SOP Airport1 Final

8/11/2019 SOP Airport1 Final

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BITSPilaniHyderabad Campus

FEASIBILITY OF ESTABLISING

AIRPORTS IN MEDIUM CITY

Kaashyap Sarma-2011A2PS378HCourse Name: Study Project

Supervisor: Dr.V. Vinayaka Ram


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BITS Pilani, Hyderabad Campus

Objectives of the Project

1. To study the factors controlling airport planning and

establishment

Segregating the factors into two broad sectors:

Technical point of View

Financial Point of View

2. Understanding the factors & aspects from the abovementioned outlooks.

3. Study a sample case study pertaining to the above study.


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What is Planning?

Planning Philosophy in Airport Design

The efficient airport as a whole is that which provides the

required capacity for aircraft, passenger, cargo and vehicle

movement with maximum passenger, operator and staff

convenience and at lowest capital and costs.


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Broad determination of the land area required.

Evaluating of factors affecting airport location.

Preliminary office study of possible sites.

Site inspection.

Environmental study.

Review of potential sites.

Preparation of outline plans and estimates of costs

and revenues.Final evaluation and selections.

Report and recommendations.

Airport Site Assessment andSelection


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Regional Plan

Airport Use

Proximity to other airports

Ground accessibility

Obstruction Clearance

Visibility

Topography

Wind factor Noise Effect

Weather Factors

Soil Characteristics

Airport Site Selection


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Aranmula Airport-Kerala

This airport is said to be planned to be built upon 700

acres of land Total Budget Cost-Around 2000 Crore Rupees.

The terminal building is being designed to handle 1,000

passengers at a time.

The main advantage of installing this airport is it wouldboost up the employment rate by creating 1500 direct

and 6000 indirect jobs.

Sample Case Study


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The airport, which is less than 100 km from Cochin InternationalAirport and Trivandrum International Airport, is expected to serve

four districts in Kerala state, namely Pathanamthitta and some areas

of Kottayam, Idukki and Alappuzha.

The project is being funded through equity and debt. The equity

portion accounts for around Rs 10 billion. The debt-equity ratio is1:1. Three banks including ICICI, IDBI Bank and SBI have funded

the debt portion.

The Kerala government has a 10% stake in the company and has

nominated one member to the board of the company, while the

Government owned oil company Indian Oil Corporation isnegotiating to pick up a 10% stake. The first phase of the project is

expected to cost Rs 7.50 billion.



ECONOMIC FEASIBILTY

The Enviro Care report states that the Aviation market in

the state of Kerala grew faster than the rest of the nation

which is one of the fastest growing aviation industries in

the world.

The government's partial open sky policy has led to

many overseas players entering the market and the

industry has been growing both in terms of players and

number of aircraft.



Year Duration

Passenger Traffic Growth RATE- INDIA

Passenger Traffic Growth RATE- Kerala

Air Traffic Growth Rate

Year Duration Passenger Traffic Growth

RATE- INDIA

Passenger Traffic Growth

RATE- Kerala

2003-04 11%

2004-05 22%

2005-06 24%

2006-07 31% 31.28%

2007-08 21% 23.74%

2008-09 6.85% 3.15%

2009-10 15% 11.66%

2010-11 16% 10.23%



The proposed Airport would provide transport infrastructure topilgrims who wish to travel by air to Sabarimala, the second

largest pilgrim center in India with annual pilgrims of around 60

Million (as per Government data for the year 2011).

The airport is expected to serve Central Travancore region,

comprising parts of five districts in Kerala state namelyPathanamthitta, Alappuzha, Kottayam, Idukki and Kollam. Out of the

foreign and domestic tourists' arrival to Kerala, these five districts

together account for about 21 per cent of foreign tourists and 14

percent of domestic tourists



A Forecast of Indian air traffic has concluded that the domesticpassenger throughput would grow at an average annual rate of

around 12% between FY-12 and FY-17. The domestic passenger

throughput is expected to touch around 209 million by FY-17 from 106

million in FY-11. Similarly, international passenger throughput is

estimated to grow at an average annual rate of 8% to reach 60 millionpassengers by FY-17 from 38 million in FY-11.

Global comparison of air travel penetration shows that India stands

far behind the developed countries like US and Australia (2 air-trips

per capita per annum). Chinas domestic traffic is five times that ofIndia despite having a population just 10% larger. There is significant

growth potential as high as 50 times for the Indian civil aviation

industry as the economy grows, disposable incomes rise and the

value of time becomes more precious.

Air Traffic Demand



Even though Kerala has only 2.75% of the overall population of India,

the International aircraft movement in Kerala is 15.28% of overall

international aircraft movement of India in the year 201112

During the year 201112, the total number of air passengers to Kerala

is 9,742,000 compared with 162.3 million air passengers throughout

India.

