by MoCA.

Eleven of AAI’s operational airports9 are major airports, whose aeronautical tariffs are regulated by AERA. Of these AERA has approved tariffs for the first control period (2011-12 to 2015-16) for Chennai, Guwahati, Kolkata and Lucknow. For the other seven major airports, existing tariffs will continue and will be revised as and when AERA

8Draft civil aviation policy looks to make flying affordable”, Oct 30, 2015, Forbes 9India Source: http://aera.gov.in/content/airport.php; Major AAI airports include Ahmedabad, Calicut, Chennai, Goa, Guwahati, Jaipur, Kolkata, Lucknow, Pune, Srinagar, and Thiruvananthapuram10Charges for Airports & Air Navigation Services, 2015-16, Airports Authority of India


approves the revised tariffs.10 Over the next decade, based on traffic projections for various airports, more airports will come under the purview of AERA as their traffic crosses the 1.5 million passengers per annum mark. Besides, as mentioned earlier, AAI earns ~31% of its revenues from its leased airports – Delhi International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL) – whose tariffs are also determined by AERA.

For tariffs of non-major airports, MoCA acts as the economic regulator.

Given the background of airport tariff determination in the country – nascent regulatory activity, unresolved aspects around some of these determinations (appeals by airport operators), and certain aspects proposed in the NCAP (hybrid till) – there is uncertainty surrounding future tariff determination for AAI airports.

The International Civil Aviation Organization (ICAO)ICAO is a specialized United Nations (UN) agency, established in 1944 to manage the administration and governance of the Convention on International Civil Aviation (Chicago Convention). ICAO works with the Convention’s 191 Member States and industry groups to reach a consensus on international civil aviation standards and recommended practices (SARPs) and policies in support of a safe, efficient, secure, economically sustainable and environmentally responsible civil aviation sector. These SARPs and policies are used by ICAO Member States to ensure that their local civil aviation operations and regulations conform to global norms, which in turn permits more than 100,000 daily flights in global aviation network to operate safely and reli-ably in every region of the world.

3.1.1.7. Safety and Security Regulation

In India, safety standards for airport operations are set by the Directorate General of Civil Aviation (DGCA) on the basis of the standards, recommended practices and procedures (SARP) developed by the International Civil Aviation Organization (ICAO). DGCA acts as the regulating agency responsible for adopting the standards set by ICAO and incorporating recommended practices and procedures shared by ICAO.

AAI needs to adhere to the safety standards and regulations laid down by the DGCA. Further, ICAO regularly monitors safety trends and indicators and audits the implementation of its standard, recommended practices and

procedures by, in the case of India, the DGCA, through its “universal safety oversight audit programme”.

The Bureau of Civil Aviation Security (BCAS) is another regulatory agency whose main responsibility is to lay down standards and measures in respect of the security of civil flights at international and domestic airports in India. BCAS’s functions include laying down aviation security standards in accordance with the Chicago Convention of ICAO for airport operators, airlines operators, and their security agencies responsible for implementing AVSEC measures. It also monitors the implementation of security rules and regulations and carries out surveys of security needs.


Further, it ensures that persons implementing security controls are appropriately trained and possess all the competencies required to perform their duties. It also engages in planning and co-ordination of aviation security matters.

AAI will need to continue to maintain its strong focus on the safety and security aspects of airport operations and continue to respond to regulatory requirements / implement best practices in aviation safety and security at its airports.

3.1.2. Economic aspect

Economic growth is one of the

fundamental drivers of air travel demand. As can be seen from the Exhibit 20, pan-India air traffic growth exhibits a correlation with the growth of the Indian economy.

Economic growth has translated into higher passenger numbers on account of a number of attendant factors (see Exhibit 20) like greater urbanization, growth in domestic and international business that boost demand for business travel, and growth in disposable incomes that has generated higher demand for leisure related travel.

Exhibit 20: Growth in domestic air passenger traffic and India’s economy

Traffic growth maps GDP growth closely

0%

2%

4%

6%

8%

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12%

-10.00%

India's GDP growth rate, % (LHS) Passenge traffic growth, % (RHS)

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0.00%

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Passenger traffic has increased with increase in incomes per person

0

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Per Caipta GDP, LHS Passenger traffic (in millions), RHS

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FY13

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FY16


Source: RBI, IMF and Annual Review of Traffic, 2015-16, AAI

Passenger traffic has increased with growth in business activity

-10.00%

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

0.00%

10.00%

20.00%

30.00%

40.00%

Increase in consumption by households exhibits similar trend as in passenger numbers

FY01

FY02

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Private Final consumption expenditure (INR billion), LHS

Passenger traffic (in millions), RHS

0%

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15%

Industry GDP Growth rate, %Service GDP Growth Rate, %Passenger traffic growth, % (RHS)

According to the International Monetary Fund (IMF), the Indian economy will continue to grow at an average 7.5% per annum till 2020, making India a US$ 3.4 trillion economy.11 Much of the thrust is expected to come from the services sector, which accounts for over half the country’s gross domestic product (GDP). The manufacturing sector is also expected to gain momentum

on account of the “Make in India” campaign of the Government of India. Both sectors are expected to grow at robust rates over the next few years, as presented in the adjacent exhibit.

Macroeconomic indicators such as GDP per capita and disposable incomes per head are also expected to grow in the next few years. As per a study by Oxford Economics, household consumption is expected

11IMF, October 2015


to increase further with the tripling of the number of Indian households with a discretionary income above $7,500 per annum from 66 million households today to 180 million households by 2030. According to Airbus, this significant increase in disposable incomes will contribute to greater demand for both domestic and international travel in the future.12

Along with domestic economic growth, growth in the global economy between 2000-01 and 2006-07 encouraged greater demand for international travel for both business and leisure. In the case of India, the Middle East, the Asia-Pacific and Europe are predominant regions with the highest ratio of inbound and outbound traffic. Further growth in business linkages with these countries will influence passenger traffic growth.

Apart from the demand side factors mentioned above, supply side drivers in terms of the evolution and predominance of the LCC model, have not only influenced air passenger

growth but also their pattern and dynamics. These aspects have been discussed in further detail below.

3.1.3. Social Aspects

3.1.3.1. Environment

Key environmental issues for airports are air quality, ground water and noise pollution. In India, airports are allowed to be set up after the requisite environmental clearances granted by the Ministry of Environment and Forests (MoEF). Further, each state sets its requirements on environmental aspects for (airport) operations.

As urbanization is increasing, cities are growing and airports will no longer remain on the periphery of the city. This may result in the emergence of stricter norms around noise abatement by airports, night curfews, and other such aspects. These stricter norms may affect the operational cost of airlines, since airports might be required to impose noise charges. This will need the setting up of a process to respond to these changing norms.

Exhibit 21: Projected growth in key drivers of air passenger growth

12 Flying by Numbers 2015-2034, Airbus

Services Industry

Manufacturing Industry

GDP per capita (PPP basis)

Disposable Personal Income

11.3%2015-20

2015-20

2015-20

2015-2011.0%

6.0 %

10.8%Rs

Source: IBEF, BCG, Trading Economics


AAI is recognized for its efforts to reduce its impact on the environment.

In July 2011, AAI signed a partnership agreement with Air Services Australia and Air Traffic and Navigation Services South Africa (ATNS) to form the Indian Ocean Strategic Partnership to Reduce Emissions (INSPIRE) to improve the efficiency and sustainability of aviation in airspace over the Indian Ocean and Arabian Sea.

INSPIRE aims to accelerate the development and implementation of operational procedures to reduce the environmental footprint for all phases of a flight on an operation-by-operation basis, from gate-to-gate and facilitate world-wide inter-operability of environmentally friendly procedures and standards. To gauge the improved environmental impact of a perfect flight minimizing on-ground delays, it uses expeditious taxi routes and runways, conducting gradual climb and descent paths and fly direct optimum routes (user preferred route) based on existing meteorological and airspace conditions. AAI’s significant lead in conducting the user preferred route project that involved 1031 INSPIRE city- pair flights resulted in carbon savings of 6885 tonnes until 28th February 2013.

In 2013, AAI was awarded the Strategic Advancement in Air Traffic Award as part of the ATC Global Excellence 2013 awards. AAI also received the Excellence in ANSP Management Award, for ANS’s initiatives to improve operational efficiency and safety, which have resulted in an estimated reduction in carbon emission by 510 million kg and savings of $200 million.

3.1.4. Technology

Significant advancements in technology have changed the face of the aviation sector over the past decades. As an airport developer and operator, AAI is required to not only respond to advancements in technologies relevant to airport operations that improve an airport’s operational efficiency and customer experience but also to advancements / developments in the areas of air navigation, safety, security, and aircraft manufacturing.

When assessing potential opportunities for and threats to AAI in the medium to long-term future, it has taken into account (1) developments in these areas over a similar time horizon in the past to understand potential areas and the pace of further impending changes, and (2)

technologies that find application in related travel / other industries that could be extrapolated to aviation infrastructure in future.

Further, the adoption of technology will need to be seen in terms of its potential impact on overall airport operations, reduction in operational costs and improvement in customer service (know and serve customers better) to ensure that this meets standards that customers who have used such technologies at international airports have come to expect. It will be important for AAI to track such developments and actively consider their deployment through detailed assessment of ‘value-for-money’ for various applications at various airports.

Some developments in the aviation industry are outlined below for reference.


Japan plans to introduce biometric data – a photo of a passenger’s face and fingerprint information – with a mobile unit to reduce queuing at immigration counters at airports. It will first be used at Kansai International Airport in Osaka, Naha Airport in Okinawa and Takamatsu Airport in Kagawa Prefecture.

There is growing emphasis on exploiting technology to provide enhanced customer experience, operations and value

Biometric data

Several international airports have introduced systems for biometric data collection of passengers to validate passenger information during the immigration process. This results in higher security and often faster processing times for passengers. Recently, facial recognition systems have also been used to provide security at airports. In January 2016, US Customs and

Border Protection (CBP) at New York’s John F. Kennedy International Airport deployed a system for biometric authentication of electronic passports. This technology allows biometric matching of a traveller’s face with the facial image stored on the identification document’s (passport) e-chip. In the US, by the end of 2016, non-expired US passports in circulation are expected to be made electronic.

Smart gates

In 2013, Dubai Aviation Engineering Projects (DAEP) and Emaratech signed an agreement with Dubai International Airport to build and install smart gates at Dubai International Airport and upgrade immigration counters. The project aims to decrease immigration counters, and ease and expedite procedures with over 78 million passengers expected to use the airport in 2015 and 103 million by 2020. The first phase of the project with 28 smart gates installed is expected to cost about DH 100 million. Similarly, Sydney International Airport’s immigration system is already in the process of being fully automated with few personnel supervising the process.

Introducing similar systems at AAI’s airports in future may require AAI to make appropriate airport plans and incur investments to make requisite provisions. This may need to be traded off against a focus on enhancing airport efficiency and security – initially through investments in infrastructure creation and subsequently in upgrading existing infrastructure.

Smart airports

Another major development could be the move towards “Smart Airports”. CISCO defines smart airports as having emerging technologies, with advanced and pervasively deployed sense-analyse respond capabilities.


Case study 1: Changi International Airport, Singapore: Emphasis on Customer Experience

Changi International Airport, Southeast Asia's biggest international airport, with over 55 million passengers a year (2014-15), emphasizes customer service. Already in the process of constructing two new terminals, Changi focuses on technology that enables staff to provide an excellent experience. They have adopted an instant feedback system (IFS), collecting passenger experience through a simple touch-screen interface, installed in locations such as immigration counters, information counters, retail and F&B outlets, and even toilets. They collect over 1.5 million feedback responses a month through this system alone. Similarly, Changi uses mobile devices for routine inspections that allow inspectors to notify staff and rectify problems immediately. The case highlights the shifting focus towards using technology to collect customer feedback and using data analytics to provide better passenger service.

Source: “Technology the backbone of world’s Best Airport”, Mar 30, 2014, CNBC

Case study 2: Hamad International Airport, Doha: Change in airport design to make airports sustainable

At the Hamad International Airport, considered one of the most “sustainable” airports, the orientation and high-tech glazing of the passenger terminal building was selected to help minimize the impact of heat gain within the building from the hot climate; it also uses high-performance insulated glass to reduce solar exposure. In addition, it utilizes demand ventilation controls using carbon dioxide occupancy sensors, displacement air ventilation systems, daylight sensor controls and an energy management control system, creating a truly energy-efficient airport. The case shows the shifting focus of airports towards innovative designs and materials to reduce their utility costs and to become more sustainable or environmentally friendly.

Source: Airport World, ACI magazine

Further, such airports have a highly integrated system with sub-systems built around a “digital grid”: a single, converged, often carrier-class internet protocol (IP) network that enables high-speed broadband traffic throughout the entire ecosystem, including the airport, airport city, airlines, seaport, logistics, authorities, and other parties, enabling exchange of real-time information.

Such airports substantially improve operational efficiencies, passenger services as well as an

airport’s security capabilities. Besides, they provide a range of personalized services by collecting and analysing passenger data to anticipate needed services. Thus, greater process integration among the airport, airlines, various allied aeronautical and non-aeronautical services induces benefits along the entire value chain13. Some such developments have been highlighted in the case studies presented below.

13Source: “Smart Airports: Transforming Passenger Experience To Thrive in the New Economy”, July 2009, CiscoInternet Business Solutions Group (IBSG)


Aircraft design

Besides changes in aircraft sizes deployed on routes on account of growth in traffic, aircraft manufacturers such as Airbus continuously experiment/ innovate in terms of seat configurations, systems on board, etc.

The implications of a change in aircraft size for AAI could be direct; it may need to handle higher passengers per aircraft movement, which may affect terminal peak hour capacities as well as the requirement of on-ground services.

From a medium to long-term perspective, AAI will consider these potential developments when planning capacity and infrastructure enhancements at its airports over the medium and long term.

3.2. Summary of external assessment

Based on the external assessment profiled in this section, certain opportunities and threats have been identified. These have been presented in section 5 along with the strengths and weaknesses identified on the basis of internal assessment.


Coimbatore Airport

Trivandrum Airport


4. Market AssessmentA market assessment was undertaken to identify and assess possible changes in the needs, service expectations and perceptions of AAI’s key customers. In this context, certain emerging trends have already been looked at in the section on external assessment. The focus in this section is to understand how AAI can to focus on its customers in this plan period and the opportunities or challenges this will throw up for AAI in the future.

The market assessment, focused on 3 key parts: 1) existing business in which AAI operates 2) allied services being provided at the airports and 3) understanding and managing customer expectation. Market assessment is based on secondary research and industry analysis, interactions within AAI at the management level, interaction with stakeholders, and consultations with industry experts.

Exhibit 22: Framework for internal assessment

Possible oppurtunitiesExisting areas of business

• Inflight catering

• Ground handling• Cargo operations in India

• Maintenance, repair and overhaul

• Passenger operations in India

• City side development

• International consulting oppurtunities

Area of Business

Understanding customer expectations


4.1. Existing market constituents

Currently, AAI’s focus market constituents are:

¾ Passengers

¾ Cargo owners / industry intermediaries

¾ Tenants and concession holders at AAI’s airports

The market assessment focused on studying key market trends, identifying drivers of future growth, assessing future requirements and assessing potential competition. Exhibit 23 illustrates the approach adopted to study, for instance, passengers as a key market constituent for AAI

Exhibit 23: Approach to market analysis

Step 1

Step 2

Step 3

Step 4

Studying current market trends

Drivers of growth and projected growth in traffic

Assessment of required infrastructure growth in future

Assessment of competition


Exhibit 24: Growth of passenger traffic in India

4.1.1. Airport development and operations

4.1.1.1. Studying current market trends

In terms of passenger numbers, India is the ninth largest civil aviation market in the world; 223.6 million passengers used air transport (from, to and within India). The number of passengers travelling by air in India has increased 2.59 times over the past decade (a CAGR of 11.6%). This increase can mainly be attributed to the entry of low cost carriers (LCCs), as shown in Exhibit 24. While Indian aviation has seen consistent growth

over the last decade, there was a decline in passenger traffic in 2008-09. This was mainly on account of the global economic downturn. As the global economy re-gained momentum, passenger traffic again increased between 2009-10 and 2011-12. The year 2012 again saw a decrease in traffic growth on account of the collapse of Kingfisher Airline and a slowdown in economic growth. The following years saw a revival in economic growth and low crude prices, which again led to passenger traffic increasing, with double-digit growth in 2014-15 and 2015-16.

Source: Annual review of Traffic, AAI

1997

-199

8

1998

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15.90%

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-1.79%

17.62%

Discontinuation of Kingfisher

10.00%

15.00%

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25.00%

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35.00%

-5.00%

5.00%

0.00%

9/11 Crises

Air Deccan starts

operations

Global economic meltdown


Much of the boost to passenger traffic in India comes from the domestic sector, which makes up about 75% of India’s total air passenger traffic. Over the past decade, domestic passenger traffic has increased at a

CAGR of 11.82%. There has been an increasing trend in international passenger traffic too during the last decade, but it contributes just under a quarter of the total passenger traffic (see Exhibit 25).

Exhibit 25: Growth of domestic and international traffic

Source: Annual review of Traffic, AAI

4.1.1.2. Drivers of growth and projected growth in traffic

Economic growth has been one of the key drivers of growth in passenger traffic in India. Over the last 15 years, the Indian economy has grown at a CAGR of 13.4% and the passenger traffic has grown at a CAGR of 14.2%. As can be seen in Exhibit 26, there is a positive correlation between

economic growth and domestic traffic growth.

Increase in passenger traffic has also been encouraged by changes in the aviation landscape in India. After liberalization of India’s aviation sector in the early 1990s, several private airlines emerged and began operations in India. The year 2003 heralded the phase of low cost airlines

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Domestic International

Passenger Traffic in India, in millions


Exhibit 26: Correlation between growth of domestic traffic and GDP

Source: International Monetary Fund (IMF) reports, DGCA annual air transport reports

with Air Deccan starting operations that year. With a number of other airlines operating on this model, LCCs have steadily gained market share14 and, in 2015, had a market share of 63% vis-à-vis 13% in 2005.

Organisation for Economic Co-operation and Development (OECD) estimates that the Indian economy will grow at a CAGR of ~6% for the next twenty years. According to a report by India Brand Equity Foundation (IBEF), business travel in India is expected to increase 3-fold to US $60.4 billion, spending on leisure travel is expected to increase 2.3 times to US $224.6 billion and the overall domestic travel and tourism industry is expected to increase 2.8 times to US $349 billion by 2024.15

Given the number of new airlines either beginning or planning to begin operations on the LCC model, the predominance of LCCs is expected to continue in the future. An Airbus study projects that the number of people flying in India will increase from 1 in 20 Indians in 2014 to 1 in 4 Indians in 2032.

According to passenger traffic projections by AAI, the passenger traffic at AAI airports will increase from about 93 million to approximately 279 million between 2015 -16 and 2025-26, growing at a CAGR of about 11.65%. During the same period, the number of overall passengers will grow from 224 million to 591 million. A comparison of growth at AAI airports with respect to the overall passenger growth in India is presented in Exhibit 27.

1998

2001

2004

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2010

2013

2016

Domestic Air Passengers and GDP Relation

0 0

GD

P (IN

R '0

00 b

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Passenger traffic Passenger traffic

14DGCA data15Source: IBEF


Exhibit 27: Passenger growth forecast

Source: AAI

Apart from AAI, a number of other agencies have carried out long term passenger forecasts. According to the report prepared by the National Transport Development Policy Committee (NTDPC) 2013, total air passenger traffic is expected to increase to 655 million, by 2030-31 a CAGR of ~10%. According to the long term forecast of Centre for Asia Pacific Aviation (CAPA), total air passenger traffic is projected to be 781 million passengers by the year 2034-35, growing at a CAGR of 7.32%.

It, however, needs to be borne in mind that actual traffic growth may differ from the projections if underlying assumptions regarding the overall growth rate are off the

mark or if the airline industry is faced with challenges such as a sudden spike in aviation turbine fuel (ATF) prices, low economic growth, high competition etc. As traffic projections are used to plan capacity expansion, a mechanism for a periodic review of traffic projections must form part of the review mechanism of the Corporate Plan to ensure the alignment of planned capacity expansions to revised traffic projections. The exercise must especially focus on traffic forecast around key demand and growth centres.

4.1.1.3. Assessment of required airport infrastructure in future

To keep pace with growing passenger traffic demand, AAI has drawn up

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93 113 127 144162

183 207 223 240 259 279131 149 163

178195

213 233

251269 289 311

AAI Airports JVC Airports

Dom

estic

pax

traf

fic (i

n m

illio

ns)


Exhibit 28: Additional capacity and investment requirement

Source: AAI presentation to MoCA (2012)

a development plan involving a capital expenditure of INR 14,746 crore spread over the plan period. As part of the development plan, existing terminal buildings will be expanded, new terminal buildings and additional parking bays will be constructed, runways will be extended/strengthened and city side development will be undertaken at select airports. A detailed list of works is provided in Annexure 1.

Further, according to a report of the working group on the civil aviation sector by NTDPC (2012), a total of INR 335,306 crore (between 2017 and 2032) will be required to develop airport infrastructure in the country. Of this INR 53,148 crore will be spent on green field developments while the remaining INR 282,160 crore will be spent on Brownfield developments. Exhibit 28 details the additional capacity and investment requirements.

A number of new green field airport projects are already in the planning phase – Navi Mumbai in Maharashtra, Bhogapuram in Andhra Pradesh, Dholera in Gujarat and Mopa in Goa etc. Besides, it is projected that new airports will be required in major cities such as Delhi, Chennai, Kolkata, etc.

As can be seen from the table above, apart from the planned developments by AAI over the next 5 years, green field airports will need to be developed over the next 10 to 15 years. This could prove either an opportunity or threat for AAI, depending on AAI’s strategic

vision and positioning to exploit this growth opportunity.

4.1.1.4. Assessment of competition

The inauguration of Cochin International Airport in 1999 heralded the era of private sector participation in airports development / operations in the Indian airports sector. The Airports Authority of India Act was amended in 2003 to allow for public-private partnerships (PPPs) in airports. This was followed by the Delhi and Mumbai airports being bid out by AAI on a PPP basis in 2006. Following this,

Period Incremental Capacity (MPPA) Investment required (INR Crore)

Greenfield Other than green field

Total Greenfield Other than green field

Total

2017 – 22 43 171 214 11,765 62,459 74,223

2022 – 27 62 249 311 17,122 90,900 108,021

2027 – 32 88 353 431 24,261 128,801 153,062

Cumulative 193 773 966 53,148 282,160 335,306


Bengaluru and Hyderabad saw green field airports come up on PPP basis in 2008. These developments have led to a change in the way airports are

developed and operated in India. A snapshot of the evolution of airport ownership in India is presented in Exhibit 29.

Exhibit 29: Evolution of airport ownership in India

Development of airport at Cochin — First private airport operator

Modernization of Delhi and Mumbai airports

Development of Greenfield airports in Hyderabad and Bangalore

Initiatives taken by state government• Five small airports

by Maharashtra • 3 small airports

by Karnataka • Large airports

on PPP basis by Kerala

Government aims to develop more than 100 operational airports. Private participation envisaged on a large scale


Allowing private sector participation has generated considerable interest among large Indian and global corporations in participating in the airports sector in India. The GMR group and GVK group already have significant interest in the airports sector in India. Other large Indian business houses such as the Reliance group, the Tatas and Essel have also evinced interest in PPP projects in the sector. This is apart from the interest shown

by global operators such as Zurich Airports, Fraport, Vinci Concessions and Egis group.

The consistent growth in air traffic in India since 2006 has been largely captured by the PPP airports. From catering to 54% of the total traffic in 2007-08, AAI now caters to around 41% of the total traffic. The traffic distribution between AAI and PPP airports is shown in Exhibit 30.

The overall traffic share of PPP airports (Delhi, Mumbai, Hyderabad, Bengaluru and Kochi) has increased from 45% to 58% and share of other AAI airports has reduced from 55% to 42%. Going forward, airports in Navi Mumbai, Mopa, Dholera and Bhogapuram are planned to be developed on a PPP basis and a number of private sector players

have already been pre-qualified to bid for Navi Mumbai and Mopa airports. These airports may attract traffic from the current AAI airports – Mopa airport will compete with the existing Goa airport operated by AAI. A similar situation may arise in future, for instance, for Chennai airport (AAI’s largest airport) as well. PPP airports / private sector participation in second

Exhibit 30: Traffic distribution between AAI and PPP airports

Source: AAI

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

0

50

100

150

200

250

PPP AAI

117 109 124

144162 159 169

190

224

45% 60%59% 58%

58% 57% 57%58% 58%

55% 40%41%

42%42% 43% 43%

42% 42%


airports for local catchment poses a threat to AAI’s organic growth.

Another form of competition to the airport industry in general is from other modes of transport. The development of new national and state highways has led to reduced travel time between cities. The Indian Railways too is taking steps to improve passenger experience and to increase the average speed of select trains. In the medium to long term, high-speed trains will become a reality and might have an impact on air traffic. Although competition from improved road connectivity may not act as a real threat to air traffic, especially for medium to long haul routes, the competition that the railways might present will need to be monitored given the possibility of an increase in

ATF prices that could affect the relative economics of these transport modes.

4.1.2. Cargo operations

4.1.2.1. Current market trends in the cargo segment

Indian airports saw a throughput of 2.7 MMT of freight during FY 2015-16, against 2.5 MMT during the same period last year. Unlike passenger traffic, cargo traffic is dominated by international throughput. For the year 2015-16 international cargo traffic was 61% of the total throughput. For the same period the share of PPP airports was 79% and 65% for international and domestic cargo respectively. A comparative break up of international and domestic cargo for AAI and PPP airports is presented in Exhibit 31.

Exhibit 31: International and Domestic cargo growth

Source: AAI traffic data

International Cargo (Million MT) Domestic Cargo (Million MT)

2007

-08

2007

-08

2008

-09

2008

-09

2009

-10

2009

-10

2010

-11

2010

-11

2011

-12

2011

-12

2012

-13

2012

-13

2013

-14

2013

-14

2014

-15

2014

-15

2015

-16

2015

-16

0.00 0.00

0.20 0.10

0.400.20

0.44

0.70

0.36

0.911.05 1.10

1.30

0.41 0.34 0.35

0.600.30

0.800.40

1.00

0.50

1.20

0.60

0.70

1.40 0.80

AAI TrafficAAI Traffic PPP TrafficPPP Traffic

0.270.30

0.230.29 0.29

0.45

0.52 0.54

0.36

0.68


AAI undertakes cargo handling at eight international and nine domestic airports, while cargo handling at nine international and seven other domestic AAI airports are given out to third parties

for operations and management. Exhibit 32 lists these airports according to the AAI’s classification of the region of operation.

4.1.2.2. Drivers of cargo traffic and projected growth in traffic

As in the case of passenger traffic, economic growth has a major impact on the growth of air cargo. Strong economic growth favours increase in industrial activity, which has a positive impact on the air cargo business.

Typically, air cargo constitutes low volume, high value products or products with significant time value

attached to them such as perishable items, high value fashion textiles, gems & jewellery, etc. In India, as shown in Exhibit 33, the projected growth in export demand for auto components, pharmaceuticals and processed food exports as well as growth in domestic e-commerce, textile and electronics industries augur well for the air cargo industry over the next ten years.

Exhibit 32: International and Domestic cargo growth

Source: AAI Cargo Directorate

Northern Eastern North-Eastern Southern Western

Domestic cargo operations (CUDCTs)

AmritsarJaipurLucknow (outbound)

KolkataBhubaneswarRaipurPort Blair

Bagdogra ChennaiCoimbatoreMaduraiVizagMangalore

AhmedabadAurangabadIndore

International cargo operations

AmritsarLucknow VaranasiJaipur

Kolkata GuwahatiBagdogra

ChennaiCoimbatoreTrichyMangaloreTrivandrumCalicutVizag

AhmedabadIndoreGoa


According to AAI estimates, all India air cargo traffic is expected to increase to 3.6 MMT by 2020-21; of this, domestic freight, which contributes about 40% share of the traffic, is expected to reach 1.4 MMT at a CAGR of 6.9%. International freight is expected to grow at a CAGR of 5.9% to reach 2.16 MMT. NTDPC’s forecast, however, is more optimistic. The report16 projects total freight volume at around 4.9 MMT by 2020-21.

The express cargo industry in India is also likely to contribute to the growth in domestic cargo traffic. According

to the Airbus Global Market Forecast (2011), the express industry in India is expected to demand 110 small jet freighter aircraft (which can carry a payload of 10 to 30 tons) by 2029, which is 15.4% of the global small jet freighter aircraft demand.

The e-commerce industry is expected to contribute to driving the domestic cargo / express cargo market. The significance of e-commerce can be gauged by the fact that the e-commerce market in India was estimated at USD 17 billion for the year 2014. According to a report on the

Exhibit 33: Sector wise growth in air cargo

Source: IBEF, Boeing (traffic estimates), Industry reports

16Working Group on Civil Aviation Sector, National Transport Development Policy Committee, June 2013

61% share

9.25% (2012-32)

39% share

International

Auto-Component

exports

E-commerce Industry

Pharma exports

Electronics Industry

Processed-food exports

Textile production

Domestic

Total Air-cargo

29%2014-20

35%2014-20

15% 2015-20

24%2012-20

33%2011-14

11%2014-21

e


Exhibit 34: NTDPC forecast for cargo infrastructure growth

Source: NTDPC

future of e-commerce by Assocham,17 the market is expected to grow to USD 100 billion due to higher internet and mobile penetration and will contribute 4% of the GDP by 2019.

4.1.2.3. Assessment of cargo infrastructure

AAI has appointed a consultant to prepare a cargo specific business plan, which will include an assessment of current and future infrastructure requirements to meet growing cargo

traffic demand. A report prepared by NTDPC forecasts that the total cargo throughput at all Indian airports will cross 18 MMT by 2030-31. The total cargo volume will require an additional 12.6 MMT capacity and an investment of INR 52 billion to meet the demand. A break up of forecast of volumes, capacity requirements and investment is given in Exhibit 34:

4.1.2.4. Competition to AAI

Competition to AAI for cargo traffic is from PPP airports as well as competing modes. As observed earlier, a large part of air cargo traffic is on international routes. Of this, 78% is handled by the PPP airports. Improved services and better international connectivity at these airports has led to leakage of traffic from AAI airports. In some cases, as observed by the cargo department at Chennai airport, cargo is sent on bonded trucks to Bengaluru or Hyderabad to be shipped to its

final destination. Non-availability of certain services like a centre to handle perishable products or a pharma holding facility has also led to a leakage in traffic to PPP airports.

Further, unlike passengers, cargo can be transported across long distances by road / railways to take advantage of better connectivity, higher efficiency or cheaper tariff. Hence competition from other modes of transport acts as a threat to AAI’s cargo operations.

Period Throughput forecast (MMT)

Estimated capacity

requirement (MMT)

Additional capacity

requirement (MMT)

Investment re-quirement

(INR billion)

2017 – 22 7.4 9.6 4.8 20

2022 – 27 12 15.6 8.5 35

2027 – 32 18 23.4 12.6 52

Cumulative 34.4 48.6 25.9 107

17http://www.assocham.org/upload/event/recent/event_1113/Background_Paper_Future_of_e-Commerce_web.pdf


4.2. Allied services

To identify possible allied services which AAI can evaluate as possible business areas in future, the business portfolio of a few key international airport operators were studied. The airport operators covered were Changi Airport, Aéroports de Paris, Fraport and Indian operators like DIAL, GMR Hyderabad International Airport Limited (GHIAL) etc. Based on this study, the following allied services were identified as potential opportunities for AAI to evaluate:

¾ City side development

¾ Airport consulting etc – International opportunities

¾ Maintenance, repair and overhaul (MRO)

¾ Ground handling

¾ In-flight catering

These have been further detailed in the sub-sections below.

4.2.1. City-side development

4.2.1.1. Current trends

Airports around have started monetizing their city-side assets to obtain an additional stream of non-aeronautical revenue while transforming themselves into new dynamic centres of economic activity. City-side development is being diversified from being only about cargo and car parks to logistics centres, hotels, convention centres, office complexes, intermodal centres, retail malls, hospitals etc. In the case of some airports, the developments are so large so as to constitute an “airport city” or “aerotropolis” (airport-centred urban economic regions).

In India, some of the PPP airports have substantially monetized city-side land assets for development. DIAL has monetized city-side assets – a number of hotels have been developed in the aerocity. DIAL has given land on long-term lease to developers and receives fees. In Hyderabad, GHIAL has developed an aviation academy on the city side.

4.2.1.2. Future outlook

GHIAL is in the process of developing India’s largest Airport City that will form an integrated ecosystem spread over 1,500 acres (of the total 5,495 acres of land available to GHIAL) through its subsidiary GMR Hyderabad Aerotropolis Ltd. It will offer commercial office space, retail, leisure and entertainment, hospitality, education and healthcare facilities. Two special economic zones (SEZs) are also planned at Hyderabad airport. GHIAL is using three primary models to develop its city-side land – (a) lease land to developers where they build the required infrastructure and operate; (b) lease land and infrastructure to third parties for operations and (c) enter into joint ventures to develop and operate city-side business.

DIAL is in the process of expanding its city side development and evaluating various options including development of large retail / office spaces. Mumbai International Airport Limited (MIAL) and Bangalore International Airport Limited (BIAL) have also commenced city-side developments to leverage land available on the city side for earning additional non-aeronautical revenues.


4.2.1.3. Attractiveness for AAI

One of AAI’s major strengths is the huge network of city-side land at its airports that can be used for development. AAI has already commenced the process of identifying airports for city-side development, techno-feasibility reports, master planning, architectural concepts and business plan studies are already being undertaken. The list of airports for which these studies are being undertaken is presented at Annexure 3. The attractiveness of these opportunities will need to be considered on a case-to-case basis. The restrictions imposed on city-side development by AAI act may limit the potential for city-side development at AAI airports.