In Kerala, air traffic is evenly spread over the 3 existing airports-Kochi,

Trivandrum and Kozhikode unlike its neighboring three states of Tamil

Nadu, Andhra Pradesh and Karnataka where one

airport viz. Chennai, Hyderabad and Bangalore caters to 80% of the airtraffic of the entire state.



ALL was seeming so well financially,

wasntit?

Promoters get their piece of pie,

employment rate boosts up. So itsa win-win, right?

Apparently it was not!



The Kerala State Biodiversity Board observed that 80% of the 500acres earmarked for the project were paddy fields. Conversion of a

portion of the 3,500-acre paddy field would "impact on the remaining

wetlands, disturb the food chain, and accelerate the depletion of fish

resources as well as other flora and fauna in the Pamba river basin.

The runway is being constructed over the Kozhithode canal, which

is a tributary of the Pamba river. Several species of fish migrate

upstream from the river through the canals to the water-logged

paddy fields. Reclamation of these wetlands would deprive the fishof their breeding grounds. Razing hills in the neighborhood for soil to

reclaim the fields could lead to biodiversity loss and water shortage.

Heres the Problem



Clearly this environmental violation is a cause for whichmany people are protesting against and the people of

that area quote that such a large project would cause

irreparable and devastating damage to the environment

and ecosystem

Conclusion



The case study which I have adopted for my study post

mid-semester is on the Navi Mumbai International

Airport(NMIA)

The proposed airport at Navi Mumbai is located nearPanvel Town on NH4B at a distance of35 km from the

existing Sahar International Airport in Mumbai. A total

area of about 2054 Ha is earmarked for the development

of Navi Mumbai International Airport consisting of airportzone and the area required for offsite infrastructure

CASE STUDY-2



The project is proposed to be executed on the basis ofpublic-private-partnership (PPP)

The main feasibility analysis is obtained by considering 4

factors:

Air Traffic Demand

Site Evaluation and Project Detailing

Project Phasing and Cost

Preliminary Analysis

INTRODUCTION



The Navi Mumbai International Airport (NMIA) isproposed to be developed in an area of 2,054 hectares,

accommodating parallel independent runways for

simultaneous and independent operations.

The airport site is large enough to develop a two runway

system and is located next to two very important

communication corridors.

SITE SELECTION AND PROJECTDETAILING



Airport Layout Plan



The site has a very good railway connection, whichwould be completed with branches linking directly to the

current lines with the airport. From the point of view of

railway connections, this site has great accessibility.

The site is also said to be suitable considering the windfactors.

However not all the clearances were sanctioned, a

few objections were raised too



Objections were raised by the Union Ministry of Environment andForests on the current proposed location of NMIA, apparently

because the construction of the airport would involve reclamation of

low-lying areas in an ecologically fragile zone as well as destruction

of several hectares of mangroves.

There are serious environmental issues. Its construction woulddamage mangrove cultivation in the 2,000 ha (4,900 acres), besides

the diversion of Gadhi and Ulwe rivers, which according to the Union

Environment and Forests Ministry is a very serious issue

considering the destruction Mumbai faced during the 26 July 2005

floods. As a result of these new developments other locations wereconsidered.

OBJECTIONS RAISED


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The airport is facing hurdles in the acquisition of private land. Theairport requires 2,042 ha CIDCO needs to acquire 424 ha of

privately owned land for which CIDCO officials and the State

Government have been negotiating with the residents of seven

villages.

Land acquisition is stuck as the villagers (5,000 families) aredemanding a higher compensation package of 200 million per

acre. CIDCO then formed a committee composed of the divisional

commissioner of the Konkan division and local politicians. The

committee had offered the project-affected-people (PAP) two

rehabilitation-related compensation options:a) 12.5% of developed land at the ready reckoner rates, in addition to

monetary compensation

b) 22.5% developed land in Navi Mumbai.

LAND ACQUISTION


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India has been experiencing a major expansion of the air

transportation industry. The total number of commercial

passengers using Indian airports almost doubled over

the four years between 2004-05 and 2007-08 from 59 tomore than 116 million.

This growth has averaged 24.4% per year and has been

particularly high for domestic traffic.

AIR TRAFFIC DEMAND


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The primary Air traffic analysis was done by looking at the

Historical Air traffic trend of MMR

MMR Demand Forecast

NMIR Demand Forecast

It has to be observed that from whatever data we will be

having, the speculation or the forecast is done initially for

the MMR zone and then this forecast is projected on to

the NMIR Demand.