4.2.2. International consulting opportunities


As a natural extension to their core business, a number of airport operators have diversified into international markets for opportunities such as consulting business, technical advisory services for ANS. Changi Airport Group, Aéroports de Paris, Fraport, etc. have dedicated consulting divisions.

Exhibit 35 highlights some of the areas where global airport operators are currently offering their consulting services to other countries.

Exhibit 35: Potential disciplines for international consulting for AAI

O&M

Airport Safety & Security

Airport Feasibility Studies

Airport Management on Turnkey basis

Airport Electrical Installations & Night Landing Facilities

Passenger & Cargo Terminal Design & Construction

Air Traffic Management

Renovation & Modernization of Airports

Pavement Design & Construction

Integrated Passenger Information System


Interactions suggest that AAI has also pursued such opportunities in the international market, mainly in South Asia, to offer technical advisory services to airport development authorities / governments. However, the volume of work undertaken has not been significant.


The aviation sector is a dynamic sector and the environment is frequently changing in terms of how airports are planned, designed, constructed and operated etc. Such dynamism will always require countries that are not advanced in the development of operations to seek assistance of airport operators having expertise in airport development and operations.

International Air Transport Association (IATA)18 estimates that there will be an increase of 4.9% in passenger numbers between the years 2014 & 2034 in the Asia-Pacific market. A high growth rate of 4.7 per cent is also expected in Africa during the same period. According to the CAPA Global Airport Construction Report, 2016, the global airport construction market size is US$ 543 billion. Africa has already initiated construction projects with about 40 new airport projects commissioned in 2012. These projects will need expertise in terms of planning, designing, operations, etc.

4.2.2.3. Industry segment attractiveness

AAI has conducted an assessment of the outlook in terms of the market for international consultancy; the results are summarized below. A snapshot of the assessment is presented in Exhibit 36.

An analysis of various key aspects reveals that AAI can utilize its strengths to enter this market and benefit from the opportunities. However, the Authority will face challenges arising from the highly competitive nature of the business and moderate entry barriers.

Consultancies are typically awarded in an open bid process; however, the project award and execution can be challenging owing to language constraints and lack of local expertise. For instance, in West and Central Africa, there are about 24 French speaking countries. To work in these countries, fluency in French may be a primary requirement. This is where AAI may lose out to its European competitors. AAI may also face competition from Chinese players in these markets.

In terms of overall competition, AAI faces stiff competition in both Asia and Africa. The Changi Airport Group is very active in the Asian region and in the Middle East. It concluded a six-year O&M contract at Dammam airport in Saudi Arabia in 2014. Apart from Changi Airport Group (CAG), Vinci Concessions, Egis, TAV, Arup, Mott MacDonald, Leigh Fischer, etc., are other competitors who have established themselves in both Asia and Africa. The results of the assessment indicate that although AAI has limited experience at present, it should explore the opportunity.

18 “IATA Air Passenger Forecast Shows Dip in Long-Term Demand”, Nov 26, 2015, IATA official website


AAI has a vast pool of talent, which has experience in various airport functions from air traffic management to designing and developing civil structures. AAI’s adoption of advanced technology in ANS compared to countries in South Asia and the Association of Southeast Asian Nations (ASEAN) gives it an edge in offering consulting services in the region. In the past, AAI has carried out development works in North and Sub-Saharan Africa, in Libya, Algeria and Tanzania. Both Asia and Africa are fast growing aviation markets and AAI will explore the possibility of offering its services in these regions.

4.2.3. Maintenance, repair and overhaul (MRO)

4.2.3.1. Current market trends

The current MRO market of Indian carriers is estimated to be approximately INR 500 crore (USD 750 - 800 million). While the market for MRO is large, there are only a few MRO service providers, the key service providers’ being Air India Engineering Services Limited (AIESL), Air India Nagpur Mihan SEZ, Air Works India Pvt. Limited, Cochin International Aviation Services Ltd and MAS-GMR Aero Technic Ltd (MGAT). Exhibit 37 gives the location of key MRO service providers in India.

Exhibit 36: Assessment for international consulting business

Intensity of competition:

High Competition is high

owing to presence of well established, large players

Barriers to entry: Moderate

Consultancy contracts typically involves open bidding process but project award and execution can be

challenging

Bargaining power of suppliers: Low Technical expertise is AAI’s strength but AAI

currently faces manpower shortage . In some

projects, collaborate with regional experts

Bargaining power of customers: Low Bargaining power limited

by project budgets specified by government

organizations

Threat from Substitution:

LowThere are no substitutes

for provision of such consultancy and

development services

Beneficial to AAI’s entry Obstacle to AAI’s Entry


One of the key challenges for the MRO industry in India has been the high tax on such services. Further, there are other challenges that the industry faces such as problems faced in the import of key components and problems arising from the movement of experts.

While in the past, steps have been taken to boost investment in the MRO business in India, only a very small percentage – 10% – of the overall MRO requirement of Indian airlines is met by service providers in India.

On account of such challenges, approximately ninety percent of expenses on MRO by Indian carriers are being spent outside India, mainly in Sri Lanka, Singapore, Malaysia and the UAE.


With growing air traffic, Indian airlines are expected to expand their

fleet. Further there are new entrants expected to enter the Indian airline industry. Given this, the Indian MRO market is expected to grow further. Based on estimates made by Boeing, the MRO market is expected to grow at a CAGR of about 7% to reach USD 1.2 billion by 2020.

The Government of India, in the Union budget for 2016-17, has provided the following incentives to promote investment in the MRO business in India:

¾ Tools and tool-kits used by the MRO have been exempted from customs duty

¾ The procedure for availing of exemption from customs duty have been simplified

¾ The restriction of one year for utilization of duty free parts have been extended to three years.

Exhibit 37: Airports with MRO facilities

Air India Engineering Services Ltd. (AIESL)

Air Works India Engineering Pvt. Ltd.

MAS-GMR Aero Technic Ltd. (MGAT) and AIESL

Air India, Nagpur MIHAN SEZ

Nagpur

Mumbai

Hyderabad

Bengaluru

KochiCochin International Aviation Services


¾ Foreign aircraft brought to India for MRO work, are allowed to remain for up to 6 months or as extended by the DGCA. The aircraft can carry passengers in the flights at the beginning and the end of the stay period in India.

Further, NCAP, 2016, has also allowed exemption on airport royalty and additional charges for MRO operators for a period of 5 years.


With the growing need for MRO services in India, there are several companies that have shown an interest in developing MRO set-ups. The government has also taken some positive steps to promote the MRO business within the country. This presents a good opportunity for AAI to try and capitalize on in the future.

4.2.4. Ground Handling


According to IATA, globally, airlines outsource more than 60% of their ground handling operations and the trend is increasing. However in India, airlines primarily handle most of their ground handling operations on their own. CAPA estimates that in 2012-13, the third-party handling market in India was around US $220 million. In India, the primary customers of third party handlers are foreign airlines. Ground handling at Indian airports is governed by the Ground Handling Policy of India, 2010.

The ground handling business in India has eight key players – Air India Air Transport Services Limited (AIATSL), Air India SATS Airport Services Private Limited (AISATS), Bird WFS, Bhadra, Cambata, Celebi GH, Celebi NAS,

Globe Ground and Menzies Bobba, which account for more than 70% of the market share.19 The rest of the market is highly fragmented between smaller ground handling companies like Universal Aviation, Aviaxpert and Dani Aviation etc. Air India is the dominant player with its subsidies AIATSL and AISATS operating at more than 50 airports.20


India handled total ATMs of 1.79 million in the year 2015-16. It is projected that the total number of ATMs will reach 3.2 million by the year 2025-26. Given the projected growth in ATMs, the overall outlook for the ground handling business looks positive. CAPA has projected that the ground handling market in India will grow to US $1 billion by 2022-23. It further states that if airlines outsource all their ground handling activities, the market size will increase further.

The NCAP, 2016, amended the ground handling policy of 2010, providing incentives for the ground handling business. The NCAP, 2016 suggests that three ground handling agencies (GHA) including Air India’s subsidiary/JV should operate at all major airports as defined in the AERA Act 2008. Non-major airports have been exempted from minimum number of ground handlers under the policy, as it directs airport operators to decide on the number of GHAs at these airports, based on the traffic output, airside and terminal building capacity. Further, it also allows all domestic scheduled airline operators including helicopter operators to carry out self-handling at all airports.

19AAI and CAPA estimates20SATS Annual report 2014-15


Exhibit 38: Evolution of Ground Handling policy in India

NCAP, 2016 policy allows self-handling and hence the current trend of self-

handling may continue in future.

NCAP, 2016 • Three Ground Handling Agencies (GHA) including Air India’s subsidiary/JV should

operate at all major airports as defined in the AERA Act 2008.• Non-major airports are exempted from minimum number of ground handlers. Airport

operator will decide on the numbers, based on the traffic output, airside and terminal building capacity. In case of third party ground handling, Air India’s subsidiary/JV will match the lowest royalty/revenue offered by the other ground handlers. All domestic scheduled airline operators including helicopter operators will be free to carry out self-handling at all airports

Regulatory guidelines easing participation of self-handling by airlines Ground Handling Policy, 2010• Parties that can offer ground handling services at metro airports− Airport operator/ JV Company− Air India/ JV company

− Independent third party (appointed by bidding process)• Self- handling for all airlines for passenger check-in & baggage handling


Exhibit 39: Porter's assessment for ground handling business

As discussed earlier, the market for third-party ground handling is not very large as a number of airlines manage ground handling operations themselves. Further, third-party ground handling is also highly competitive and fragmented – it includes established players such Celebi (of global repute), AIATSL and AISATS etc. Based on interactions with various stakeholders, it is understood that a key factor for

generating business is established relationships with various airlines. While AAI is in an advantageous position because it is an airport operator, it currently does not have the technical skills / capability to undertake ground handling services and will need to incur both capital expenditure for various equipment and bring on board the requisite manpower.


High Presence of multiple

third-party GHAs, self-handling by airlines

Enhance attractiveness Obstacle to AAI’s entry

Barriers to entry: High

Long standing relationships with various local authorities/airlines.

Also, need for high capex, technical skills &

manpower training

Bargaining power of suppliers: Low

Availability of large labour pool in the

country reduces supplier bargaining power

Bargaining power of customers: High Unfavourable financial

positions of airlines would lead to intense

negotiations. Availability of many GH players at

an airport

Threat from Substitution:

HighTechnology upgradation could reduce scope for

GHS


Based on secondary research, an assessment was undertaken to assess

the attractiveness of the ground handling market in India for a new entrant. Exhibit 39 shows the result.


4.2.5. In-flight catering

4.2.5.1. Current market trends

In India, the airline operating model has an impact on the type of in-flight catering required. Typically full service carriers provide hot meals to their passengers while low cost carriers provide curtailed options (limited snacks and beverages). With LCCs not opting for traditional hot meals, the traditional catering market for domestic traffic is limited to full service carriers such as Air India, Jet Airways and Vistara. With more than 60% market share with the LCCs, the overall catering market is limited to less than 40% of domestic traffic.

In India, there are several private in-flight catering companies such as TajSATS, Skygourmet Catering Pvt. Ltd, Ambassador’s Sky Chef, Muthoot Skychef, Aerotech Aviation, Modern Processes, Oriental Hotels, Tripzgo, 3A Travels, Comfort Kitchen, etc. TajSATS is the market leader in the country and provides in-flight catering services in Mumbai, Delhi, Chennai, Kolkata, Amritsar, Goa and Bengaluru, and manages airport lounges in Mumbai and Chennai. With the overall market

size is limited to full service carriers, the presence of a large number of players, has resulted in a fragmented market.


As discussed earlier, the LCCs have been gaining market share in India with a 63% share in 2015. This trend is likely to continue and the market share of the LCCs may continue to increase as a number of new airlines are poised to enter the Indian market as LCCs.

While globally, the in-flight catering market is expected to grow in the next five years with the growth in passenger traffic, the increasing market share of LCC, may limit the potential for new entrants in an already fragmented and competitive market.


Based on secondary research, an assessment of the attractiveness of the in-flight catering market in India for a new entrant was carried out. Exhibit 40 shows the results of an assessment of the attractiveness of the in-flight catering market for a new entrant.


The assessment indicated that AAI does not have any specific established strength in providing such services in a highly competitive, characterised by the presence of several leading international service providers.

4.3. Understanding and managing customer expectations

As discussed above, there is strong market potential for AAI to grow in its existing business and possibly provide new services at AAI airports. In this competitive and fast changing market, retention of customers and

growth will remain a key factor for AAI to retain / expand its market. Retention of and an increase in the customer base will require meeting their expectations through high quality service at airports.

Accordingly, in this Corporate Plan period, concerted efforts to understand and manage customer expectations will be needed.AAI has already adopted the practice of measuring customer satisfaction at its airports through the ASQ surveys undertaken at 11 AAI airports and the Customer Satisfaction Index (CSI) satisfaction

Exhibit 40: Assessment for in-flight catering business

Enhance attractiveness Reduce attractiveness


High The market is very competitive and

fragmented ~ more than 10 players in the market

already

Barriers to entry: Low

Low capital investment requirement

Bargaining power of suppliers: Low

Skilled resources available in plenty for

catering business

Bargaining power of customers: High

Airlines are free to choose from a large number of catering

players

Threat from Substitution

HighLCC are opting for direct

procurement of snack and beverages

Restaurant options available for passengers

at the terminal


surveys undertaken at 53 other AAI airports. However understanding and managing customer expectations involve activities that go much beyond measuring customer satisfaction. It requires that AAI be proactive in the following areas:

¾ Understanding customer expectations

¾ Taking on board how global airport operators deliver on customer expectations

This sub-section discusses these aspects, and specifically how other airport operators are responding to meet changing customer needs.

4.3.1. Understanding customer expectations:

Traditionally, airlines were considered as key customers for airports, and passengers were considered as customers for airlines. However, in the recent past, there has been a significant change in the way airports view their customers – the focus of airports has diversified from just providing airport operation services to providing non-aeronautical services and enhancing their revenues from such non-aeronautical services..

Given this shift, today leading airports are classifying their categories of customers as follows:

¾ Internal customers – tenants like in-terminal concessionaires, ground handlers, airlines, cargo operators etc.; and

¾ External customers – passengers, airport visitors, meet and greeters

Each of these customer groups have different expectations from the airport operator, which has been evolving over time. For example, airport

operators were earlier responsible for the infrastructure that supported air transportation and airports were viewed as a public utility. In recent years, however, privatization of airports has led to a significant change in passenger expectations from airports, including expectations relating to facilities and services at airports, security clearance, availability of baggage carts, courtesy of airport staff, etc. AAI needs to assess the expectations of its customer groups in order to achieve higher customer satisfaction in future. Some details are provided below:

4.3.1.1. Internal Customers

Amongst internal customers, airlines continue to be the most important customer for AAI. Internationally, airlines’ expectations from airports has been evolving and rising with airlines expecting airports to provide advanced technology for efficient operations. Thus, AAI must evaluate, adopt and implement best practices of other global airport operators to respond to needs of its internal customers (Please refer Annexure 4).These include the following:

¾ Providing high technology solutions such as live tracking of ground services (both luggage and people flow), which help airlines to better track and monitor performance on ground

¾ Improving the efficiency of use of existing space at airports forfaster processing of passengers, higher traffic handling within the existing infrastructure etc.

¾ Using data analytics to increase operational efficiencies

¾ Implementing advanced airport


operations database to manage daily airport operations

PPP airport operators are already proactively responding to such expectations. AAI will need to follow suit.

4.3.1.2. External customers - passengers

Like airlines, passenger expectations from airports have increased substantially. Today, passengers are developing expectations based on:

¾ their experiences from large international hub airports;

¾ learning from experiences of friends and family;

¾ advertisements by international airport operators; etc.

A unique travel experience is a key element in addressing passengers’ expectations as each journey has different priorities and concerns. In creating this passenger experience, the airport’s role should evolve from passive asset owner to that of an active participant, enriching the passenger journey as a key partner. Each passenger has different expectations

in terms of airports services and facilities, which can be mapped in one or all of the following categories:

¾ Faster processing at airports – faster processing at various points, including check-in, security check, immigration, etc.

¾ Courteousness of airport staff

¾ Ease of journey at airports – efficient display and signage systems

¾ Higher sense of safety and security

¾ High quality services and infrastructure –

• Free Wi-Fi, high degree of cleanliness, adequate seating etc.

• Entertainment facilities such as gaming zones, spas, lounges, etc.

• Facilities for passengers with special needs

• Disaster management systems

¾ Better retail and F&B offerings

¾ Customer feedback management


Aurangabad Airport


5.SWOT AnalysisAs discussed in the internal assessment section, several customer service benchmarking programmes have been established globally to systematically measure the customer satisfaction of the airport, such as Airport Service Quality (ASQ) survey, SKYTRAX rating programme, etc. AAI has been participating in the ASQ survey programmes to assess its own standing and understand the areas for improvement in future.

AAI may focus on exceeding customer’s expectations and planning ahead for future, in order to offer differentiated service levels. AAI will need to design the total airport experience for its passengers, from the moment the passengers arrived at the parking area or the drop-off point to the moment they take off, in order to elevate the passengers’ experience to the next level. To do this, efficient use of information integration, technology and people will be required.

Earlier, the section on Internal Assessment focused on identifying AAI’s potential strengths / areas of comparative advantage as well as potential weaknesses / areas of vulnerability. External and Market

Assessments tried to identify / assess potential changes and trends in the environment external to the AAI that could have an impact on it over the next 5-10 years - most importantly with reference to possible changes in the needs, service expectations and perceptions of AAI’s key customers. The focus was to identify those changes that could have a significant impact on the AAI and which could present opportunities or threats to AAI’s working / growth in the future.

5.1. Key strengths

Based on the internal assessment undertaken, following key strengths were identified:

5.1.1. Large land holdings

AAI has access to large parcels of lands at airports which it operates. While a large part of such parcels are currently under operational use or earmarked for future expansion of aeronautical infrastructure, AAI still has large land parcels that can be commercially exploited as well. Exhibit 41 highlights the information on land available for commercial exploitation at some of key AAI airports:


Exhibit 41: Land available at select airports

5.1.2. Network of airports across the country

In terms of the number of airports being operated, AAI is the largest airport operator in the country. Currently it owns/operates 125 airports in the country and manages approximately 41% of the total passenger traffic. This network of airports is a significant strength for AAI and can be leveraged to explore opportunities in extending value propositions for its different customers.

5.1.3. Expertise in providing air navigation services

AAI has monopoly in providing air navigation and traffic management services in the country, excluding the airspace identified for military use. Over the years AAI has developed significant expertise in providing these services including developing and adopting contemporary technology systems such as GAGAN. The organization’s competency in navigation services is well recognized in the South Asia region. AAI has won the prestigious Jane’s ATC Award21

for cross-border initiatives like Indian Ocean Strategic Partnership for Reduced Emission (INSPIRE).

5.1.4. Consistent profitability and financial resources

AAI has been a consistent profit making public sector entity. The financial strength of AAI is evident from the cash reserves it had at the end of FY 15. AAI has also paid dividends to the Government of India in the past years. The revenue between FY 07 to FY 15 grew at a CAGR of 13 per cent, while profit before tax has grown at around ten percent.

5.1.5. Experienced Manpower

AAI has professionals with diverse experience in the fields of airport planning, engineering and development, airport operations, etc. It also has experienced manpower in other areas such as air navigation services, cargo terminal development and operations etc. Such diverse experience provides AAI the strength to expand its current business, within India and in foreign territories.

Source: AAI

Airport Land available for Commercial Exploitation

Kolkata Airport 95 acres approx.

Jaipur Airport 19 acres approx.

Bhubaneswar Airport 50 acres approx.

Amritsar Airport 27.54 acres approx.

21 Reference - http://www.aai.aero/misc/IT_Airport28513.pdf


Exhibit 42: Comparison of non-aeronautical revenues of AAI with a comparable private airport

5.2. Key Weaknesses

Based on the internal assessment undertaken, the following key weaknesses emerged:

5.2.1. Low share of non-aeronautical revenue

The share of non-aeronautical revenue for major AAI airports is lower as compared to global airport

operators including private operators in India. A comparison of the privately operated Rajiv Gandhi International Airport, Hyderabad with AAI operated Chennai and Kolkata International Airports is shown in the Exhibit 42. While there have been efforts in enhancing the non-aeronautical revenue at airports, there is scope for enhancing non-aeronautical revenue further.

5.2.2. Low growth of cargo business

Cargo revenues22 for AAI have been stagnant since 2007 and are less than two percent of total revenue. While cargo operations at Delhi and Mumbai airports have increased significantly over the last few years, AAI has not been able to expand its cargo business. Less than one-fifth of its total cargo handling capacity is being utilized at four out of nine terminals operated by AAI. Based on interaction with stakeholders, it is understood that lack of marketing to potential users is one key reason for low cargo volumes. Other reasons include weak customer responsiveness, lack of flexibility with cargo department etc.

5.2.3. Manpower shortage and training

Manpower shortage is currently at 40% of the sanctioned positions at AAI. Interactions with various departments, including Planning, Engineering, Operations, Commercial, Air navigation, Corporate Planning & Management Services (CP&MS) etc., suggested that the shortage has affected the performance of various departments and is becoming a constraint for future growth. Further, there are currently no formalized training programmes for various departments including planning, operations etc.

FY 15-16

Pax (in million) Gross Revenue Share of non-aeronautical

Hyderabad – GMR 12.39 6,155 (INR mn)* 32.79%

Chennai – AAI 15.22 11,854 (INR mn)** 21.97%

Kolkata – AAI 12.42 8,162 (INR mn)** 24.53%

* Gross revenues from GMR consolidated FY 15-16 presentation** Gross revenues from AAI provided data, Revenues exclude income from ANS services

22 Cargo revenues from operating revenue and expenditure data provided by AAI


5.2.4. Limited focus on MIS

Interaction with various departments also revealed that no formalized MIS systems in place at most departments at the airport, regional and central levels. It is understood that information is being shared based on requirements. A formalized MIS system helps keep the management informed of the prevailing business situation and enables them to proactively take appropriate actions. Such a decision support system at various departments / management level can help them leverage the data / information available within the authority and ensure more informed decision making.

5.2.5. Limited focus on marketing

Marketing for airports allows effective communication with its customers and user base, helping an operator identify the services and the service quality level required. Until recently,23 AAI had limited focus on marketing. However, a department has now been established. Lack of marketing and a branding strategy have led to less than effective engagement with customers and promotion of various service offerings.

5.3. Major Opportunities

Based on the external and market assessment undertaken, following major opportunities seem to be relevant:

5.3.1. Enhancing non-aeronautical services at the passenger terminals

As discussed earlier, a number of airport operators – internationally and within India such as AAI’s joint venture company (JVC) airport operators

– have focused on enhancing non-aeronautical services revenue at passenger terminals to increase their revenues. Traffic is expected to grow in the coming years and AAI has the opportunity to translate the increasing passenger numbers into higher terminal revenues. Providing value added services within the terminal, having retail capture at the airports, and enhancing the food and beverage (F&B) setup at the airports are some of the opportunities available to AAI.

5.3.2. Increasing the cargo business

There has been significant growth over the past few years in the air cargo business and the trend is only likely to strengthen with the growth of e-commerce and manufacturing industry. As discussed earlier, AAI operates cargo terminals at its airports using both the operation and maintenance and self-handling models, and is suitably placed to capitalize on this potential growth in air cargo.

5.3.3. Monetizing land holdings

A large number of airport operators (including the AAI JVC airports operators in India) have put the land holdings available to them to commercial use – to develop hotels, retail complexes, office complex, MROs, etc. As discussed earlier, AAI has access to large land holdings that currently are not under operational use. Like other airport operators, AAI can monetize a part of its land holdings and exploit them for commercial developments, MROs, etc. Such developments can help enhance revenues and improve the overall passenger experience.

23 Marketing function has been recently established by AAI, this is focus on promoting AAI’s services to airlines and other potential business partners.


5.3.4. Adoption of state-of-the-art technology

Technology in airport operations has changed over the years. Airports globally are adopting state-of-the-art technology such as e-gates, mobile applications for customers, automated storage and retrieval processes, radio frequency identification (RFID) tags, etc., to improve operations, efficiency in passenger movement, improving passenger experience, etc. Further, a number of airports have also implemented data analytics tools to help them collect and analyse data to better understand customer behaviour and predict passenger behaviour etc. This has helped airports design and operate airports better and enabled them to optimise the retail / F&B mix at airports to enhance revenues.

5.3.5. Marketing initiatives to improve engagement with customers

Engaging with customers, airlines and passengers, has become critical for airport growth. Globally, it is seen that airports make significant efforts to connect and engage with their customers and promote services and offerings through social media, marketing promotions at airports, organizing shopping festivals, etc. An effective marketing strategy can help AAI promote new and existing services across businesses.

5.3.6. International opportunities for consulting and other services

As discussed earlier, AAI has significant expertise in and is well recognized for its expertise in providing air navigation services. A number of countries in the South Asian region are known

to be not very advanced in terms of expertise available for air navigation services. AAI can leverage its expertise to provide services such as consulting and calibration of air navigation equipment to such countries.

AAI also has vast human capital having in-depth knowledge of airport planning and engineering, airport development, and airport operations. AAI can leverage human capital to explore opportunities for providing services such as consulting, developing, operating and managing airports outside the country, focusing on developing countries (the South Asian, South-East Asian and African region).

5.4. Major Threats

Based on the external and market assessment undertaken, the following have emerged as major threats:

5.4.1. Reliance on revenues beyond the control of AAI

One of the major contributors to AAI revenues is the revenue share from Delhi International Airport Limited (DIAL) and Mumbai International Airport (MIAL). Currently this revenue accounts for about 24%24 of the total revenue. The revenue of these airports are regulated by and based on the guidelines issued by Airports Economic Regulatory Authority of India (AERA). The tariffs for DIAL are expected to reduce significantly in the second control period25 (FY 2015-19). This reduction in the tariffs will affect AAI’s revenue from DIAL; the overall revenue in 2016-17 is projected to decrease.

24 AAI Profit and Loss Account for year 2015-1625 http://aera.gov.in/upload/order/566abbbd4c46ffinalorder11122015430opti.pdf


5.4.2. Obligation to implement RCS

As discussed earlier, AAI has the mandate to implement the Regional Connectivity Scheme (RCS) which entails expanding the aviation network to unserved and underserved regions of the country. The implementation of RCS could possibly result in operationalization of non-operational airports and / or development of new airports. While the operationalization of RCS is at a relatively early stage, it does not seem probable that AAI would benefit financially from operationalizing non-operational airstrips / airports with low traffic volumes.

5.4.3. Competition from other airport developers and operators

The increasing involvement of the private sector in airport development and operations and the interest shown by global airport developers in the Indian aviation sector is likely to result in substantial competition for greenfield airport development in the country.

Various state governments are planning to develop greenfield airports. These include Maharashtra (Navi Mumbai Airport), Goa (Mopa Airport), and Andhra Pradesh (Bhogapuram). All these airports are planned to be developed on a PPP basis. Some of these would be the second airport in local catchments, leading to some competition for existing traffic at AAI / AAI leased airports.

5.4.4. Stricter environment and safety norms

Going by international experience, possible reforms in safety and environment regulations in India in the future could bring in stricter compliance norms. These may include stricter norms / restrictions around pollution levels, night curfews etc., which have already been applied in a number of leading airports globally. Such stringent norms could lead to loss of revenue for AAI or necessitate additional spends to maintain compliance.

5.5. Summarizing the SWOT

Based on the above assessment, Exhibit 43 summarizes AAI’s SWOT analysis.


Strength • Large land holdings• Network of airports across the country• Expertise in providing air navigation services• Consistent profitability and strong financial resources• Experienced manpower

Opportunities • Enhancing non-aeronautical services at passenger terminals • Expanding the cargo business• Monetizing land assets• Adoption of state-of-art technology• Marketing initiatives to improve engagement with customers• International opportunities for consulting and other services

Weakness • Low share of non-aeronautical revenue• Stagnant growth of cargo business• Manpower shortage and training• Limited focus on MIS• Limited focus on Marketing

Threat • Reliance on revenue beyond the control of AAI• Obligation to implement RCS• Competition from other airport developers• Stricter environment and safety norms

Exhibit 43: Summary of SWOT analysis for AAI


Vadodara Airport

Coimbatore Airport


6. Setting the Vision and Mission

Vision and mission statements are building blocks of strategic planning for any organization. These help an organization focus its energy on what is important and in visualizing / articulating the following.26

¾ “The mission projects the purpose of existence for the organization. A mission is a general expression of the overall purpose of the organization, which, ideally, is in line with the values and expectations of major stakeholders and concerned with the scope and boundaries of the organization. It is sometimes referred to in terms of the apparently simple, but actually challenging question: “What business are we in?”

¾ “A vision or strategic intent is the desired future state of the organization. It is an aspiration around which a strategist, perhaps a chief executive, might seek to focus the attention and energies of members of the organization”

These building blocks, together with management aspirations, guide organizations in identifying their objectives. This section describes the vision and mission setting exercise for this plan period.

6.1. Setting the mission statement

6.1.1. Approach to setting the mission statement

As stated earlier, the mission statement is the overriding purpose of an organization, the purpose for its existence. To develop the mission statement for this plan period, three things were taken into account:

Exhibit 44: Framework of review mechanism

Review of existing mission

statement

Management view

Stakeholders' view

26 Gerry Johnson and Kevan Scholes: Exploring Corporate Strategy Text and Cases, seventh edition.


¾ The existing mission statement;

¾ Management view on purpose of existence (Internal View); and

¾ Stakeholders’ view on AAI’s purpose of existence (external view).

6.1.1.1. Review of existing mission statement

The existing mission statement is “to achieve highest standards of safety and quality in air traffic services and airport management by providing state-of-the-art infrastructure for total customer satisfaction, contributing to economic growth and prosperity of the nation”.

6.1.1.2. Management's view

Within the senior management, there was a consensus that while purpose of AAI’s existence continues to be the

same as documented in the previous Corporate Plan, however the mission statement needs to be aligned with the changes in the industry and the expectations of the customers,.

6.1.1.3. External view

Inputs were also sought from key stakeholders outside the AAI to elicit their view of AAI’s purpose (Please refer Annexure 4). The following key stakeholders were consulted:

¾ Ministry of Civil Aviation

¾ Select airlines

¾ Other stakeholders including passengers, industry experts etc.

The stakeholders’ view is that AAI’s main purpose is to provide high-quality, safe and customer oriented services – for both airport and air navigation.

6.1.2. Mission statement for this plan period

As can be seen, the management and key stakeholders broadly agree on the purpose of AAI’s existence. Hence, the mission statement for the Corporate Plan period of 2017-2026 is:

“To be the foundation of an enduring Indian aviation network, providing high quality, safe and customer-oriented airport and air navigation services, thereby acting as a catalyst for economic growth in the areas we serve”.


6.2.2. Inputs from internal, external and market assessment

An organization’s aspirations need to be aligned with its key strengths and weaknesses. The key strengths and weaknesses identified earlier, therefore, need to be considered while reframing the vision statement.

Further, the external environment (including market) and its evolution will both offer opportunities and pose threats for AAI. The Vision statement has to be aligned with these. Therefore, these factors need

to be appropriately considered while identifying the desired state and revising the Vision statement.

6.2.3. Management aspirations

To identify the management’s aspirations, AAI conducted a series of interactions and workshops with key management personnel. (kindly refer to Annexure 5 for the questionnaire used to elicit the management viewpoint). Views elicited during these interactions and workshops have been presented in Exhibit 46:

Exhibit 45: Framework for preparation identifying vision statements

Vision statement for

AAI“To be state”

Key Inputs Overarching Purpose

Internal, external and market assessment

— SWOT Mission Statement for AAI“Purpose”Management

aspirations

Guidance from peers and competition

6.2. Setting the vision statement

6.2.1. Framework for setting the vision statement

Vision statements for an organization articulate “the desired future state”. The desired future state is a function of various factors –management’s aspirations, what peers and competitors are aspiring to achieve in future, the environment

the organization operates in and the opportunities and threats it poses, the strengths and weaknesses of the organization, etc. The approach to developing the vision statement has recognized these factors, while aligning it with the overall Mission. Exhibit 45 below highlights the framework used for identifying the vision for this plan period.


Exhibit 46: Key inputs for vision

Provide reliable services as per global standardsImplement and adopt latest technologyGo globalSafer, more efficient, cost effective/ fuel efficientCollaborate with other countries (INSPIRE)

Operate more airports to promote regional connectivity (from NCAP)Provide modern services on par with global standardsFind opportunities to expand in global marketsImprove operational efficiency at airportsFast track expansion projects Ensure profitability of airportsFocus on aspects of safety and reliability in airport operationsO&M and modernization effortsEnhance sustainability – increasingly depend on renewable energy sources for power at airports

Increased focus on cargo operations Develop new cargo hubs at regional airports

Partner with private players to provide services / build infrastructureStress on serving the e-commerce market, primarily for warehousing at both large and small airportsDevelopment of common user domestic air cargo terminals (CUDCTs)

Focus on monetizing land holdings by city-side developmentTarget more consulting projects in India and abroadEmphasise non-aeronautical revenue enhancement

Focus on quality and efficiency. Being reliable. Being world class. Following highest standards. Adopting latest technology. Bringing efficiency. Exceed customer expectations

Focus on growth and developing a strong aviation network: Develop new airports, foray into the global aviation market, scale up of airport operations, improve air connectivity and scale up of cargo operations;

Focus on sustainability: Focus on profitability, Being cost effective, development of manpower; Environmental sustainability

Functions Key Aspirations Key themes

Air Navigation Service

Airport Development & Operations

Cargo Operations

Other Businesses

The last column identifies the key themes emerging from the various interactions and workshops. These

key themes need to be considered while reframing the vision statement for AAI for this plan period.