ANALYSIS


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The driving forces behind this rapid growth in air traffic are:

1. Deregulation of the aviation sector.

2. Positive macro economic trends

3. Tourism

4. The Emergence of Low Cost and Premium Service

Carriers

Why the Rapid Growth??


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CSIA experienced relatively modest slow growth in the number ofpassengers over the two decades preceding the liberalization of the

Indian air transportation industry during 2003-04, doubling from 6.4

to 13.3 million passengers (at an annual average compound growth

rate of 3.5%).

This growth trend has been interrupted during the current year(2008-09); initially by spiking fuel prices last summer, followed by

the impact of the worldwide financial crises.

Though the overall trend during those two decades was generally

positive, there was significant year to year variation, with temporary

declines in traffic during the economic recession of the early 1990sand in the period immediately following the terrorist attacks of

September 11, 2001

HISTORICAL TREND


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During both previous periods, the number of domesticpassengers had grown at over twice the rate of

international passengers, but it is also the traffic segment

most affected by the current crisis.

Though it is not indicated in these tables, this boomperiod seems to have recently come to an end as the

industry was hit hard by high fuel costs this past summer

and the current worldwide financial crisis.

HISTORICAL TREND


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These forecasts were developed using a two step process:

1. Develop econometric forecasting models according to

industry practices.

2. Adjust forecasts for short-term and long-term industry

trends not reflected in the econometric modelling.

MMR Demand Forecast


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The specific factors that were considered in this particular case are:

1. The extent and duration of the impact of the current downturn in air

traffic caused by fluctuating fuel costs and what has become a

worldwide financial crisis.

2. The extent to which an eventual recovery of the world economy will

lead to a return to the projected medium to long-term trend line (asestablished by the econometric model).

3. Whether it is feasible to assume that domestic traffic will indefinitely

continue growing faster than international traffic.

4. Whether the long-term growth rates resulting from the econometric

analysis are sustainable in the very long-run once the market begins

to mature.

MMR Demand Forecast


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The base forecasts for the High and Low scenarios wereestimated using the same equations, but applying High

and Low forecasts of the primary independent variables.

The same adjustment was carried out for 2008-09. In the

case of 2009-10, the following adjustments were made:

High: The growth rate predicted by the regression

equation was multiplied by 0.8.

Low: The regression growth rate was multiplied by 0.2.

These multiplication factors are obtained from the

previous regression constants

Forecast Scenarios


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The procedure followed to allocate potential passengertraffic is the following:

Review airline preferences and plans

Estimate the proportion of the passenger and cargo

markets for which NMIA has a comparative advantage

Analyse saturation levels at CSIA

Derive passenger levels at NMIA

Derive cargo levels at NMIA

NMIA Passenger Forecast


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The primary results are:

NMIA is forecasted to handle over 20 million passengers by the end

of Phase 1 in 2017-18. This would increase to just under 40 million

passengers by 2022-23 and almost 62 million by 2031-32.

International passengers are forecasted to reach over 10 million

passengers by the end of Phase 2 and over 16 million by 2031-32

Domestic passengers are forecasted to reach over 28 million by

2022-23 andover 44 million over the long run.

Direct international transit passengers are forecasted to increase toover 1 million over the first 24 years of operation of the airport.

RESULTS


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Phase 1 (2013-14 to 2016-17): In Phase 1, the airport is initiallydesigned with a level of service adequate to satisfy the demand of

10 million passengers.

Phase 2 (2017-18 to 2021-22): The Phase 2 development at the

airport is designed to meet the demand for 25 million passengers.

Phase 3 (2022-23 to 2026-27): The Phase 3 development of theairport is designed with a level of service adequate to satisfy a 45

million passenger's demand.

Phase 4 (2027-28 to 2031-32): The airport is ultimately designed

with a level of serviceadequate to satisfy a 60 million passengers

demand by providing NMIA with additional boarding gates and apronarea to satisfy the additional demand

PROJECT PHASING


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Development Stages


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Project Cost by Phases


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The primary results of this analysis are presented in termsof the following indicators:

Net Present Value (NPV) of the annual net cash flows

Internal Rate of Return (IRR)

FINANCIAL FEASIBILITY


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The final results which were obtained included the followingmethodology

Estimating revenues at each Airport over the various development

phases, based on traffic projections and the price and tariff for use of

the terminals, facilities and services

Project annual Operating Costs (OPEX) for the various facilities,including personnel, administration and maintenance;

Incorporate the preliminary cost estimates (CAPEX) for investment

requirements

Prepare annual cash flows for the established planning horizon (30

years)

Determine the financial viability of the project in terms of its

Financial Internal Rate of Return (IRR) under different scenarios


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FINAL RESULTS


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BITSPilaniHyderabad Campus

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