6.2.4. Guidance from peers

In developing its Vision, AAI also studied vision statements of a diverse set of airport operating authorities / corporations (encompassing airports of various sizes, from various regions etc.) were studied (please refer Annexure 6 for the vision statements of the organizations studied)

The study showed that the aspirations of these organizations (private and public sector) varied from commercial success to serving the community. While the aspirations are different for different organizations, there are common themes that run across various organizations. These are described below:

¾ Customer focus: Delighting the customers, enhancing airport experience and providing safe operations

¾ Growth / Develop core business: Enhancing the business, vying for growth, providing for extensive connectivity

¾ Global or regional aspirations: Setting benchmarks globally or in the region. Expansion of business regionally or globally, based on core strengths

¾ Technology and process: Setting technology and process benchmarks. Leveraging technology to expand business and offer distinctive passenger experience

¾ Innovation and proactive approach: Leading innovation in airport business to provide future ready infrastructure for efficient operations

These themes have been considered for reframing the vision statement.

6.2.5. Vision statement for this plan period

Based on the above inputs, the vision statement has been finalized. It reads as follows:

“To be the principal aviation services provider in the country, AAI shall

¾ adopt and facilitate the use of contemporary air navigation services;

¾ upgrade and develop airport infrastructure;

¾ support improving air connectivity at unserved and under-served airports;

¾ have a restructured organization;

¾ focus on profitable operations at major airports through continuing efforts on cost reduction and enhancing non-aeronautical revenue.”


7.Corporate Agenda: Priorities, Action Areas and Strategies

7.1. Introduction

This section outlines certain key priorities for AAI for this plan period to guide the course of its actions to realise its Vision.

7.2. Framework

The methodology used to identify priorities is presented in Exhibit 47. Key

extracts from the vision statement were used to define key priorities. Inherent in the vision statement are management aspirations and the SWOT analysis, factors also influencing short-listing of the priorities for AAI for this Corporate Plan period.

Exhibit 47: Framework for setting priorities

Key aspects of vision statement Identified Priorities

“Adopt and facilitate the use of contemporary air navigation services”

“Have a restructured organization”

“Upgrade and develop airport infrastructure, support improving air connectivity at unserved and under-served airports”

“Focus on profitable operations at major airports through continuing efforts on cost reduction and enhancing non-aeronautical revenue”

• Strengthening ANS

• Strengthening organizational resources• Improving operational efficiency• Provision of value added services• Emphasis on environmental

sustainability and safety

• Retention and growth of user base

• Increase non-aero revenues• Implementing cost reduction measures • Foray into new businesses• Building the brand “AAI”


7.3. Priorities for AAI

7.3.1. Use contemporary technology to provide air navigation services

The first part of the vision of AAI pertains to enhancing and upgrading the technology to provide air navigation services. As the sole provider of air navigation services across all civil airspace and airports in the country, it is important for AAI to upgrade air traffic management infrastructure to meet the growing demands of the industry. AAI shall, thus, focus on addressing the following:

7.3.1.1. Strengthening ANS

In order to realize its priority of strengthening air navigation services, AAI shall focus on the following:

¾ Implementation of ATFM

¾ Upgrade of FIU

The implementation of ATFM across airports in the country would enable the effective management of air-traffic along with the optimal usage of airside facilities at airports. This will help in the reduction of fuel wastage, reduce operational delays and would increase safety. The augmentation of FIU resources with manpower and equipment is also a focus area of AAI as it is an important step towards ensuring flight safety throughout the system.

7.3.2. To Upgrade/develop of airport infrastructure and improve air connectivity

A key aspiration of AAI is to connect and serve more people and more businesses by enhancing airport infrastructure and expanding connectivity at both, served and under-served airports. While the upgrade and development of airport infrastructure is a key focus area of AAI in the context of rising air-travel

demand, its endeavour to improve air connectivity assumes increased significance in the context of the Regional Connectivity Scheme being promoted by the government. While this part of the vision meets the overall mission, i.e., serving the nation, it also focuses on the management’s growth aspirations and involves the following:

7.3.2.1. Retaining and expanding of user base

India is going through a phase of high economic growth, and is one of the fastest growing aviation markets in the world. Figures available with the AAI suggest that domestic traffic in India has had a year-on-year growth of 21.2% in FY 2015-16. The rapid rise in passenger traffic, however, has not worked in favour of AAI airports; the JVC airports in Delhi and Mumbai have grown much faster than AAI airports. Hence, it is necessary that AAI work towards retaining its market share in terms of both passenger and cargo traffic. The following actions need to be taken to achieve this:

¾ Meet infrastructure requirement

¾ Market AAI’s services

AAI shall focus on improving utilization of its assets and expanding capacity where constraints suppress growth. Further, to gain market share, AAI must proactively work with state governments and airlines to identify and develop new financially feasible airports; this could include participating in PPP projects of state governments.

7.3.3. Restructure organization to efficiently serve all stakeholders

The restructuring of AAI is an important endeavour that may enable it to respond to the requirements of various stakeholders in an effective


manner. To this end, AAI shall focus on the following:

¾ Strengthening organizational resources

¾ Improving operational efficiency

¾ Provision of value added services

¾ Emphasis on environmental sustainability and safety

7.3.3.1. Strengthening organizational resources

Based on internal assessment, AAI has identified certain challenges that could affect its ability to respond to changes in its business environment and operate efficiently. For instance, the organizational structure and processes must allow AAI to quickly respond to the need for enhanced infrastructure at an airport to meet unexpected high growth in traffic.

Hence, in this plan period, one of AAI’s key priorities will be to address challenges related to organizational resources. This will require, among other things, organizational restructuring and the implementation of a new management information system.

7.3.3.2. Improving operational efficiency

Operational efficiency is important to ensure passenger satisfaction and to improve their airport experience. Globally airports have taken a number of initiatives to improve operational efficiency, and to enhance the quality of services and facilities at their airports to meet changing customer needs in a competitive environment. In the past decade, it has been observed that passenger experience / operational efficiency have had a significant impact on an airport’s ability to generate non-aeronautical revenue. According to an

ACI study,27 a one percent increase in passenger satisfaction translates into 1.5% increase in non-aeronautical revenue and a one percent increase in aeronautical revenue.

7.3.3.3. Providing value added services

Airport operators globally have started providing value added services to its passengers. Providing value added services to customers has the following benefits:

¾ Airports can charge passengers separately for the value added services being provided such as meet and greet etc.

¾ Such services lead to higher passenger satisfaction and improve their airport experience, which in turn is expected to result in improved non-aeronautical revenue.

Hence, one of AAI’s priorities in this plan is to identify and provide value added services to various passenger groups.

7.3.3.4. Emphasizing environmental sustainability and safety

In today’s world, environmental sustainability is a collective obligation that organizations and countries work towards to help reduce carbon footprint and ensure a healthier environment. AAI has taken initiatives in this direction and will keep it as one of the key priorities for this plan period.

The priorities for AAI to maintain environment sustainability will be the following:

¾ Use environmental friendly energy resources

¾ Implement energy efficient solutions at its airports

27 http://www.passengerterminaltoday.com/viewnews.php?NewsID=79058


¾ Target development of “green buildings” for expansions and in development projects, and be compliant with environmental norms

¾ Implement measures to control water and noise pollution

7.3.4. Achieve profitable operations at Major airports

The last part of the vision focuses on financial sustainability of AAI. Profitability of airport operations at major airports can enable AAI to offset the reduced viability of operations at non-major airports and the potential decline of major revenue streams such as lease revenues from JV airports. AAI shall thus address the following:

¾ Increasing non-aero revenues

¾ Implementing cost reduction measures

¾ Foray into new businesses

¾ Building the brand “AAI”

7.3.4.1. Increasing non-aero revenues

As stated earlier, a significant proportion of AAI’s revenue currently comes from lease revenue from Delhi and Mumbai airports and from air navigation services. To reduce its reliance on these revenue streams, one of the key priorities for AAI in this plan period will be to increase the share and amount of non-aeronautical revenue.

In its core area of operations, viz., passenger and cargo operations, the priorities for enhancing non-aeronautical revenues are the following:

¾ Enhancing non-aeronautical revenues from passenger terminals

¾ Focusing on expanding the cargo business

7.3.4.2. Implementing cost reduction measures

Globally, a number of airport operators focus on cost efficiency at airports. To sustain and enhance its profitability, cost reduction will be critical for AAI too. An efficient cost base will help AAI deliver better value to all customers, especially passengers and airlines.

Accordingly, in this plan period, an emphasis on implementing cost efficiency measures will be a priority for AAI. Cost efficiency will need to be the goal at all operational airports of AAI, and the regional and corporate headquarters.

7.3.4.3. Foraying into new businesses

While AAI’s traditional businesses are growing at a healthy rate, there is potential for AAI to enter new businesses and new markets. Globally airport developers / operators have swiftly entered new businesses that complement their existing business. As discussed earlier, AAI’s key strengths need to be leveraged and new opportunities need to be explored. In this plan period, AAI will focus on the following key opportunities:

¾ City side development at select airports

¾ Aircraft maintenance, repair and overhaul business at select airports

¾ International consulting opportunities, specifically in the South Asian, African and Middle Eastern regions

7.3.4.4. Building the brand “AAI”

Globally, it is seen that airports make significant efforts to connect and engage with their customers and promote their services and offerings through social media, promotions at airports, organization of shopping


Exhibit 48: Action Plans for the plan period

festivals etc. Such marketing activities attract more customers; engagement with customers enables better servicing, which leads to better customer experience and higher non-aeronautical revenues for airports.

For this plan period, marketing / branding will be priority areas for AAI. Marketing / brand building at AAI is at a nascent stage and needs more

focused efforts. For this plan period, marketing and brand building have been considered priority areas for AAI.

7.4. Action Areas for the plan period

Based on the priorities identified, this sub-section underlines the key action areas for AAI in this plan period.

Priority Action Areas

Strengthening ANS Implementation of ATFM

FIU upgradation

Retaining and expanding of user base

Brownfield expansion Marketing airports and passenger engagement through social media

Development of greenfield airports

Strengthening organizational resources

Organizational restructuring

Implementation of a new management information system

Improving operational efficiency Improve operational performance at passenger terminals

Develop and operationalize hydrant fuel farms at high growth airports

Providing of value added services

Provision of value added services such as meet and greet etc. at AAI airports

Emphasizing environmentalsustainability and safety

Energy efficiency Develop “green airports”

SMS Level1-2 to Level 3-4 and safety audit

Increasing non-aeronautical revenue

Improving non-aeronautical revenue from passenger terminals

Accelerating cargo operations

Implementing cost reduction measures

Cost reduction at airports

Foraying into new business and markets

City-side development at select airports

MRO services at select airports

International consulting

Building brand “AAI” Brand building


Exhibit 49: Phases for implementation of ATFM

7.5. Strategies

Specific strategies have been identified to achieve the goals of the action plans outlined above. The departmental targets determined by various AAI departments is outlined in Annexure 7.

28 Air Traffic Flow Management in India, Strategic Plan for Air Navigation Services 2014- 2018

7.5.1. Strengthening ANS

7.5.1.1. Implementation of ATFM

AAI endeavours to implement ATFM in this plan period which would enable balancing of demand and capacity in Indian airspace and airports for efficient operations of both domestic and international traffic. Towards this end, the ATFM project will be undertaken in three phases28:

Phase 1

ATFM for six metro airports i.e. Delhi, Mumbai, Chennai, Kolkata, Bengaluru and Hyderabad• ATFM will be provided for strategic and pre-tactical demand predictions to

determine period of demand vis-à-vis available capacity• Centralized Air Traffic Flow Management (C-ATFM) will provide capabilities to

model and implement Traffic Management Initiatives (TMIs) to smooth demand to available capacity via Ground Delay Programs

• For period of significant, unexpected capacity reductions, Ground Stop TMIs will be modelled and implemented

• CATFM will provide updated demand prediction to monitor traffic management initiatives (TMI) performance.

• Aircraft operators are provided capabilities to perform schedule management adjustments to optimize their operations consistent the available capacity determined by AAI and the constraints of the TMI

Nationwide implementation at all airports and Indian continental airspace.• A nationwide ATFM system covering all airports to support ATFM for airspace

programs and arrivals into airports throughout India will be implemented.• Key functional enhancements for including departure programs of additional airport

and airspace flow programs to complement the proposed airport arrival programs inphase 1 may be taken up in phase 2.

• A passive web portal access shall be made available to the neighboring states to haveincreased situational awareness of the ATFM in India.

• Aircraft operators will be able to view flight details and manage their own ATC slotsduring a TMI. ATS Units, Airline and aerodrome operators will be able to view allflights arriving and departing from their aerodrome.

Integration with international ATFM according to ICAO regional ATFM plan of Asia Pacific region:• The evolution of C-ATFM system in the third phase will be planned to harmonize with

recommendations of Air Traffic Flow Management Steering Group (ATFMSG).

Phase 2

Phase 3

DescriptionPhase


Exhibit 50: Approach for infrastructure planning

7.5.2.2. Marketing at airports

Airports are operating in a competitive environment and it has become critical to use marketing as a tool to attract and retain customers. AAI has realized the importance of marketing

its airports and has recently established a new marketing directorate with the mandate to undertake airport marketing for all AAI airports. In this plan period, to achieve its objectives, the marketing directorate will focus on the aspects presented in Exhibit 51:

7.5.1.2. Upgrade of FIU

The Flight Inspection Unit is a critical resource of AAI for conducting flight checks and calibration of CNS facilities installed by AAI and at defense airfields throughout the country. AAI shall take the following steps to address the requirements of FIU pertaining to equipment and personnel:

¾ Augmentation of capabilities of existing Fleet for PBN ( SBAS, GBAS )

¾ Augmentation of Fleet

¾ Augmentation of manpower

7.5.2. Retention and growth of user base

7.5.2.1. Brownfield expansion

One of the priorities is user retention and growth, and to achieve this, AAI will need to plan and deliver infrastructure development / expansion in sync with passenger growth and after taking into account the views of all relevant departments. Key factors, depicted in Exhibit 50 need to be considered in infrastructure planning and development:

Interactions with airlines

to understand their plans

Inputs from all

departments

Forecasts of traffic growth over the next

few years, considering

the changes in environment


Exhibit 51: Focus on airport marketing

7.5.2.3. Passenger engagement through social media

Social media is fast becoming the primary tool for airport operators globally to engage and market services to passengers. LeighFisher’s survey for 160 airports, as shown in Exhibit 52, reveals increasing preference for social media platforms like Facebook, Twitter and YouTube for passenger outreach and engagement. AAI will

consider adopting social platforms for

¾ building informal relationships and engaging directly with interested customers

¾ introducing crisis communication, which is quick and direct during times of crisis.

¾ enhancing corporate communications to increase awareness

Developing marketing intelligence and market

data

Marketing AAI airports to airlines,

retailers and passengers

Design customized marketing campaigns

Prepare and develop

marketing plans for key AAI airports

Joint marketing promotions with tourism department,

industry chambers


¾ promoting products and services

¾ analysing customer behaviour by surveying customer opinions, e.g., about new opportunities

In this plan period, AAI will use social media as a tool for interacting with

passenger and improve passenger experience. Social media is also an effective tool for marketing products and services. The following possible categories can be used for interacting with passengers / marketing its services:

Exhibit 52: Usage of social media by airports

Uses of social media by airport operators worlwide

(percent of airports surveyed)

Uses of YouTube by airport operators worlwide

(percent of airports surveyed)

0% 0%20% 20%40% 40%60% 60%80% 80%100% 100%

Crisis

CommunicationNew Service

Community

RElations

Delayed Flight Information

Customer Services

Promotion

Promotion

Airport Construction

Projects

Airport Management

and Operations

Corporate Communication

Corporate Communication

Infromal Communication

Source: Leigh Fisher Survey and analysis of 160 airports worldwide, as of January 2013.

Facebook Twitter


Exhibit 53: Potential Social Media Platforms for AAI

7.5.2.4. Development of greenfield airports

With growth in passenger traffic, many Indian airports have reached saturation levels. Non-availability of land in the immediate vicinity has restricted expansion possibilities and second airports are now being

planned. Navi Mumbai, Bhogapuram and Mopa are a few developments that will come up on the PPP model. In all three cases, AAI will lose some traffic to new airports, leading to potential loss of revenue and passenger traffic. AAI will need to take steps to mitigate the risk of revenue and traffic loss.

Category Description Media

Social networking Develop social networks with other users that share common interests or activities

Information or entertainment service that is accessed via mobile devices and allows, e.g., users ‘check-in’ at venues

Facebook,

Foursquare

Airport blog /Microblog

Updated with entries that provide general commentary, descriptions of organized events or content such as photos or video for readers

Online service, platform or site that allows users to exchange small elements of content such as short sentences or links

Airports own blog or discussion forum /

Twitter

Community Online platforms or sites allowing users to share multi-media such as photos, music, videos or presentations

YouTube, Instagram, Scribd,


Exhibit 54: Strategy on new greenfield airports

7.5.3. Strengthening organizational resources

7.5.3.1. Organizational re-structuring

As mentioned earlier, AAI has appointed a consultant to advise it on organizational restructuring. The recommendations by the consultant, who has already begun work, is expected to be implemented within this plan period.

7.5.3.2. Implementation of new management information systems

To improve efficiency and to maintain seamless information sharing in this plan period, a robust MIS system will be implemented at AAI. The MIS system will act as a catalyst for the management and provide information

for informed decision making. Some key elements that an effective MIS could help address are the following:

¾ Operations – Recording pain areas for passengers and attempt to Improve passenger experience by increasing efficiencies at multiple touch points

¾ Finance – Enhancing profitability through better control on financial health

¾ Commercial – Monitoring of utilization of retail space, car park and other rentals

¾ Airport marketing – Identifying trends and opportunities to attract more airlines to AAI airports

Shortlist airportsShortlist airports using the traffic assessment exercise and identify suitable land for second airports

Traffic assessmentIdentify airports where traffic demand is higher than available capacity and expansion works are not possible due to land constraints, presence of obstacles or operational constraints

Prepare business casePrepare a business case based on requirements like land, capex, technical specifications, timelines for development works, phasing of the project, etc.

Present to state governmentPresent a comprehensive business case to state government(s) for consideration


¾ Infrastructure – Monitoring project progress, and proactively maintaining infrastructure for better efficiency and serviceability

¾ Environment and Sustainability – Improving safe and energy efficient business operations

¾ Business development – Monitoring business opportunities pipeline within India/overseas

¾ Engineering – Monitoring maintenance activities at the airports

As can be seen, MIS would differ for each department in terms of coverage of information, frequency of reports etc. A specific work stream will need to be initiated to design and implement a robust MIS system for AAI. (Please refer Annexure 8 for potential MIS coverage for some departments.)

7.5.4. Improving operational efficiency

7.5.4.1. Improve operational performance at passenger terminals

AAI has appointed a consultant to undertake an operational efficiency study. The study will recommend measures to improve operational efficiency in areas like passenger and baggage processing time, passenger flow, utilization and management of operating systems like passenger

boarding bridges, etc. The study will also focus on augmenting manpower, enhancing the technical and soft skills of airport staff, and identify state-of-the-art technologies and processes to be adopted to enhance customer service performance. In this plan period, AAI will implement the measures suggested by the consultant to enhance operational efficiency at select airports and introduce them in other airports progressively to improve passenger experience on an organization wide scale.

7.5.4.2. Develop and operationalize hydrant fuel farm

To improve fuelling systems at airports, AAI plans to develop hydrant fuel farms at select airports. The main purpose of fuel farms is to increase efficiency in ground handling and reduce turn-around times. AAI intends to define thresholds beyond which it would be mandatory to adopt hydrant linked fuel farms at its airports. Further, AAI willl endeavour to earmark and reserve suitable areas at major airports where anticipated traffic growth and aircraft movement are expected to achieve or surpass pre-defined thresholds. AAI will evaluate development of hydrant fuel farms on models highlighted in Exhibit 55.


Exhibit 55: Development Models for Fuel Farms

Development Model

Risk for the airport operator

Responsibilities and Examples

Fully Outsourced – The development (through long term concession) and O&M is outsourced to a third party.

Low risk for the airport operator

The ATF producer and supplier take land on lease and build infrastructure. Operations and maintenance respon-sibility also lies with the concessionaire.

Implemented at Hong Kong International Airport and Sydney

Fuel concession models

Multiple ATF producers and suppliers take land on lease and build common infrastructure. O&M costs are also divided amongst the suppliers.

Implemented at Bogota & Lima Airports (Single Operator / Open Access)

Hybrid – The Airport builds the facility but outsources O&M

Low to medium risk for the airport operator

The airport operator builds the facilities and leases the O&M to a private player

Implemented in India at GHIAL (at operation commence-ment), and at DIAL & MIAL airport through an special purpose vehicle (SPV) in which the airport operator shares ownership with partner companies. Implemented Interna-tionally at South Africa , London and Jeddah

Fully in-sourced – Airport builds, oper-ates and maintains the facility on its own

High risk for the airport operator

Development on this model needs detailed viability as-sessment as, apart from capex risk, capabilities in O&M also need to be considered.

Implemented Internationally at Tulsa and Tucson Airports

The suitability of a development mode has to be ascertained for each airport separately based on the scale

of operations, financial viability, alignment to overall strategic goals, etc.


7.5.5. Provision of value added services

7.5.5.1. Value added services at AAI airports

In this plan period, AAI aims to provide value added services to its passengers for example meet and greet services,

entertainment zone, art gallery, etc., at select airports. For specific measures to be taken, AAI will undertake airport specific studies to identify potential services and implement solutions. The approach AAI will adopt to achieve its target is shown in Exhibit 56:

Exhibit 56: Approach to provide value added services

Identify airports for providing value added services

Identify value added services to be provided

Provide services at select airports

• Based on airport throughput

• Based on passenger profile and requirements

• Study the value added services being provided at airports globally

• Based on passenger profile, shortlist services to be provided

• Implement value added services at airports in a phased manner

• If required, appoint third-party agency to provide such services and train staff


Exhibit 57: Options to improve energy efficiency

7.5.6. Emphasis on environmental sustainability and safety

7.5.6.1. Energy Efficiency

Currently, there are some energy efficiency measures already being implemented at select airports; e.g., LED lighting at passenger terminals

etc. While these measures will help reduce energy consumption, there is further potential that AAI can realize. To bring in more energy efficiency at AAI airports, Exhibit 57 shows the possible options available to AAI in this plan period:

7.5.6.2. Develop “green airports”

In future, AAI shall design and plan terminals in a way that they meet the Green Rating for Integrated Habitat Assessment (GRIHA) or green building requirements and achieve a rating of GRIHA 4. In this plan period,

the action plan will be to reduce the carbon footprint at AAI airports and adopt measures to lower the levels of air, water and noise pollution. Measures shown in Exhibit 58 will be implemented.

• Automated electrical power demand and lighting & climate control to reduce energy consumption at airports

• ICT-based building management systems to improve operations

• Installation of sensors, meters and advanced data loggers at airports to measure parameters such as temperature, pressure, flow rates, electrical consumption, etc.

• Undertaking energy audits to assess areas where there are energy leaks and how energy can be conserved.

• Passenger terminal to be designed in a manner to ensure effective usage of solar energy/renewable energy to reduce energy consumption.

Technology interventions at

airports

Energy Measurement and

Monitoring

Building design / re-design


Exhibit 58: Strategies to develop green airports

Potential options Strategy

GRIHA compliance for new developments Follow the GRIHA protocol during construction phase to achieve at least a rating of four on a five-point scale

Reducing COX, SOX and NOX emissions from vehicular traffic on airside

Promote the use of efficient fuels like compressed natural gas for vehicles on the apron

Comply with restrictions on age of vehicles, as set by state pollution control boards to reduce COx emission

Introduce new technology like fuel cell for vehicles

Design efficient vehicle movement area on airside to reduce congestion and hence emissions

Preventing spillage of fuel and other chemicals

Operationalize a spill management procedure at all airports to pre-vent and manage spillage caused by oil, toxic heavy metals, etc.

Maintain a record of all the spills on the apron and measures taken to mitigate the associated risks

Source equipment to efficiently handle major spills

Monitoring air and water quality Install air and water quality monitoring units within the airport

Install air and water quality monitoring units outside the airport pe-rimeter, within 2KM of the airport

Operationalize a mechanism to mitigate any ground water pollution caused by the spillage of chemical or untreated sewage into ground water

Reducing water utilization Operationalize water treatment plants to recycle water

Introduce water saving technology for cleaning, horticulture and pas-senger amenities

Long-term measures to reduce aircraft pollution

Introduce a noise mitigation plan for airports with night time operations

Prepare a plan to incentivize aircraft to use fuel efficient engines


Exhibit 59: Strategies/Plan for SMS implementation level 3-4

7.5.6.3. Shift from SMS Level 1-2 to Level 3-4 and safety audit

Safety and security of passengers has been at the forefront of AAI’s efforts. In an effort to improve these areas AAI has envisaged a shift to safety management system (SMS)implementation level 3-4 from present

SMS implementation level 1-2. This represents an advancement in SMS maturity from basic and reactive safety risk management (SRM) processes to proactive and continuous improvement levels of SRM. Exhibit 59 represents the development requirements for this shift.

SMS Implementation Level Development strategy/requirements

SMS implementation Level 3(Proactive processes, looking ahead)

• SRM to be applied to initial design of systems, processes, organi-zations, and products, development of operational procedures, and planned changes to operational processes.

• The activities involved in the SRM process involve careful analysis of systems and tasks involved; identification of potential hazards in these functions, and development of risk controls.

• The risk management process developed at level two is used to analyze, document, and track these activities. Because the ser-vice provider is now using the processes to look ahead, this level is termed “proactive.”

• At this level, however, these proactive processes have been im-plemented but their performance has not yet been proven.

SMS implementation Level 4(Continuous Improvement, Continued Assurance)

• The final level of SMS maturity is the continuous improvement level. Processes have been in place and their performance and effectiveness have been verified.

• The complete Safety Assurance (SA) process, including continuous monitoring and the remaining features of the other SRM and SA processes are functioning.

• A major objective of a successful SMS is to attain and maintain this continuous improvement status for the life of the organization.

Source: SMS Implementation guide, Federal Aviation Administration


7.5.7. Increasing non-aeronautical revenue

7.5.7.1. Improving non-aeronautical revenue from passenger terminals

Currently, main terminal revenue

consists of three categories – duty free (at international airports), revenue from retail concessions and revenue from F&B concessions. The options AAI can exercise to increase terminal revenues are outlined in Exhibit 60.

Exhibit 60: Strategies to increase non-aeronautical revenue from terminals

Potential options for enhancing terminal revenues

Strategy

Modifying the contracting structure Traditionally, AAI has opted for fixed rental contracts for concessions with the terminals. This model ensures a fixed income but AAI does not get the benefit of higher sales made by concessionaires. AAI is considering modifying the contracting structure and is evaluating the following options:

Revenue sharing contract – Revenue sharing is the most preva-lent contracting model for concession contracts at airports. A plain revenue share contract ensures that both the airport and the retailer stay invested in the project and ensure its success. However, this also puts risk on the airport operator in terms of a decline in income when the sales are low.

Minimum Annual Guarantee (MAG) contract – MAG contract is another variant of the revenue sharing contract being used by airport operators. Under this arrangement, the concessionaire needs to pay a fixed minimum amount to the airport operator. Over and above the minimum amount, the airport operator also gets a small revenue share percentage.

Terminal redesign; enhancing the retail / F&B capture at the airports and new offerings

Terminal redesign – AAI has appointed consultants to assess the terminal redesigning exercise at some of its airports to enhance their retail / F&B capture. In this plan period, more airports are likely cov-ered under a similar exercise.

Enhancing the product mix – In this plan period, AAI can under-take passenger profiling and record passenger expectations in terms of retail / F&B capture at the airport. Based on passenger expecta-tions, the product mix provided at airports can be reconsidered / changed.

New offerings – Further, in this plan period, new offerings such as retail kiosks may be provided at select airports. Retail kiosks can be used for areas that are too small to accommodate retail outlets. Retail kiosks can be used to sell essential items, e.g., cosmetics or electronics etc.


Exhibit 61: Strategy for city-side development

7.5.7.2. Accelerating the cargo business

AAI had appointed a consultant to advise it on the way forward to improve AAI’s cargo business. The consultant has submitted its report to the Cargo Directorate. As per the recommendations of the consultant, the AAI management has decided to form a 100% AAI owned Cargo Subsidiary to give focused attention for cargo development and flexibility in the cargo operations - AAI Cargo Logistics and Allied Services Company Limited (AAICLAS). AAICLAS will undertake all the activities that were previously carried out by the Cargo Department of AAI and it is envisioned that it will become the foremost integrated logistics network in India. It will work as a multi modal interface, linking air, surface & water transport. AAICLAS will promote, represent, organize, undertake, establish, conduct, handle, arrange, own, operate, participate, facilitate, sponsor, encourage, and provide the business as Cargo Terminal Operator, Free Trade Zone, Air Freight Station and Inland container depot for cargo and passengers. AAICLAAS is currently in the process of being operationalized.

7.5.8. Implementing cost reduction measures

7.5.8.1. Cost reduction at airports

AAI has appointed a consultant to advise it on potential cost reduction measures at select airports. The consultant is currently undertaking the assignment and will submit its inputs / report in due course. In the coming plan period, the airports shall endeavour to implement the measures

suggested by the consultant. A similar exercise needs to be undertaken for other airports in the AAI network.

7.5.9. Foray into new business and markets

7.5.9.1. City-side development at select airports

AAI has large land holdings that can be put to use for city-side development. While land for city-side development is available at a number of airports operated by AAI, all airports may not be attractive for such development. AAI will consider the following key aspects in drawing up the strategy for city-side development:

¾ Identify airports suitable for city-side development

¾ Define a suitable product mix

¾ Choose the development model

Identify Airport

StrategyChose development model

Define a suitable

product mix


7.5.9.2. Identify airports

AAI has already appointed consultants to undertake assessments at select airports to assess the viability of undertaking city-side development. AAI intends to develop a framework to identify airports where city-side development can be undertaken which will consider aspects such as land available for development (considering the land required for future development), passenger traffic, passenger profile, location of the airport, real estate development within the city, etc., for identifying potential airports for city-side development. Further, consultants will be appointed to undertake financial viability assessment to ensure that development is undertaken only at financial viable airports.

7.5.9.3. Potential development options

For airports where city-side development is viable, the next step is to assess and finalize the product mix for such development. Exhibit 62 indicates the product mix that has been developed by airport operators world-wide.

While airport operators world-wide have developed real estate within airport lands, AAI is regulated by the AAI Act 1994, which imposes restrictions

on real estate developments within airport lands. Within the provisions of the Act, the most appropriate product mix will need to be identified on an airport-by-airport basis.

7.5.9.4. Development model

There are multiple models available for development of such facilities. The following are possible options, with examples of airport operators that have undertaken city-side development based on the models shown in Exhibit 63:

Exhibit 62: Potential development options to be assessed

Exhibit 63: Possible development models

Possible development model Risk for AAI

Lease model – with/without additional licence fee (including other variants of the lease model)

Low

JV Model – JV with real estate developer for development and/or operations Medium

Development model – AAI takes full responsibility for the development and opera-tion of city-side developments

High

Hotels

Hospitals

Retail Complex

Golf-course

Commercial office

complex


For each planned city side development, the above models will be studied and based on factors such as management’s preference, risk perception, market interest etc., the most suitable model will be implemented. Annexure 9 indicates various concepts adopted by global airport operators for city side development.

7.5.9.5. Development of MRO

Apart from developing land for real estate, AAI will consider the possibility of using the land available on the airside to develop MRO facilities at select airports. The following three-step approach, as shown in Exhibit 64 will be followed to assess the MRO business potential at AAI airports:

• Assessment of land availability on airside with access to apron

• Plans of future expansion to assess land availability

• Brief interaction with airlines to assess interest on using airport for MRO

• AAI to appoint a consultant to carry out a market assessment considering key segments of MRO activity • Line maintenance• Airframe heavy

maintenance• Engine overhaul• Components

overhaul• Modifications

• Evaluate possible entry models in the MRO business. A few examples of business model are :• Land as lease • JV with existing player• Self-developed and

operated • Adopt the most suitable

model for developing MRO at select airports

Exhibit 64: Three step approach to MRO business

Identification of airports for

MRO

Market assessment

Market Entry Model


Exhibit 65: Examples of MRO business (Representative list)

Exhibit 66: Modes of entering international consulting business

7.5.9.6. International Consulting

As discussed in the SWOT analysis, one of the key strengths of AAI is its expertise in a diverse range of airport related services. This can be marketed abroad as consultancy to countries in the South Asian Association for Regional Cooperation

(SAARC), ASEAN and Africa. AAI already has a business development cell that focuses on exploring and evaluating international opportunities in consulting. In this plan period, the modes suggested in Exhibit 66 can be adopted to identify and target international consulting opportunities:

Possible mode Strategy

Tracking international consulting oppor-tunities tenders

First mode to enter the international consulting market is to respond to international tenders issued by various government / authorities for their consulting needs. In this plan period, international consulting tenders to be proactively identified and tracked

Government-to-Government route (G2G) route

The second mode is to explore G2G route to create opportunities in consulting – leveraging the relationships of the Government of India with other countries and identifying opportunities for AAI to provide consulting services.

Land Lease / Land sale

JV with MRO player 100 % owned and developed by airport operator

Risk Low Medium High

Implementation Examples

Air India Ltd, MRO in Mihan SEZ (which has connectivity to Nagpur Airport)

GMR’s GHIAL with Ma-laysia Aerospace Engi-neering SDN established MAS GMR Aerospace Engineering Company Limited (MGAE) which started operations in 2011 at an SEZ near Hyderabad International Airport

Malaysia Aerospace Engi-neering exited the venture with GHAIL taking over the balance 44.61% stake in 2014


7.5.10. Building brand “AAI”

7.5.10.1.Brand building

In this plan period, AAI aims to build the AAI brand both within the organization and outside. Currently, AAI lacks consistent branding standards within the organization. As a first step AAI shall introduce brand guidelines for aspects like stationery formats (letter heads, business cards, etc.), presentation templates, colours

and fonts to be used for external and internal communication, etc. As a second step, AAI shall focus on building its brand to engage customers.

There are two potential levels, as shown in Exhibit 67, at which AAI may target branding – an overall AAI brand, which passengers associate with high service levels, and brands for key airports.

Exhibit 67: Strategy for brand building

Potential options for creating an AAI brand

Strategy

Overall AAI brand Potential measures to create the overall brand• Identify services that customers should associate with AAI• Identify services that can be standardized across airports that pas-sengers can associate with AAI• Maintain consistency in sales and promotions activities across all airports

Developing standalone airport brands Potential measures to create standalone airport brands• Identify airports that AAI wants to develop a brand for• Identify and communicate specific services that customers should associate with each airport• Differentiate services and products according to the needs of cus-tomers using the airport• Create a unique identity for each airport to manage customer expec-tation

The options above are not exhaustive; AAI will detail this further during the plan period and identify and implement specific measures in this direction.


Bhopal Airport


8. Corporate Plan Monitoring and Review

8.1. Corporate Plan monitoring and review

The Corporate Plan states the Vision, Mission, objectives and priorities for AAI to meet during the next 10 years, besides suggesting the strategies to achieve its goals. To ensure that AAI moves in the direction outlined in this Corporate Plan, it intends to introduce an institutionalized review framework to assess the progress made in implementing the strategies and the extent to which priorities have been achieved.

The monitoring and review framework is critical given the fact that AAI’s external environment and the market it operates in, changes dynamically in a short period of time. The changes affect AAI’s business and hence,

some revision in the strategies to be implemented to achieve its action plans may be needed. Strategies and plans formulated for 10 years may require readjustment as changes take place in an ever-evolving economic and social environment. To this end, the Corporate Plan monitoring and review exercise will be undertaken on an annual basis. The exercise will include preparing annual plans and action plans, monitoring of the application of strategies and reviewing the progress made vis-à-vis the priorities and action plans defined.

Exhibit 68 presents the overall Corporate Plan monitoring and review framework to be adopted by AAI.


Exhibit 68: Corporate Planning Monitoring and Review framework

8.1.1. Annual monitoring and review

Under this framework, AAI will institutionalize an annual monitoring and review mechanism and Corporate Planning and Management Services (CP&MS) will play a pivotal role in overall monitoring and review exercise. It is suggested that this exercise will

also cover the annual goal setting exercise which provides inputs for the Memorandum of Understanding (MoU) to be entered into with MoCA. The following are the key steps to be undertaken in the annual monitoring and review exercise.

10 year Corporate Plan

Monitor and Review of Corporate Plan

Change in External / Market Environment

Vision & Mission

Priorities

AAI Strategies

Targets

New Opportunities

Use of strategies

CP&MS — Responsible for overall

coordination

Directorate level goals — annual basis

New Threats

Review of progress

New strategies required

Performance review

Achievements and shortfalls

Annual goals and targets


Exhibit 69: Key steps to be undertaken in the annual monitoring and review exercise

8.1.1.1. Commencement of monitoring and review exercise

The monitoring system will coincide with the annual budgeting exercise of AAI, which starts with a mid-term review in October. The CP&MS Directorate will initiate the monitoring and review exercise. This would involve the following steps:

¾ CP&MS department shall circulate templates to various departments to complete and return. Various departments shall be asked to provide information on strategies implemented in the assessment year; information on goals and action plans for the assessment year; and information on goals and action plans achieved in the assessment year. The departments shall provide the information

to CP&MS Directorate by 15th October.

¾ CP&MS department shall request all departments to commence a broad level external / market environment assessment for their departments to assess and understand changes in the environment and their effects on the department. The departments would complete such broad level assessment by 31st December and furnish the assessment to CP&MS. CP&MS will then provide the consolidated findings of the broad external/ market assessment.

8.1.1.2. Review of performance

Based on the information submitted by the departments, CP&MS team will review the performance of all departments of AAI. The review will

The Corporate Planning and Management Services (CP&MS) Department would start the monitoring exercise on a financial year basis (same as MoU) with a focus on monitoring / reviewing the implementation of the previous year’s Corporate Plan.

CP&MS will review the status of implementation of various strategies and assess performance against priorities and targets. Based on such a review, CP&MS would document achievements and shortfalls and the results would be shared with all HODs for review.

While CP&MS undertakes review of performance, it would request all departments to undertake a broad external / market environment assessment – to assess new opportunities as well as threats to AAI.

Based on the achievements of targets and new opportunities and threats identified, HODs will prepare annual goals and targets. The respective Members will finalize the annual goals and targets – to be shared with CP&MS.

CP&MS will consolidate goals and targets at AAI CHQ level. CP&MS will present both department-wise / consolidated annual goals and targets to the AAI Board to review and finalize annual action plans.

Commencement of monitoring and

review exercise

Review of performance

Assessment of external / market

environment

Developing annual goals and action

plans

Finalize annual goals and action

plans


include the following:

¾ Implementation of strategies – CP&MS will review whether departments implement strategies outlined in the Corporate Plan

¾ Achievements / shortfalls in the goals and action plans – CP&MS will review the goals and action plans achieved by the departments and identify shortfalls, if any

CP&MS shall complete the performance review by mid-February every year and share the results with all departments. CP&MS shall also request departments to provide the reason for shortfalls in meeting goals and action plans.

8.1.1.3. Assessment of external / market environment

As stated earlier, all departments shall be asked to undertake a broad level external and market assessment to identify the following:

¾ The changes in the environment in the assessment year and their impact on the performance of the department / AAI

¾ New opportunities for and threats to AAI arising because of the change in the environment

The departments shall be required to complete such assessment by the 31st December of every year

8.1.1.4. Developing annual goals and action plans

Subsequently, all departments will develop annual goals and action plans for the next year. The heads of department (HODs) would be made responsible for developing the goals and action plans by 15th February every year. The goals and action plans to be developed considering the following:

¾ Achievements / shortfalls in previous year goals and action plans

¾ New opportunities / threats identified

The HODs shall discuss the annual goals and action plans with respective Members, finalize these and submit annual goals and targets of different departments to CP&MS team by 28th February.

8.1.1.5. Finalize annual goals and action plans

CP&MS shall consolidate the department level goals and identify any conflicts in department level goals. It shall present the following to the AAI Board:

¾ The performance of each department in the previous year

– Status of strategies implemented; and

– Status of goals and action plans

¾ Planned department level goals and action plans for the next year

¾ Consolidated AAI goals and action plans for the next year

¾ Any identified conflicts in department level goals and action plans for the next year

CP&MS shall aim to get the Board’s approval on the goals and action plans for next year by 31st March and provide confirmation to respective departments on approved goals and action plans.

8.1.2. Review of strategies – every 3 to 5 years

The strategies presented in previous sections are planned to be implemented over the short to medium term. Following implementation, it may take approximately two to


five years for results to be achieved. Accordingly, while the Corporate Plan monitoring and review exercise will be undertaken on an annual basis, strategies will be revisited over a three to five-year horizon. However, during the annual planning exercise, the

HODs may suggest revision of some strategies to achieve goals and action plans – both long term and annual, if required.

The steps for revising the strategies by AAI will be as follows:

Exhibit 70: Steps for revising strategies by AAI

1 2 3

8.2. Summary

As discussed earlier, the environment in which AAI operates is dynamic and changing and hence the Corporate Plan should be able to respond to changes in the environment. The

Corporate Plan should act as a compass and not as an inflexible blueprint for action. To meet this objective, the monitoring and review exercise is critical for AAI.

IDENTIFYING NEED FOR CHANGE IN STRATEGY• Modifications may be

required in the existing strategy on account of the following:

• Change in external environment

• Existing strategy not leading to expected results

• Change in the internal environment

• Each HOD should undertake this activity at the start of every 3rd year

IDENTIFYING THE NEW STRATEGY Once the need to revise the strategies is identified, the respective HODs will identify the following• Modification in the

existing strategy• New strategy The revised strategies should be shared by the HODs with the CP&MS team, which will collate the inputs from all departments.

APPROVAL AND IMPLEMENTATIONThe list of revised strategies will be presented to the AAI Board for consideration. AAI will review and suggest modifications, based on which the revised strategies can be finalized for implementation.


Raipur Airport


Airport Proposed capacity Tentative cost

(in INR Cr)

Brief Timeline

Runway Apron Terminal building

Status

Northern Region

Jaipur - - 18,000+ 107,000sq. m / 5.0 PHP / 5000 PHP

PMC/ENGG tender in process

Terminal Building– 1200

Expansion of Terminal Building

2019-20

Dehradun - - 4,200 + 22,800 sq. m/ 1.5 MPPA / 1300 PHP

PMC tender in process


Expansion of Terminal Building

2018-19

Srinagar - - 20,000 +33,000 sq. m/ 5.2 MPPA / 2300 PHP



Expansion of Terminal Building, Design Year as 2023-24 due to land con-straint.

2018-19

Lucknow - - 16,250 +1,00,000 sq. m/ 5.5 MPPA / 4,000 PHP


Terminal Building - 1042

Itnl 'Bldg (T1)will be demolished . T2 will be retained and Expansion of Terminal Building

2018-19

Leh 6 nos. AB321

16,500 sq. m/ 0.7 MPPA / 800 PHP


New Termi-nal building and apron

2019-20 (subject to land transfer by IAF).

Jammu - - 6,750 +8,650 sq. m=15,400 sq. m/ 1.0 MPPA / 750 PHP

Work in Progress

- Expansion of Terminal Building

-

Gorakhpur - - 1,400 sq. m/ 0.1 MPPA / 100

- - - -

Annexure 1: List of expansion works planned by AAI



(in INR Cr)

Brief Timeline


Status

Eastern Region

Gaya 2786m X 45m

AB 321 Land being acquired

150 500m runway extension with CAT I lighting

Dec 2018-19 (Subject to handing over of land by state gov.)

Patna - 10 AB 320 40,000 sq. m/ 3.0 MPPA / 2,000 PHP

11.5 Acres of land to be handed over by the state gov-ernment

500 Needs to be revised based on State Govt. Approval


Raipur 3251m X 45m (For AB 321)

2 C type - Tendering Stage

Runway 80, 500m runway extension with CAT I lighting


Ranchi - 3 (2 AB 321 + 1 ATR)

- Tendering Stage

Apron-28 500m runway extension with CAT I lighting


Bhubane-swar

- - - - CT 40 - -

Port Blair - 4 (2 C type + 2 D type)

40,837 sq. m/ 1.42 MPPA / 1,200 PHP

Under con-struction

417 NITB for 600 Dom + 600 Int'l PHP

2017-18

North Eastern Region

Agartala - - 30,000 sq. m/ 1.5 MPPA / 1,200 PHP



- -

Guwahati - - 77,500 sq. m/ 3.5 MPPA / /3,100 PHP


Terminal Building -930

New Terminal Building - 4.43 MPPA, Old Termi-nal Building - 1.6 MPPA

-



(in INR Cr)

Brief Timeline


Status

Dibrugarh 2469m x 45m

- - Work in progress

59.85 Runway extension, Isolation Bay, Link taxi

Nov-17

Imphal - 06 Nos (5 No. A-321)(1 No.ATR-72)

- - CT 40 - -

Dimapur - 04 Nos (1 No. A-320) (2 Nos A-321)(1 No. ATR-72)

- - CT 40 - -

Southern Region

Chennai - - T1(Dom) New - 60,300 sq. m/ 10MPPA/ 3,000 PHP, T2(New Int'l) - 1,08,500 sq. m/ 6MPPA/ 4,000 PHP (Total 30 MPPA)

PMC Tender in progress


Existing Ter-minal Build-ing will be dismantled, 16mppa new Termi-nal Build-ing to be constructed for seamless operations.

2019

Trichy - 10 nos. AB-320

11,777 + 60,723 sq. m/ 3.52 MPPA / 2900 PHP

PMC Tender in progress


- 2019

Vijayawada - 10 nos. AB -320 (Night parking facility)

Interim Domestic Terminal Building 12,642 sq. m/ 0.43 MPPA / 500 PHP

Under con-struction at the rate of Rs.24.25 Cr. PDC- Oct 2016

Interim Terminal Building - 161.65,

- -



(in INR Cr)

Brief Timeline


Status

3025m x 45m (For AB-321)

- Integrated Buillding 30,360 sq. m/3.13 MPPA /1,200 PHP

AA&ES ac-corded

Runway – 145

As/ DPR PH-I Devel-opment

2019

Rajamundri 2600m x 45m

3 Nos AB-320

- - - As/ DPR PH-I Devel-opment.

2019

Kadapa 2015m x 45m

- - - - - -

Visakhapat-nam (CE)

- 6 Nos.- C - - - - -

Tirupati - 4 Nos.- C - - - - -

Tirupati - 4 Nos.- C - - - - -

Belgaum 2300m x 45m

3 Nos.- C New termi-nal building 0.5 MPPA

- - - -

Hubli 2600m x 45m

3 Nos.- C New termi-nal building 0.5 MPPA

- - - -

Mysore 2600m x 45m

- - - - - -

Thiruvanat-hap-uram

- - Air side corridor with Rotunda

- 12 - -

Calicut 3777m x 45m

- New Int'l terminal building Arrival Block 3.0 MPPA

- 120 - -

Pondicherry 2377m x 45m

- - - - - -

Agatti 1540m x 45m

2 Nos.- ATR-72

- - - - -

Western Region

Surat 2905m x 45 m

- - Under Con-struction

- - -



(in INR Cr)

Brief Timeline


Status

Vadodara - - 17,500 sq. m/ 0.73 MPPA / 700 PHP

Under Con-struction

- - -

Jabalpur 2750m x 45 m

4 Nos C 9,000 sq. m/ 0.24 MPPA/ 500 PHP

SOW Is-sued. Site survey in progress

Runway 120 , Apron-21, TB -100

New Domestic Terminal Building -0.54 ap-prox.Old Terminal Building to be retained for G.A. etc.

-

Juhu - - - - - - -

Pune (CE) - 17 (10C+7B)

57,300 sq. m/ 3.10 MPPA / 2300 PHP

SOW Is-sued.


Old Termi-nal Building -7000 sq m dismantled and recon-structed.

-


Name of the airport

Covered area (in

sqm)

Cargo handled in FY: 2015-16 (in MT) Annual hold-ing capacity

(in MT)International Domestic Total

Chennai 54,620 230,753 84,872 315,625 1,102,373

Kolkata 21,906 49,166 90,513 139,679 303,293

Coimbatore 2,585 1,072 6,720 7,792 62,780

Amritsar 2,256 611 224 835 60,833

Lucknow 200 2,656 2,301 4,957 4,866

Guwahati 150 11 15,617 15,628 3,560

Trichy 4,000 6,579 3 6,582 28,993

Mangalore 1,400 566 370 936 17,885

Port Blair 945 - 3,842 3,842 23,116

Jaipur* 1,000 1,458 7,912 9,370 10,000

Annexure 2: Cargo handling capacity and volume handled by AAI airports

The following exhibit illustrates the list of airports, their capacity and volume of cargo handled in 2015-16 (in MT).

Note: For Jaipur airport, international cargo handling is outsourced to state government agencies

Source: AAI data


City side development – Preparation of DPR (Phase I)

Airports Area Available(in Acres)

Consultant Report Submission

Lucknow, 217 M/S RITES March 2016

Raipur 80 M/S RITES March 2016

Tirupati 117 M/S RITES March 2016

Kolkata 105 M/S CBRE May 2016

Varanasi 60 M/S CBRE May 2016

Bhubaneshwar 80 M/s JLL May 2016

Jaipur 40 M/s JLL May 2016

Amritsar 60 M/s PWC June 2016

City-side development – Phase II

Airports Area (in Acres) Consultant

Chennai Under Planning To be appointed

Hyderabad

Trivandrum 2

Bengaluru Under Planning

Vizag

Coimbatore

Ahmedabad

Indore

Chandigarh 30

Guwahati 46

Gaya 62

Patna 10.5

City side development – Phase III

Airports Area (in Acres) Consultant

Trichy Under Planning To be appointed

Bhopal 2.5

Dehradun 2

Madurai Under Planning

Annexure 3: Airports selected for City side development


Stakeholder Comments*

Airline representation bodies (FIA and IATA)

AAI should work towards optimum utilization of existing airport infrastructure to intro-duce efficiencies

Night parking is constrained at AAI airports, which needs attention. More night parking stands should be added at major airports

AAI should upgrade ground handling system at its airports to help airlines achieve quicker turnaround time

Lack of night landing facilities at some AAI airports is a constraint for operation and is affecting passenger growth. More airports should have night landing facilities

Passenger amenities at AAI airports have immense scope for improvement. Toilets, baby care rooms, lounges, etc., need upgrade and better maintenance

Airlines(Domestic and International)

AAI should consider introducing differential tariffs for LCCs and legacy carriers. This will help in reducing operating costs for LCCs and hence, cheaper fares, leading to passenger growth

Cost overruns resulting from delays in projects should not be passed on to airlines in shape of higher tariffs

AAI should involve airlines for consultation before taking up capex projects. This should be done through the Airport User Consultative Committee

Annexure 4: Stakeholder consultation

*Based on interactions and secondary sources


Feedback questionnaire on Mission and Vision statements for Members

AAI’s Mission statement was articulated in the Corporate Plan document 2007-16 as follows:

“To achieve highest standards of safety and quality in air traffic services and airport management by providing state-of-the-art infrastructure for total customer satisfaction, contributing to economic growth and prosperity of the nation.”

Do you think the above appropriately captures AAI’s Mission / Purpose? Would you think any refinements are re-quired to the same? As part of the top management of AAI, what do you think AAI should aspire to achieve (“Vision”) over the next 10 years?

What are the changes and trends that will have the greatest impact on AAI over the next decade?

As part of the top management of AAI, what do you think are the key competencies / strengths of AAI which could be leveraged / help in achieving the above articulated Vision?

In your view, what are some of the big opportunities and key challenges for AAI over the next decade?

What would be some key areas of enhancement for AAI to achieve the above articulated Vision?

Would there be any initiatives / action plans that you think are already being taken / should be taken up that would be relevant to the Corporate Plan formulation?

Do you have any suggestions regarding the effective implementation of this Corporate Plan across the departments of AAI?

Annexure 5: Questionnaires used for feedback on Mission and Vision statements


Annexure 6: Vision statements of international airports

Airports Vision statement Key words

Changi Airport Exceptional People, Connecting Lives - We aspire to build a company where ordinary people achieve extraordinary results. Working together as a team, we bring great ideas to life and achieve exceptional results beyond our individual capabilities.Customers are our inspiration. From the youngest child to the largest corporation, we understand that what we provide connects people in ways that will enhance their lives.

Manpower skill development, team work, customer centric, people focus

Hong Kong airport To strengthen Hong Kong International Airport as the leading international aviation hub and a key engine for the economic growth of Hong Kong.

Leadership role in airport develop-ment, people focus, economic com-mitment

Abu Dhabi Airport Our vision is to be the world’s leading airports group.

Aspiration, corporate excellence

Infraero To be among the best airport solutions companies in the world.To be a worldwide reference in airport solutions.

Staggered approach, airport solu-tions, global benchmark

Fraport We are Europe’s best airport operator and set standards worldwide.

Global leadership, best processes, technology, etc.

Aena international To be a leading, benchmark company in the airport infrastructure management sector worldwide.Participating and having a strong presence in the international airport services market is what Aena Internacional contributes to the Aena group.

Infrastructure management, global ambitions, commitment to parent company

CAA Philippines To be a pre-eminent Civil Aviation Authority in the world and a global brand of excellence in civil avia-tion.

Excellence, global benchmark

Angakasa Pura I To be one of Asia’s ten best airports management companies.

Management excellence, regional ambitions

Angakasa Pura II To become a leading and professional world-class airport management company.

Global ambition, aspirational

Airports Authority of Thailand

Airports Authority of Thailand operates the World’s Smartest Airports.

Futuristic approach, global ambitions

ACSA To be a world leading airport business. Global ambition,

Aéroports de Paris Be a leading group in airport design, construction and operation.

Focused on design, construction and ops, ambitious

Munich Airport Living ideas – connecting lives Innovation, people focus

Amsterdam Airport Europe’s preferred airport Excellence, regional focus

Zurich Airport We are the leading transport hub and meeting place in Europe.

Transport convergence, people focus, regional focus

Dubai Airport To always go further and be the world’s leading airport company.

Global ambition, all around excel-lence

Beijing Airport To be a first-class airport management company Quality excellence

Mumbai Airport To be one of the world's best airports that consist-ently delights customers and to be the pride of Mumbai.

Global aspirations, customer focus,


Action Plans for the plan period 2016-17 to 2025-26

Departmental Action Plans

Directorate of HR

Objectives Short Term Medium Term Long Term

Recruitment across various functions

Filling of vacancies in operations, commercial & cargo at E1 & E3 level with a strategy to improve non-aero revenue

Filling up of vacancies in engi-neering, ATC, CNS, HR, fire & Finance to improve the perfor-mance

Review the gaps in the manpower requirement of all the disciplines and fill the vacancies.

Training plan Strengthen existing training centers. Reinforce regional training centers. Estab-lish CHQ training center. Develop & deliver induction training program for HR, OPS, Finance & Engineer-ing. Collaborate with inter-national aviation training partners.

Develop massive open online course. Collaborate with premier management institute for indus-try-academic tie-up. Standardize all training packages and align them with National Occupational Standards. Align all training pro-grams with 4-tier training policy (E1-E3, E4-E5, E6-E7, E8-E9). update all training records on LSO module of SAP.

Establish training centers at 15 select airports. Con-duct periodical reviews or audits of training programs. Establish a training calen-dar. Develop & implement a training credit system and link it to career progression.

Identifying non-core functions and out-sourcing certain non-core functions after redeployment.

Identification of non-core areas

Taking appropriate steps to outsource identified as non-core areas in Kolkata, chennai 10 major airports

Taking appropriate steps to outsource identified as non-core areas in all remaining other airports

Organization restruc-turing

Organizational restructur-ing of Northern region, CHQ & Kolkata airport as per recommendation of consultant

Organizational restructuring of other regions, Chennai & 10 other airports as per recommen-dation of consultant

Organizational restructur-ing of remaining airports as per recommendation of consultant

Departmental Action Plan

Directorate of Cargo


Development of latest I.T. System for the Cargo Directorate:To be IATA e-freight compliant at Chennai and Kolkata Airport followed with other AAI airports having International cargo

To establish CPC & Pharma zone at Aurangabad /Chennai / Bagdogra Airports etc. depending on the users requirements

Annexure 7: Action plans provided by select Directorates of AAI


Action Plans for the plan period 2016-17 to 2025-26Departmental Action Plan



To launch Common User Domestic air Car-go Terminal (CUDCTs) / YInternational Cargo / International Courier facilities at AAI Airports based on need basis subject to cargo/cou-rier potential from time to timeTo launch e-commerce warehousing facilities at AAI Airports on 24 airports initially and continuing (including e-channel concept at CUDCTS)To obtain RA/RA-3 status for Chennai/ Kolkata airports fol-lowed with at other AAI Airports depend-ing upon the export cargo volumes.To undertake Bonded Trucking operations within Indian territory at AAO Airports.To create/launch of professional Train-ing Centre/Institute covering Commercial all Cargo Opera-tions /Aviation related training programs with subject experts from the industry.To undertake cargo handling operations at other Indian Airports as well as abroad through competitive biddings basis.To undertake ramp Handling /Passenger handling operations at Indian Airports/ abroad through competitive bidding process.





To launch / undertake Air Freight Stations role & responsibilities at AAI Airports subject to Customs approvalTo launch Free Trade Zone / Cargo Village / Dedicated Cargo Airport(s) in India after assessing the ground realities.To become Authorized Economic Operator (AEO) for facilitating EXIM trade etc. at AAI AirportsTo undertake door to door delivery of cargo on behalf of the con-signee at AAI AirportsTo undertake Customs clearance assignments on behalf of consignee / importers / exporters at AAI Airports.To develop Air Cargo Community System (ACS) at AAI Airports subject to levy of License / user charges etc.


Directorate of Commercial


Layout redesigning of airports

12 airports 27 airports 35 airports

Contract restructuring of retailers

15 airports All operational airports

Introduction of ad-ditional services for passengers

Introduce services like (at least for 15 airports) :• Business lounge• Facility for car rental• Wi-Fi facility• Art gallery• Meet & Greet services• Entertainment zone

• Value addition in existing facilities• Identify and introduce new facilities to enhance passenger experience at all operational airports



Directorate of ANS


Implementation of multilayered surveil-lance systemUpgrading FIU Augmentation of capa-

bilities of existing Fleet for PBN ( SBAS, GBAS )

Augmentation of capabilities of existing Fleet for PBN ( SBAS, GBAS )

Augmentation of Fleet

Overseas consulting assignments

Target SAARC Countries Target Africa/ Mid East

Capex plan• Replacement of ex-isting infrastructure• Augmentation of Infrastructure• Adoption of new Technology

Adopting a Perfor-mance Benchmarking System (PBS)for ANS

Adopt a performance benchmarking system for ANS to measure Safety, Capacity, Efficiency and Environmental Efficiency Parameters.

Continue the refinement of PBS. Include Horizontal and Vertical Efficiency Parameters.

Further refinement of PBS. Setting up of Targets to be achieved based on PBS.

Implementation of ATFM

Flow Management at six metro airports

Extension of Flow Management activities to cater to entire Indian Airspace

Indian ATFM system extend-ing ATFM activities across neighboring Countries as “cross-border” ATFM

Overseas consulting in Flight Procedure Design

Target SAARC countries Target Africa/ Mid East

Finalizing ANS Strate-gic Plan

Update ANS Strategic Plan to reflect New Civil Aviation Policy guidance and Asia Pacific Seamless ATM Plan objectives.

Update ANS Strategic Plan based on Global Plan (Aviation System Block Upgrades- ASBU) Block 1 (2018-2023) modules and technology.

Developing R&D Ca-pabilitiesImplementing a Futur-istic Telecommunica-tions NetworkAirspace Management



Directorate of Marketing


Operationalization of Schedule Flights at Airports

2 Airports: 7 Airports 10 Airports

Enhancing Schedule Flights at under-served airports

To be updated

Launching Airport Loyalty Programme

1st Year: 2 Airports (more than 10 millions)

45 airports in 2nd, 3rd, 4th and 5th Year (.1 to 6 million passen-gers)

19 airports (having less than 1 lac passengers)

Market Study to Assess the Potential of Airport Cities

10*+2** airports

Launching Incentive Scheme

( 1st to 2nd Year )

Procuring passenger MIS* tool

*MIDT (Marketing Informa-tion Data Transfer System)

Hiring Agency to Sup-port Airport Marketing Directorate to carry various activitiesPreparing a hub strategy for Chennai airportTraining of marketing team

Minimum 10 days

Refreshal and Advance Refreshal and Advance


Directorate of IT


Implementation of E-OfficePhasing out of physical filing systemImplementation of EPoS for retail conces-sionaires

15 airports All operational airports

Central database managementRevamping of E-ten-dering portal(both application and hardware)Implementation of ISMS



Directorate of IT


Revamping of Airport Information Manage-ment System (AIMS)(both application and hardware)ISO 27001 certifica-tion of IT division, CHQ.Implementation of IPV4 to IPV6Augmentation and migration of applica-tions from DC(RGB) to DC(SAP)Integrated Cargo Management System

12 airports 25 airports To be assessed in the long term

Fire Training Simulator

Enterprise-wide data mining for better informed decisionsEnterprise-wide data repository with single point data collectionImplementation of new WebsiteRefreshing of Data Centre Infrastructure


Directorate of Aviation Safety


To graduate from SMS Level1-2 to Level4Establish dedicated team for safety auditsReduction in bird strike incidents

5% per year

Reduction in separa-tion minima infringe-ment

5% per year

Reduction in runway incursion

5% per year

Reduction in flight level bursts

5% per year



Directorate of Engineering


Introduction of au-tomated building man-agement systemCompletion of solar projects

13 airports

Achieving GRIHA 4 at new construction projectsReplacing convention-al lights with LED Incremental reduction in energy consumption

10% per year

Introducing pre-engineered hangars & terminalsIntroduction of airfield pavement manage-ment system at 10 airports


Directorate of Planning


New projects for upgradation and ex-pansion of airports

2 airports 18 airports To be estimated based on traffic growth and traffic projections

Extension and upgra-dation works at exist-ing airports

17 airports 2 airports

Revival of non-sched-ule airports for VFR operations

12 airports* 3 airports* To be assessed at a future date

Development/Upgra-dation of regional airports in Tier II and III cities

5 airports (Kishangarh, Jharsuguda, Tezu, Hubli, Belgaum)

Development of solar projects – roof top based

12 airports

Development of solar projects – ground based

3 airports

*Note: Time lines depend upon willingness of airlines to operate



Directorate of Operations


To establish the AOCC at Goa and Lucknow airports to enhance efficiency of Airport OperationsTo award the Quality and cost based selec-tion MESS (up-keeping contract) at 20 airports where annual pas-senger traffic is 1.25 million and more to improve the cleanli-ness parameters of ASQ/ACITo improve trained manpower at all operational airports to strengthen the opera-tions cadre for smooth function of terminal / airside operations


Directorate of Finance


Automation of tariff cellReal time banking/Bank reconciliation on a daily basisImplementation of billing gateway and realization moduleDeveloping a policy for debtors manage-ment and reviewing of the existing credit policyRevising of financial delegation of powersIncremental cost re-duction (as a percent-age of current cost)

2% 3% 5%



Directorate of Business Development


Bid for development, construction and op-eration of greenfield/Brownfield airports in India and exploring global markets for such projects by form-ing consortium/JV/SPV

Minimum 2 projects 4 projects 8 projects

Feasibility study, financial modelling, architectural concept plan & bidding for development of city side facility at various airports


Feasibility study, financial modeling & bidding for finaliza-tion of developer for Multi-Level Car Park at various airports


Explore global aviation market of air naviga-tion service providers (ANSPs) & Airport Operator offering a comprehensive e-business solution in collaboration with IATA and exporting the services and domain knowledge such as GAGAN, NOCAS, etc.

2 projects 6 projects 10 projects

Techno-economic feasibility studies for the development of New greenfield Airport at comparatively less attractive destinations in Tier II and Tier III cities wherein JV/SPV with state Government or any other local stakeholders can be formed under Regional Connectivity Scheme of New Civil Aviation Policy


Participating and securing contracts for Flight Inspection Ser-vices and CNS related activities

2 projects 8 projects To be a leading FIS service provider in Asia Pacific



Directorate of Business Development


Project for develop-ment of aviation skill development and export of AAI’s capacity building in all functional areas of the airport business and effective sharing of best professional standards and prac-tices promoting FTC, CATC & IAA globally.

Minimum 2 projects 6 projects 10 projects

Assisting/ advising State Government on state specific avia-tion related activities including setting up of Regional Airlines by State Government, acquisition of suitable aircraft for intra-re-gional connectivity within the state, their flying training institutes by improving their viability and quality of training.

Minimum 1 project 3 projects 5 projects


Directorates MIS coverage

Cargo Airport wise loading and unloading of commoditiesAirport wise categorization of types of cargoAirport wise dwell time of cargo

Commercial Airport wise list of active concessionairesConcessionaire wise list of monthly sale/transactionsConcessionaire wise average transaction valueBoarding pass wise duty free sales / average transaction value

Finance and accounts Airport wise detailed costs incurred Airport wise detailed revenue earnedAirport wise cash flowsAirport wise sale and purchase of assets

Human resources Department wise manpower requirementDepartment wise training requirementsDepartment wise planned retirements and succession planning

Engineering Airport wise list of worksWork wise time targets Work wise cost targets Time overrunsCost overruns

Marketing Sector wise passenger trafficSector wise cargo traffic

Operations Airport wise passenger processing timeAirport wise landing/takeoff slot availabilityAirport wise availability of parking slotsAirport / terminal wise congestion statusAirport wise flight delays

Annexure 8: Potential coverage of MIS for AAI

Note: The above list is just representative and not exhaustive. Each department has to define its specific information requirements.


Airport City Side Development Mix29

Aeroports de Paris Product mix at Paris Charles de Gaulle and Orly international airports includes entertainment & business centres, hospitality and retail with golf courses.

Kuala Lumpur International Airport New airport city is commercially anchored by its large gateway park that, in addition to retail and office development, includes motor sports, an automotive hypermarket and leisure venues drawing on the local as well as aviation-induced market.

Hong Kong International Airport’s SkyCity One million square metresretail, exhibition, business office, hotel and entertainment complex near its passenger terminal. Supported by high-speed rail connectivity with city centres.

Dubai World Central $32 billion airport city under development, 25 miles south of downtown Dubai. Corner stoned by a multimodal air logistics hub, will include office towers, hotels, a mega mall, golf course and housing for 40,000 on-site workers.

Incheon’s “AirCity” It encompasses international business areas, logistics zones, shopping and tourism districts, as well as housing and services for airport city workers and residents.

Beijing Capital Airports Holding Fast progressing Capital Airport City’s master plan takes an expansive definition of airport functions including, among others, shopping, enter-tainment, education, sports and leisure, logistics, light manufacturing, finance, trade and housing

Annexure 9: City side development by international airports

29 Various media reports and respective airport websites

Rajiv Gandhi Bhawan, Safdarjung Airport, New Delhi - 110 003 Website: www.aai.aero

Chennai Airport

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